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Nuclear Regulatory Commission.
Direct final rule.
The U.S. Nuclear Regulatory Commission (NRC) is amending its spent fuel storage regulations by revising the Holtec International HI–STORM FLOOD/WIND (FW) System listing within the “List of approved spent fuel storage casks” to include Amendment No. 1 to Certificate of Compliance (CoC) No. 1032. Amendment No. 1 adds a new heat load pattern for the multipurpose canister (MPC)–37, broadens the back pressure range for MPC–37 and MPC–89, and updates certain definitions related to fuel classification. Also, the amendment makes a correction to the expiration date of CoC No. 1032.
The direct final rule is effective December 17, 2014, unless significant adverse comments are received by November 3, 2014. If the direct final rule is withdrawn as a result of such comments, timely notice of the withdrawal will be published in the
Please refer to Docket ID NRC–2014–0102 when contacting the NRC about the availability of information for this direct final rule. You may access publicly-available information related to this direct final rule by any of the following methods:
• Federal Rulemaking Web site: Go to
• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly-available documents online in the ADAMS Public Documents collection at
• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O–1F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Naiem S. Tanious, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–415–6103, email:
This direct final rule is limited to the changes contained in Amendment No. 1 to CoC No. 1032 and does not include other aspects of the Holtec International HI–STORM FW System design. The NRC is using the “direct final rule procedure” to issue this amendment because it represents a limited and routine change to an existing CoC that is expected to be noncontroversial. Adequate protection of public health and safety continues to be ensured. The amendment to the rule will become effective on December 17, 2014. However, if the NRC receives significant adverse comments on this direct final rule by November 3, 2014, then the NRC will publish a document that withdraws this action and will subsequently address the comments received in a final rule as a response to the companion proposed rule published in the proposed rule section of this issue of the
A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:
(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:
(a) The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;
(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or
(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.
(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.
(3) The comment causes the NRC staff to make a change (other than editorial) to the rule, CoC, or Technical Specifications (TSs).
For detailed instructions on filing comments, please see the companion proposed rule published in the Proposed Rule section of this issue of the
Section 218(a) of the Nuclear Waste Policy Act (NWPA) of 1982, as amended, requires that “the Secretary [of the Department of Energy] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more technologies that the [ Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.” Section 133 of the NWPA states, in part, that “[the Commission] shall, by rule, establish procedures for the licensing of any technology approved by the Commission under Section 219(a) [sic: 218(a)] for use at the site of any civilian nuclear power reactor.”
To implement this mandate, the Commission approved dry storage of spent nuclear fuel in NRC-approved casks under a general license by publishing a final rule which added a new subpart K in part 72 of Title 10 of the
By letter dated October 13, 2011, and as supplemented on May 23, 2012, January 24, April 18, and July 23, 2013, Holtec International, Inc. (Holtec or the applicant) submitted an application to the NRC to amend CoC No. 1032. The amendment adds a new heat load pattern for the MPC–37, broadens the back pressure range for MPC–37 and MPC–89, and updates certain definitions related to fuel classification. Also, the amendment makes a correction to the expiration date of CoC No. 1032.
As documented in the safety evaluation report (SER), the NRC staff performed a detailed safety evaluation of the proposed CoC amendment request. There are no significant changes to cask design requirements in the proposed CoC amendment. Considering the specific design requirements for each accident condition, the design of the cask would prevent loss of containment, shielding, and criticality control. If there is no loss of containment, shielding, or criticality control, the environmental impacts would be insignificant. This amendment does not reflect a significant change in design or fabrication of the cask. In addition, any resulting occupational exposure or offsite dose rates from the implementation of Amendment No. 1 would remain well within the 10 CFR part 20 limits. Therefore, the proposed CoC changes will not result in any radiological or non-radiological environmental impacts that significantly differ from the environmental impacts evaluated in the environmental assessment supporting the July 18, 1990, final rule. There will be no significant change in the types or significant revisions in the amounts of any effluent released, no significant increase in the individual or cumulative radiation exposure, and no significant increase in the potential for or consequences from radiological accidents.
This direct final rule revises the Holtec International HI–STORM FW System listing in 10 CFR 72.214 by adding Amendment No. 1 to CoC No. 1032. The amendment consists of the changes previously described, as set forth in the revised CoC and TSs. The revised TSs are identified in the SER.
The amended Holtec International HI–STORM FW System design, when used under the conditions specified in the CoC, the TSs, and the NRC's regulations, will meet the requirements of 10 CFR part 72; therefore, adequate protection of public health and safety will continue to be ensured. When this direct final rule becomes effective, persons who hold a general license under 10 CFR 72.210 may load spent nuclear fuel into the Holtec International HI–STORM FW System that meet the criteria of Amendment No. 1 to CoC No. 1032 under 10 CFR 72.212.
The National Technology Transfer and Advancement Act of 1995 (Pub. L. 104–113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this direct final rule, the NRC will revise the Holtec International HI–STORM FW System design listed in 10 CFR 72.214. This action does not constitute the establishment of a standard that contains generally applicable requirements.
Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, and published in the
The Plain Writing Act of 2010 (Pub. L. 111–274) requires Federal agencies to write documents in a clear, concise, well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883).
The action is to amend 10 CFR 72.214 to revise the Holtec International HI–STORM FW System listing within the “List of approved spent fuel storage casks” to include Amendment No. 1 to CoC No. 1032. Under the National Environmental Policy Act of 1969, as amended, and the NRC's regulations in subpart A of 10 CFR part 51, “Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions,” the NRC has determined that this rule, if adopted, would not be a major Federal action significantly affecting the quality of the human environment and, therefore, an environmental impact statement is not required. The NRC has made a finding of no significant impact on the basis of this environmental assessment.
This direct final rule amends the CoC for the Holtec International HI–STORM FW System design within the list of approved spent fuel storage casks that power reactor licensees can use to store spent fuel at reactor sites under a general license. Specifically, Amendment No. 1 adds a new heat load pattern for the multipurpose canister MPC–37, broadens the back pressure range for MPC–37 and MPC–89, and updates certain definitions related to fuel classification. Also, the amendment makes a correction to the expiration date of CoC No. 1032.
On July 18, 1990 (55 FR 29181), the NRC issued an amendment to 10 CFR part 72 to provide for the storage of spent fuel under a general license in cask designs approved by the NRC. The potential environmental impact of using NRC-approved storage casks was initially analyzed in the environmental assessment for the 1990 final rule. The environmental assessment for this Amendment No. 1 tiers off of the environmental assessment for the July 18, 1990, final rule. Tiering on past environmental assessments is a standard process under the National Environmental Policy Act.
The Holtec International HI–STORM FW System is designed to mitigate the effects of design basis accidents that could occur during storage. Design basis accidents account for human-induced events and the most severe natural phenomena reported for the site and surrounding area. Postulated accidents analyzed for an Independent Spent Fuel Storage Installation, the type of facility at which a holder of a power reactor operating license would store spent fuel in casks in accordance with 10 CFR part 72, include tornado winds and tornado-generated missiles, a design basis earthquake, a design basis flood, an accidental cask drop, lightning effects, fire, explosions, and other incidents.
Considering the specific design requirements for each accident condition, the design of the cask would prevent loss of containment, shielding, and criticality control. If there is no loss of containment, shielding, or criticality control, the environmental impacts would be insignificant. This amendment does not reflect a significant change in design or fabrication of the cask. There are no significant changes to cask design requirements in the proposed CoC amendment. In addition, because there are no significant design or process changes, any resulting occupational exposure or offsite dose rates from the implementation of Amendment No. 1 would remain well within the 10 CFR part 20 limits. Therefore, the proposed CoC changes will not result in any radiological or non-radiological environmental impacts that significantly differ from the environmental impacts evaluated in the environmental assessment supporting the July 18, 1990, final rule. There will be no significant change in the types or significant revisions in the amounts of any effluent released, no significant increase in the individual or cumulative radiation exposure, and no significant increase in the potential for or consequences from radiological accidents. The staff documented its safety findings in the SER for this amendment.
The alternative to this action is to deny approval of Amendment No. 1 and end the direct final rule. Consequently, any 10 CFR part 72 general licensee that seeks to load spent nuclear fuel into Holtec International HI–STORM FW System casks in accordance with the changes described in proposed Amendment No. 1 would have to request an exemption from the requirements of 10 CFR 72.212 and 72.214. Under this alternative, interested licensees would have to prepare, and the NRC would have to review, a separate exemption request, thereby increasing the administrative burden upon the NRC and the costs to each licensee. Therefore, the environmental impacts would be the same or less than the action.
Approval of Amendment No. 1 to CoC No. 1032 would result in no irreversible commitments of resources.
No agencies or persons outside the NRC were contacted in connection with the preparation of this environmental assessment.
The environmental impacts of the action have been reviewed under the requirements in 10 CFR part 51. Based on the foregoing environmental assessment, the NRC concludes that this direct final rule entitled, “List of Approved Spent Fuel Storage Casks: Holtec International HI–STORM FLOOD/WIND System; Certificate of Compliance No. 1032, Amendment No. 1,” will not have a significant effect on the human environment. Therefore, the NRC has determined that an environmental impact statement is not necessary for this direct final rule.
This direct final rule does not contain any information collection requirements and, therefore, is not subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Existing requirements were approved by the Office of Management and Budget (OMB), Approval Number 3150–0132.
The NRC may not conduct or sponsor, and a person is not required to respond to a request for information or an information collection requirement unless the requesting document displays a currently valid OMB control number.
Under the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the NRC certifies that this direct final rule will not, if issued, have a significant economic impact on a substantial number of small entities. This direct final rule affects only nuclear power plant licensees and Holtec. These entities do not fall within the scope of the definition of small entities set forth in the Regulatory Flexibility Act or the size standards established by the NRC (10 CFR 2.810).
On July 18, 1990 (55 FR 29181), the NRC issued an amendment to 10 CFR part 72 to provide for the storage of spent nuclear fuel under a general license in cask designs approved by the NRC. Any nuclear power reactor licensee can use NRC-approved cask designs to store spent nuclear fuel if it notifies the NRC in advance, the spent fuel is stored under the conditions specified in the cask's CoC, and the conditions of the general license are met. A list of NRC-approved cask designs is contained in 10 CFR 72.214. On June 8, 2011 (76 FR 33121), the NRC issued an amendment to 10 CFR part 72 that approved the Holtec International HI–STORM FW System design and added it to the list of NRC-approved cask designs in 10 CFR 72.214 as CoC No.1032.
On October 13, 2011, and as supplemented on May 23, 2012, January 24, 2013, April 18, 2013, and July 23, 2013, Holtec submitted an application to amend the Holtec International HI–STORM FW System as described in Section III of this document.
The alternative to this action is to withhold approval of Amendment No. 1 and to require any 10 CFR part 72 general licensee seeking to load spent nuclear fuel into the Holtec
Approval of this direct final rule is consistent with previous NRC actions. Further, as documented in the SER and the environmental assessment, the direct final rule will have no adverse effect on public health and safety or the environment. This direct final rule has no significant identifiable impact or benefit on other Government agencies. Based on this regulatory analysis, the NRC concludes that the requirements of the direct final rule are commensurate with the NRC's responsibilities for public health and safety and the common defense and security. No other available alternative is believed to be as satisfactory, and therefore, this action is recommended.
The NRC has determined that the backfit rule (10 CFR 72.62) does not apply to this direct final rule. Therefore, a backfit analysis is not required. This direct final rule revises the CoC No. 1032 for the Holtec International HI–STORM FW System, as currently listed in 10 CFR 72.214, “List of approved spent fuel storage casks.” The revision consists of Amendment No. 1 which adds a new heat load pattern for the MPC–37, broadens the back pressure range for MPC–37 and MPC–89, and updates certain definitions related to fuel classification. Also the amendment makes a correction to the expiration date of CoC No. 1032.
Amendment No. 1 to CoC No. 1032 for the Holtec International HI–STORM FW System was initiated by Holtec and was not submitted in response to new NRC requirements, or an NRC request for amendment. Amendment No. 1 applies only to new casks fabricated and used under Amendment No. 1. These changes do not affect existing users of the Holtec International HI–STORM FW System, and the current Amendment continues to be effective for existing users. While current CoC users may comply with the new requirements in Amendment No. 1, this would be a voluntary decision on the part of current users. For these reasons, Amendment No. 1 to CoC No. 1032 does not constitute backfitting under 10 CFR 72.62, 10 CFR 50.109(a)(1), or otherwise represent an inconsistency with the issue finality provisions applicable to combined licenses in 10 CFR part 52. Accordingly, no backfit analysis or additional documentation addressing the issue finality criteria in 10 CFR part 52 has been prepared by the staff.
This action is not a rule as defined in the Congressional Review Act (5 U.S.C. 801–808).
The documents identified in the following table are available to interested persons through one or more of the following methods, as indicated.
The NRC may post materials related to this document, including public comments, on the Federal rulemaking Web site at
Administrative practice and procedure, Criminal penalties, Manpower training programs, Nuclear materials, Occupational safety and health, Penalties, Radiation protection, Reporting and recordkeeping requirements, Security measures, Spent fuel, Whistleblowing.
For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; the Nuclear Waste Policy Act of 1982, as amended; and 5 U.S.C. 552 and 553; the NRC is adopting the following amendments to 10 CFR part 72.
Atomic Energy Act secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183, 184, 186, 187, 189, 223, 234, 274 (42 U.S.C. 2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2232, 2233, 2234, 2236, 2237, 2273, 2282, 2021); Energy Reorganization Act secs. 201, 202, 206, 211 (42 U.S.C. 5841, 5842, 5846, 5851); National Environmental Policy Act sec. 102 (42 U.S.C. 4332); Nuclear Waste Policy Act secs. 131, 132, 133, 135, 137, 141, 148 (42 U.S.C. 10151, 10152, 10153, 10155, 10157, 10161, 10168); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note); Energy Policy Act of 2005, Pub. L. 109–58, 119 Stat. 549 (2005).
Section 72.44(g) also issued under Nuclear Waste Policy Act secs. 142(b) and 148(c), (d) (42 U.S.C. 10162(b), 10168(c), (d)).
Section 72.46 also issued under Atomic Energy Act sec. 189 (42 U.S.C. 2239); Nuclear Waste Policy Act sec. 134 (42 U.S.C. 10154).
Section 72.96(d) also issued under Nuclear Waste Policy Act sec. 145(g) (42 U.S.C. 10165(g)).
Subpart J also issued under Nuclear Waste Policy Act secs. 117(a), 141(h) (42 U.S.C. 10137(a), 10161(h)).
Subpart K also issued under sec. 218(a) (42 U.S.C. 10198).
Certificate Number: 1032.
Initial Certificate Effective Date: June 13, 2011.
Amendment Number 1 Effective Date: December 17, 2014.
SAR Submitted by: Holtec International, Inc.
SAR Title: Final Safety Analysis Report for the HI–STORM FW System.
Docket Number: 72–1032.
Certificate Expiration Date: June 12, 2031.
Model Number: HI–STORM FW MPC–37, MPC–89.
For the Nuclear Regulatory Commission.
National Credit Union Administration (NCUA).
Final rule.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) repealed NCUA's rulemaking authority under the Federal Trade Commission Act (FTC Act). As a result, the NCUA Board (Board) is now repealing NCUA's regulations governing unfair or deceptive acts or practices. The Board is also making a number of technical amendments to other NCUA regulations to conform them to the agency's current central and field office structures. Additionally, the Board is amending NCUA's payday alternative loans regulation to replace all references to “short-term, small amount loans” and “STS loans” with corresponding references to “payday alternative loans” and “PAL loans.” The latter terms more accurately reflect the nature and purpose of this loan product.
This final rule is effective on October 3, 2014.
Frank Kressman, Associate General Counsel, Office of General Counsel, at 1775 Duke Street, Alexandria, VA 22314 or telephone: (703) 518–6540.
In 2010, President Obama signed into law the Dodd-Frank Act (Pub. L. 111–203, 124 Stat. 1376 (2010)). The Dodd-Frank Act substantially changed the federal legal framework with respect to consumer financial protection regulation. Among the many changes, section 1092 of the Dodd-Frank Act repealed NCUA's rulemaking authority under the FTC Act.
Despite the repeal of part 706, NCUA still has supervisory and enforcement authority regarding unfair or deceptive acts or practices,
• Including confessions of judgment, waivers of exemptions, wage assignments, or security interests on household goods in consumer contracts;
• Misrepresenting the nature or extent of cosigner liability; and
• Pyramiding late fees.
In November 2013, the Board approved a restructuring of NCUA's central office. This restructuring consisted of transferring certain functions from one office to another and establishing the Office of Continuity and Security Management (OCSM). OCSM performs all security-related functions that were formerly the responsibility of several different offices. The core functions of OCSM are national continuity programs, emergency management and physical security, personnel security, and intelligence and information security. As a result of this and other organizational changes described in section II, the Board is making a number of conforming technical amendments to NCUA's regulations.
In September 2010, the Board amended its general lending regulation to enable federal credit unions (FCUs) to offer payday alternative loans (PAL loans).
As discussed above, in response to changes made by the Dodd-Frank Act, this final rule repeals 12 CFR part 706.
As discussed above, the Board is amending part 790 of NCUA's regulations to conform it to NCUA's current central and field office structures.
The Office of Continuity and Security Management (OCSM), created in November 2013, began operating in January 2014. It was created to aggregate all of the agency's security-related functions into one office. The primary consolidated functions are continuity of operations planning, physical security, and personnel security. Also, NCUA put in place an additional security function to address national security issues affecting the financial services industry. All federal agencies are required to comply with various statutes and Executive Orders related to the safeguarding of national assets. Through OCSM, NCUA will be able to more efficiently respond to these federal mandates and conduct its security-related functions.
The final rule amends Part 790 to add a new paragraph describing OCSM and its functions.
The final rule amends the description of the Office of Chief Financial Officer to add strategic planning as one of its duties. NCUA shifted this duty from another office to better utilize staffing resources.
The final rule amends the description of the Office of Consumer Protection (OCP) to reflect that the office now has four divisions. The Board added two divisions within OCP to more efficiently
The Board established the Ombudsman position in April 1995, as required by the Riegle Community Development and Regulatory Improvement Act of 1994. The Ombudsman operates as an objective third party to resolve disputes that cannot be resolved at the operational level. In 2013, the Board elevated the position of the Ombudsman to the Executive Director's office. It is supervised by the Executive Director's office and reports directly to the Board. Previously, OCP oversaw the Ombudsman's duties, and the Ombudsman reported to the Director of OCP.
NCUA realigned its regional offices effective January 1, 2014. This was designed to create geographically compact districts that balance workload, improve efficiency, and reduce travel costs. In addition, the new regional structure coincides with other changes to strengthen NCUA's supervision, such as the creation of the Office of National Examinations and Supervision. Each NCUA region now has approximately an equal number of examiners, in addition to supervision, special actions, and support personnel.
The Board is updating the table in § 790.2(c)(1)(i), indicating the states that each region is responsible for supervising. Nine states have been transferred among the NCUA regional offices for the reasons noted above.
• Wisconsin is in Region I;
• Ohio is in Region II;
• Arkansas and Louisiana are in Region III;
• Colorado, Montana, New Mexico, and Wyoming are in Region IV and
• California is in Region V.
Lastly, the territory of American Samoa is no longer listed in § 790.2(c)(1)(i) as NCUA no longer supervises any credit unions in that jurisdiction.
As discussed above, the Board is amending NCUA's payday alternative loans regulation to replace the terms “short-term, small amount loans” and “STS loans” with the terms “payday alternative loans” and “PAL loans” to more accurately reflect the nature and purpose of this loan product and to make it more readily understood.
The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a rule may have on a substantial number of small entities (primarily those under $50 million in assets).
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden.
Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order to adhere to fundamental federalism principles. This final rule will not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this final rule does not constitute a policy that has federalism implications for purposes of the executive order.
NCUA has determined that this final rule will not affect family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act, 1999.
The Small Business Regulatory Enforcement Fairness Act of 1996
Generally, the APA requires a federal agency to provide the public with notice and the opportunity to comment on agency rulemakings. The amendments in this rule are non-substantive and technical, or involve only matters relating to management and personnel and are exempt from APA notice and comment requirements.
Credit, Credit unions, Reporting and recordkeeping requirements.
Consumer protection, Credit, Credit unions, Deception, Intergovernmental relations, Trade practices, Unfairness.
Organization and functions (Government agencies).
For the reasons discussed above, the NCUA Board amends 12 CFR parts 701, 706, and 790 as follows:
12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 701.31 is also authorized by 15 U.S.C. 1601,
12 U.S.C. 1766, 1789, 1795f.
The revisions and addition read as follows:
(b) * * *
(4)
(i) Agency-wide strategic planning, budget formulation, and performance reporting;
(ii) The agency's financial management system and financial reporting functions;
(iii) Procurement and facilities management to include various administrative responsibilities such as property management, mail services, graphics support, supply management, printing, and publications management; and
(iv) Managing the operations of the Operating and Insurance Funds, including payroll, travel policies, revenue assessment, and dividend distributions.
(6)
(15)
(A) The Division of Consumer Compliance Policy and Outreach;
(B) The Division of Consumer Affairs;
(C) The Division of Consumer Access; and
(D) The Division of Consumer Access-South.
(ii) The office provides consumer services, including consumer education and complaint resolution; establishes, consolidates, and coordinates consumer protections within the agency; acts as the central liaison on consumer protection with other federal agencies; and nationalizes field of membership processing and chartering activities.
(17)
(c) * * *
(1)
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are adopting a new airworthiness directive (AD) for certain Bombardier, Inc. Model DHC–8–400 series airplanes. This AD was prompted by reports of missing clamps that are required to provide positive separation between the alternating current (AC) feeder cables and the hydraulic line of the landing gear alternate extension. This AD requires an inspection for missing clamps that are required to provide positive separation between the AC feeder cables and the hydraulic line of the landing gear alternate extension, and related investigative and corrective actions if necessary. We are issuing this AD to detect and correct chafing of the AC feeder cable. A chafed and arcing AC feeder cable could puncture the adjacent hydraulic line, which, in combination with the use of the alternate extension system, could result in an in-flight fire.
This AD becomes effective November 7, 2014.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of November 7, 2014.
You may examine the AD docket on the Internet at
For service information identified in this AD, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
Assata Dessaline, Aerospace Engineer, Avionics and Service Branch, ANE–172, FAA, New York Aircraft Certification Office, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516–228–7301; fax 516–794–5531.
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc. Model DHC–8–400 series airplanes. The NPRM published in the
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF–2013–16, dated June 14, 2013 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
During production checks, it was found that the appropriate clamps required to provide positive separation between the AC feeder cables and the hydraulic line of the landing gear alternate extension were omitted. The AC feeder cable could sag and be in direct contact with the swage fitting of the landing gear alternate extension hydraulic line, resulting in chafing of the AC feeder cable. The chafed and arcing AC feeder cable could puncture the adjacent hydraulic line. In combination with the use of the alternate extension system, this could result in an in-flight fire.
This [Canadian] AD mandates the [general visual] inspection [for missing clamps], and rectification [related investigative and corrective actions] as necessary, for proper clamp installation.
The related investigative action is a general visual inspection of the AC power feeder cables and the hydraulic line for damage due to chafing. The corrective actions include repair of chafed parts, and replacement of missing clamps. You may examine the MCAI in the AD docket on the Internet at
We gave the public the opportunity to participate in developing this AD. We have considered the comment received. The following presents the comment received on the NPRM (78 FR 79338, December 30, 2013) and the FAA's response to the comment.
Horizon Air requested that we change the language in paragraph (g) of the NPRM (78 FR 79338, December 30, 2013) from mandating the Accomplishment Instructions in Bombardier Service Bulletin 84–24–53, Revision A, dated May 16, 2013, to mandating only the section of Bombardier Service Bulletin 84–24–53, Revision A, dated May 16, 2013, that corrects the unsafe condition. Horizon Air stated that the Accomplishment Instructions, Part A, “Job Set-up,” and Part C, “Close Out,” have nothing to do with correcting the unsafe condition. Horizon Air expressed that mandating operators to perform these sections adds an unnecessary regulatory requirement because operators must have the airplane in a specific condition, and keep it in that condition, while performing the corrective action. Horizon Air also stated that, if the FAA keeps the requirements of job setup and job close-out, it forces an operator to request an alternative method of compliance (AMOC) if it chooses to deviate from the work-steps. Horizon Air provided its cost estimate of obtaining an AMOC.
In this case, we agree with the commenter's request to exclude the “Job Set-up” and “Close Out” sections of Bombardier Service Bulletin 84–24–53, Revision A, dated May 16, 2013. We have revised paragraph (g) of this AD to require accomplishment of paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84–24–53, Revision A, dated May 16, 2013.
Since late 2006, we have included a standard paragraph titled “Airworthy Product” in all MCAI ADs in which the FAA develops an AD based on a foreign authority's AD.
The MCAI or referenced service information in an FAA AD often directs the owner/operator to contact the manufacturer for corrective actions, such as a repair. Briefly, the Airworthy Product paragraph allowed owners/operators to use corrective actions provided by the manufacturer if those actions were FAA-approved. In addition, the paragraph stated that any actions approved by the State of Design Authority (or its delegated agent) are considered to be FAA-approved.
In the NPRM (78 FR 79338, December 30, 2013), we proposed to prevent the use of repairs that were not specifically developed to correct the unsafe condition, by requiring that the repair approval provided by the State of Design Authority or its delegated agent specifically refer to this FAA AD. This change was intended to clarify the method of compliance and to provide operators with better visibility of repairs that are specifically developed and approved to correct the unsafe condition. In addition, we proposed to change the phrase “its delegated agent” to include a design approval holder (DAH) with State of Design Authority design organization approval (DOA), as applicable, to refer to a DAH authorized to approve required repairs for the proposed AD.
No comments were provided to the NPRM (78 FR 79338, December 30, 2013) about these proposed changes. However, a comment was provided for another NPRM, Directorate Identifier 2012–NM–101–AD (78 FR 78285, December 26, 2013), in which the commenter stated the following: “The proposed wording, being specific to repairs, eliminates the interpretation that Airbus messages are acceptable for approving minor deviations (corrective actions) needed during accomplishment of an AD mandated Airbus service bulletin.”
This comment has made the FAA aware that some operators have misunderstood or misinterpreted the Airworthy Product paragraph to allow the owner/operator to use messages provided by the manufacturer as approval of deviations during the accomplishment of an AD-mandated action. The Airworthy Product paragraph does not approve messages or other information provided by the manufacturer for deviations to the requirements of the AD-mandated actions. The Airworthy Product paragraph only addresses the requirement to contact the manufacturer for corrective actions for the identified unsafe condition and does not cover deviations from other AD requirements. However, deviations to AD-required actions are addressed in 14 CFR 39.17, and anyone may request the approval for an alternative method of compliance to the AD-required actions using the procedures found in 14 CFR 39.19.
To address this misunderstanding and misinterpretation of the Airworthy Product paragraph, we have changed that paragraph and retitled it “Contacting the Manufacturer.” This paragraph now clarifies that for any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the FAA, TCCA, or Bombardier's TCCA Design Approval Organization (DAO). Where necessary throughout this AD, we also replaced any reference to approvals of corrective actions with a reference to the Contacting the Manufacturer paragraph.
The Contacting the Manufacturer paragraph also clarifies that, if approved by the DAO, the approval must include the DAO-authorized signature. The DAO signature indicates that the data and information contained in the document are TCCA-approved, which is also FAA-approved. Messages and other information provided by the manufacturer that do not contain the DAO-authorized signature approval are not TCCA-approved, unless TCCA directly approves the manufacturer's message or other information.
This clarification does not remove flexibility previously afforded by the Airworthy Product paragraph. Consistent with long-standing FAA policy, such flexibility was never intended for required actions. This is also consistent with the recommendation of the Airworthiness Directive Implementation Aviation Rulemaking Committee to increase flexibility in complying with ADs by identifying those actions in manufacturers' service instructions that are “Required for Compliance” with ADs. We continue to work with manufacturers to implement this recommendation. But once we determine that an action is required, any deviation from the requirement must be approved as an alternative method of compliance.
Other commenters to the NPRM discussed previously, Directorate Identifier 2012–NM–101–AD (78 FR 78285, December 26, 2013), pointed out that in many cases the foreign manufacturer's service bulletin and the foreign authority's MCAI might have been issued some time before the FAA AD. Therefore, the DOA might have provided U.S. operators with an approved repair, developed with full awareness of the unsafe condition, before the FAA AD is issued. Under these circumstances, to comply with the FAA AD, the operator would be required to go back to the manufacturer's DOA and obtain a new approval document, adding time and expense to the compliance process with no safety benefit.
Based on these comments, we removed the requirement that the DAH-provided repair specifically refer to this AD. Before adopting such a requirement, the FAA will coordinate with affected DAHs and verify they are prepared to implement means to ensure that their repair approvals consider the unsafe condition addressed in this AD. Any such requirements will be adopted through the normal AD rulemaking process, including notice-and-comment procedures, when appropriate. We also have decided not to include a generic reference to either the “delegated agent” or “DAH with State of Design Authority design organization approval,” but instead we have provided the specific delegation approval granted by the State of Design Authority for the DAH.
We reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM (78 FR 79338, December 30, 2013) for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM (78 FR 79338, December 30, 2013).
We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.
We estimate that this AD affects 78 airplanes of U.S. registry.
We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $13,260, or $170 per product.
In addition, we estimate that any necessary follow-on actions would take about 2 work-hours and require parts costing $11, for a cost of $181 per product. We have received no definitive data that would enable us to provide cost estimates for the on-condition repair of the AC power feeder cables and hydraulic lines specified in this AD. We have no way of determining the number of aircraft that might need these actions.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
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 AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. 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.
You may examine the AD docket on the Internet at
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD becomes effective November 7, 2014.
None.
This AD applies to Bombardier, Inc. Model DHC–8–400, –401, and –402 airplanes, certificated in any category, serial numbers 4001 through 4347 inclusive.
Air Transport Association (ATA) of America Code 24, Electrical power.
This AD was prompted by reports of missing clamps that are required to provide positive separation between the alternating current (AC) feeder cables and the hydraulic line of the landing gear alternate extension. We are issuing this AD to detect and correct chafing of the AC feeder cable. A chafed and arcing AC feeder cable could puncture the adjacent hydraulic line, which, in combination with the use of the alternate extension system, could result in an in-flight fire.
Comply with this AD within the compliance times specified, unless already done.
Within 6,000 flight hours or 36 months after the effective date of this AD, whichever occurs earlier: Do a general visual inspection for installation of clamps between the AC feeder cables and hydraulic line; and do all applicable related investigative and corrective actions; in accordance with paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84–24–53, Revision A, dated May 16, 2013. Do all applicable related investigative and corrective actions before further flight.
This paragraph provides credit for actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Bombardier Service Bulletin 84–24–53, dated May 11, 2012.
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF–2013–16, dated June 14, 2013, for related information. This MCAI may be found in the AD docket on the Internet at
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (k)(3) and (k)(4) of this AD.
(1) The Director of the
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Bombardier Service Bulletin 84–24–53, Revision A, dated May 16, 2013.
(ii) Reserved.
(3) For service information identified in this AD, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
(4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425–227–1221.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule.
We are superseding Airworthiness Directive (AD) 2010–03–05 for all the Boeing Company Model 747–200C and –200F series airplanes. AD 2010–03–05 required, for the upper chords of the upper deck floor beam of section 41, an inspection for cracking of certain fastener holes, and corrective action if necessary; and repetitive replacements of the upper chords, straps (or angles), and radius fillers of certain upper deck floor beams and, for any replacement that is done, inspections for cracking, and corrective actions if necessary. This new AD adds repetitive inspections of the upper chords of the upper deck floor beam of Section 42, repetitive replacements of the upper chords, post-replacement inspections, and corrective actions if necessary. This new AD also adds post-replacement inspections for section 41 and reduces certain compliance times. This AD was prompted by a determination that the upper deck floor beams are subject to widespread fatigue damage (WFD), the existing inspection program is not sufficient to maintain an acceptable level of safety, and the upper chords of the upper deck floor beam of section 42 are subject to the unsafe condition. We are issuing this AD to detect and correct cracking of the upper chords and straps (or angles) of the floor beams, which could lead to failure of the floor beams and consequent loss of controllability, rapid decompression, and loss of structural integrity of the airplane.
This AD is effective November 7, 2014.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of November 7, 2014.
For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, WA 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
You may examine the AD docket on the Internet at
Roger Caldwell, Aerospace Engineer, Technical Operations Center, ANM–100D, FAA, Denver Aircraft Certification Office (ACO), 26805 East 68th Avenue, Room 214, Denver, CO 80249; phone: 303–342–1086; fax: 303–342–1088; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2010–03–05, Amendment 39–16188 (75 FR 5692, February 4, 2010). AD 2010–03–05 applied to all The Boeing Company Model 747–200C and –200F series airplanes. The NPRM published in the
We gave the public the opportunity to participate in developing this AD. We have considered the comment received. Boeing stated that it concurs with the contents of the NPRM (79 FR 30486, May 28, 2014).
We reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM (79 FR 30486, May 28, 2014) for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 30486, May 28, 2014).
We estimate that this AD affects 25 airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.
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 have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under 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 amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective November 7, 2014.
This AD replaces AD 2010–03–05, Amendment 39–16188 (75 FR 5692, February 4, 2010).
This AD applies to all The Boeing Company Model 747–200C and –200F series airplanes, certificated in any category.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by a determination that the upper deck floor beams are subject to widespread fatigue damage (WFD), the existing inspection program is not sufficient to maintain an acceptable level of safety, and upper chords of the upper deck floor beam of section 42 are subject to the unsafe condition. We are issuing this AD to detect and correct cracking of the upper chords and straps (or angles) of the floor beams, which could lead to failure of the floor beams and consequent loss of controllability, rapid decompression, and loss of structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
At the applicable time specified in Table 1 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012: At stations (STA) 340 through STA 440, STA 500, and STA 520, do an open-hole high frequency eddy current (HFEC) inspection at all accessed fastener holes to detect cracking; and install new upper deck floor beam upper chords, straps, angles, and radius fillers; in accordance with Part 2 and Part 3 of the Accomplishment Instructions of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
At the applicable time specified in Table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012; or within 1,500 flight cycles after March 11, 2010 (the effective date of AD 2010–03–05, Amendment 39–16188 (75 FR 5692, February 4, 2010)); whichever occurs later: Do detailed and HFEC inspections to detect cracking of the replaced upper deck floor beam chords, the floor panel attachment holes, and the permanent fastener locations of the replaced upper deck floor beam chords, in accordance
(1) Do the detailed and HFEC inspections of the replaced upper deck floor beam chords within 3,000 flight cycles after the most recent inspection, or within 300 flight cycles after the effective date of this AD, whichever occurs later, and repeat thereafter at the applicable time specified in Table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
(2) Do the open-hole HFEC inspection and chord replacement required by paragraph (g) of this AD at the applicable time specified in Table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012, or within 240 flight cycles after the effective date of this AD, whichever occurs later. Repeat the inspections and replacement specified in paragraph (h) of this AD at the applicable time specified in Table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
At the applicable time specified in Tables 3 and 4 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012, except as required by paragraph (l) of this AD: Do the actions specified in paragraph (i)(1) or (i)(2) of this AD as applicable.
(1) At STA 540 through STA 740 for Group 1 airplanes identified in Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012: Do an open-hole HFEC inspection to detect cracking, and install new upper deck floor beam upper chord replacements, in accordance with Part 7 and Part 8 of the Accomplishment Instructions of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
(2) At STA 540 through STA 780 for Group 2 airplanes identified in Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012: Do an open-hole HFEC inspection to detect cracking, and install new upper deck floor beam upper chord replacements, in accordance with Part 7 and Part 8 of the Accomplishment Instructions of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
At the applicable time specified in Table 5 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012; or within 1,500 flight cycles after March 11, 2010 (the effective date of AD 2010–03–05, Amendment 39–16188 (75 FR 5692, February 4, 2010)); whichever occurs later: Do HFEC inspections to detect cracking of the replaced upper deck floor beam chords, in accordance with Part 9 of the Accomplishment Instructions of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012. If no crack is found, do the actions specified in paragraphs (j)(1) and (j)(2) of this AD.
(1) Repeat the HFEC inspections of the replaced upper deck floor beam chords thereafter at the applicable time specified Table 5 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
(2) Do the open-hole HFEC inspection and chord replacement required by paragraph (i) of this AD at the applicable time specified in Table 5 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012. Repeat the inspections and replacement, as specified in paragraph (j) of this AD, at the applicable time specified in Table 5 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
If any cracking is found during any inspection required by this AD, before further flight, repair using a method approved in accordance with the procedures specified in paragraph (o) of this AD.
Where Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012, specifies a compliance time “after the revision 1 date on this service bulletin,” this AD requires compliance within the specified compliance time “after the effective date of this AD.”
This paragraph provides credit for the installation of floor beam replacements required by this AD, if those actions were performed before the effective date of this AD using Boeing Alert Service Bulletin 747–53A2696, dated October 16, 2008. (This service bulletin was incorporated by reference in AD 2010–03–05, Amendment 39–16188 (75 FR 5692, February 4, 2010)).
Special flight permits, as described in Section 21.197 and Section 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199), are not allowed.
(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the persons identified in paragraph (p)(1) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(1) For more information about this AD, contact Nathan Weigand, Aerospace Engineer, Airframe Branch, ANM–120S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, Washington 98057–3356; phone: 425–917–6428; fax: 425–917–6590; email:
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (q)(3) and (q)(4) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) Boeing Alert Service Bulletin 747–53A2696, Revision 1, dated April 12, 2012.
(ii) Reserved.
(3) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, WA 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
(4) You may view this service information at FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425–227–1221.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are superseding Airworthiness Directive (AD) 94–12–03 for certain Airbus Model A320 series airplanes. AD 94–12–03 required modification of the belly fairing structure. This new AD requires repetitive inspections for cracking of the four titanium angles between the belly fairing and the keel beam side panel, an inspection for cracking of the open holes if any cracking is found in the titanium angles, and repair or replacement if necessary; this new AD also expands the applicability of AD 94–12–03. This AD was prompted by reports of cracks at the lower riveting of the four titanium angles that connect the belly fairing to the keel beam side panels on both sides of the fuselage. We are issuing this AD to detect and correct cracking of the titanium angles that connect the belly fairing to the keel beam side panels on both sides of the fuselage, which could affect the structural integrity of the airplane.
This AD becomes effective November 7, 2014.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of November 7, 2014.
The Director of the Federal Register approved the incorporation by reference of certain other publications listed in this AD as of January 10, 1994 (59 FR 64875, December 10, 1993).
You may examine the AD docket on the Internet at
For service information identified in this AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
Sanjay Ralhan, Aerospace Engineer, International Branch, ANM–116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057–3356; telephone 425–227–1405; fax 425–227–1149.
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 94–12–03, Amendment 39–8930 (59 FR 28763, June 3, 1994). AD 94–12–03 applied to Model A320 series airplanes having serial numbers (S/Ns) 003 through 092 inclusive. These serial numbers apply to Model A320–111, –211, and –231 series airplanes. The NPRM published in the
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2013–0122, dated June 5, 2013 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
During the fatigue test campaign of the A320 family type design, cracks have been found at the lower riveting of the four titanium angles which connect the belly fairing to the keel beam side panels between frames FR40 and FR42, on both sides of the fuselage.
This condition, if not detected and corrected, could affect the structural integrity of the aeroplane.
In 1992, [Direction Générale de l'Aviation Civile] DGAC France issued AD 92–201–030 (
For the reason described above, this [EASA] AD retains the requirements of DGAC France AD 92–201–030, which is superseded, and requires repetitive detailed inspections [for cracking] of the affected titanium angles and, depending on findings, repair or replacement of parts.
As an option to extend the repetitive inspection interval, after the first detailed inspection is accomplished and on condition of no crack findings, this AD allows operators to remove the four titanium angles, perform a rototest for cracking on the open holes and, provided no cracks are found on the open holes, install new titanium angles, followed by post-modification detailed inspections of the new titanium angles.
For any titanium angle crack findings, this AD requires removing any cracked angle, performing a rototest for cracking on the open holes and, provided no cracks are found, installing a new titanium angle, followed by detailed inspections of the new titanium angles.
For any open hole cracking found during any rototest required by this AD, this AD requires repairing any cracking using a method approved by the Manager, International Branch, ANM–116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).
This AD expands the applicability of AD 94–12–03, Amendment 39–8930 (59 FR 28763, June 3, 1994), to include all Airbus Model A318, A319, A320, and A321 series airplanes.
You may examine the MCAI in the AD docket on the Internet at
We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM (79 FR 10707, February 26, 2014) and the FAA's response to each comment.
Delta Airlines (DAL) requested that we extend the compliance time for the inspection of the titanium angles specified in paragraph (h)(3) of the proposed AD (79 FR 10707, February 26, 2014). DAL stated that extending this compliance time from 3,000 flight cycles or 6,000 flight hours after the effective date of this AD, whichever occurs first, to 5,000 flight cycles or 10,000 flight hours, whichever occurs first, would match the repetitive interval for the detailed inspection on those airplanes that have not had the modification accomplished, and it would give DAL and other operators the opportunity to schedule these inspections in a hangar environment.
We do not agree with the commenter's request to extend the compliance time specified in paragraph (h)(3) of this AD. DAL has not provided data to
DAL requested that we add a provision in the NPRM (79 FR 10707, February 26, 2014) to allow operators to ferry airplanes with cracking found during the inspection specified in paragraph (h) of this AD. DAL stated that a ferry flight would allow an airplane to be moved to a more suitable location for maintenance in the event damage is found. DAL also stated that the ferry flight is necessary due to the extensive level of access and disassembly.
We agree with the intent behind the commenter's request, but find it unnecessary to include a special flight provision in this AD. Special flight permits are currently allowed under Section 39.23 of the Federal Aviation Regulations (14 CFR 39.23), unless specifically prohibited or limited by an AD. No change is necessary to this final rule in this regard.
Since late 2006, we have included a standard paragraph titled “Airworthy Product” in all MCAI ADs in which the FAA develops an AD based on a foreign authority's AD.
The MCAI or referenced service information in an FAA AD often directs the owner/operator to contact the manufacturer for corrective actions, such as a repair. Briefly, the Airworthy Product paragraph allowed owners/operators to use corrective actions provided by the manufacturer if those actions were FAA-approved. In addition, the paragraph stated that any actions approved by the State of Design Authority (or its delegated agent) are considered to be FAA-approved.
In the NPRM (79 FR 10707, February 26, 2014), we proposed to prevent the use of repairs that were not specifically developed to correct the unsafe condition, by requiring that the repair approval provided by the State of Design Authority or its delegated agent specifically refer to this FAA AD. This change was intended to clarify the method of compliance and to provide operators with better visibility of repairs that are specifically developed and approved to correct the unsafe condition. In addition, we proposed to change the phrase “its delegated agent” to include a design approval holder (DAH) with State of Design Authority design organization approval (DOA), as applicable, to refer to a DAH authorized to approve required repairs for the proposed AD.
No comments were provided to the NPRM (79 FR 10707, February 26, 2014) about these proposed changes. However, a comment was provided for an NPRM having Directorate Identifier 2012–NM–101–AD (78 FR 78285, December 26, 2013). The commenter stated the following: “The proposed wording, being specific to repairs, eliminates the interpretation that Airbus messages are acceptable for approving minor deviations (corrective actions) needed during accomplishment of an AD mandated Airbus service bulletin.”
This comment has made the FAA aware that some operators have misunderstood or misinterpreted the Airworthy Product paragraph to allow the owner/operator to use messages provided by the manufacturer as approval of deviations during the accomplishment of an AD-mandated action. The Airworthy Product paragraph does not approve messages or other information provided by the manufacturer for deviations to the requirements of the AD-mandated actions. The Airworthy Product paragraph only addresses the requirement to contact the manufacturer for corrective actions for the identified unsafe condition and does not cover deviations from other AD requirements. However, deviations to AD-required actions are addressed in 14 CFR 39.17, and anyone may request the approval for an alternative method of compliance to the AD-required actions using the procedures found in 14 CFR 39.19.
To address this misunderstanding and misinterpretation of the Airworthy Product paragraph, we have changed the paragraph and retitled it “Contacting the Manufacturer.” This paragraph now clarifies that for any requirement in this AD to obtain corrective actions from a manufacturer, the actions must be accomplished using a method approved by the FAA, the European Aviation Safety Agency (EASA), or Airbus's EASA Design Organization Approval (DOA).
The Contacting the Manufacturer paragraph also clarifies that, if approved by the DOA, the approval must include the DOA-authorized signature. The DOA signature indicates that the data and information contained in the document are EASA-approved, which is also FAA-approved. Messages and other information provided by the manufacturer that do not contain the DOA-authorized signature approval are not EASA-approved, unless EASA directly approves the manufacturer's message or other information.
This clarification does not remove flexibility previously afforded by the Airworthy Product paragraph. Consistent with long-standing FAA policy, such flexibility was never intended for required actions. This is also consistent with the recommendation of the Airworthiness Directive Implementation Aviation Rulemaking Committee to increase flexibility in complying with ADs by identifying those actions in manufacturers' service instructions that are “Required for Compliance” with ADs. We continue to work with manufacturers to implement this recommendation. But once we determine that an action is required, any deviation from the requirement must be approved as an alternative method of compliance.
Other commenters to the NPRM having Directorate Identifier 2012–NM–101–AD (78 FR 78285, December 26, 2013) pointed out that in many cases the foreign manufacturer's service bulletin and the foreign authority's MCAI might have been issued some time before the FAA AD. Therefore, the DOA might have provided U.S. operators with an approved repair, developed with full awareness of the unsafe condition, before the FAA AD is issued. Under these circumstances, to comply with the FAA AD, the operator would be required to go back to the manufacturer's DOA and obtain a new approval document, adding time and expense to the compliance process with no safety benefit.
Based on these comments, we removed the requirement that the DAH-provided repair specifically refer to this AD. Before adopting such a requirement, the FAA will coordinate with affected DAHs and verify they are prepared to implement means to ensure that their repair approvals consider the unsafe condition addressed in this AD. Any such requirements will be adopted through the normal AD rulemaking process, including notice-and-comment procedures, when appropriate.
We also have decided not to include a generic reference to either the “delegated agent” or “DAH with State of Design Authority design organization approval,” but instead we have provided the specific delegation approval granted by the State of Design Authority for the DAH throughout this AD.
We reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting this final rule with the changes described previously and minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM (79 FR 10707, February 26, 2014) for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 10707, February 26, 2014).
We estimate that this AD affects 851 airplanes of U.S. registry.
The actions that were required by AD 94–12–03, Amendment 39–8930 (59 FR 28763, June 3, 1994), and retained in this AD take about 288 work-hours per product, at an average labor rate of $85 per work-hour. Required parts cost about $1,045 per product. Based on these figures, the estimated cost of the actions that were required by AD 94–12–03 is $25,525 per product.
We also estimate that it will take about 7 work-hours per product to comply with the basic new requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $506,345, or $595 per product.
We have received no definitive data that would enable us to provide cost estimates for the on-condition and optional actions specified in this AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
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 AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. 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.
You may examine the AD docket on the Internet at
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD becomes effective November 7, 2014
This AD replaces AD 94–12–03, Amendment 39–8930 (59 FR 28763, June 3, 1994).
This AD applies to the Airbus airplanes specified in paragraphs (c)(1) through (c)(4) of this AD, certificated in any category, all manufacturer serial numbers.
(1) Airbus Model A318–111, –112, –121, and –122 airplanes.
(2) Airbus Model A319–111, –112, –113, –114, –115, –131, –132, and –133 airplanes.
(3) Airbus Model A320–111, –211, –212, –214, –231, –232, and –233 airplanes.
(4) Airbus Model A321–111, –112, –131, –211, –212, –213, –231, and –232 airplanes.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by reports of cracks at the lower riveting of the four titanium angles that connect the belly fairing to the keel beam side panels on both sides of the fuselage. We are issuing this AD to detect and correct cracking of the titanium angles that connect the belly fairing to the keel beam side panels on both sides of the fuselage, which could affect the structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
This paragraph restates the requirements of paragraph (a) of AD 94–12–03, Amendment 39–8930 (59 FR 28763, June 3, 1994), with new service information. For Model A320–111, –211, and –231 series airplanes, manufacturer serial numbers 003 through 092 inclusive: Prior to the accumulation of 12,000 total landings on the airplane, or within 300 days after January 10, 1994 (the effective date of AD 93–24–11, Amendment 39–8760 (58 FR 64875, December 10, 1993)), whichever occurs later, modify the belly fairing structure, in accordance with the Accomplishment Instructions of an Airbus service bulletin specified in paragraph (g)(1), (g)(2), or (g)(3) of this AD. As of the effective date of this AD, use only the Airbus service bulletin specified in paragraph (g)(3) of this AD.
(1) Airbus Industrie Service Bulletin A320–53–1014, dated June 25, 1992.
(2) Airbus Industrie Service Bulletin A320–53–1014, Revision 1, dated May 26, 1993.
(3) Airbus Service Bulletin A320–53–1014, Revision 2, dated September 1, 1994.
At the latest of the compliance times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD: Do a detailed inspection for cracking of the four titanium angles between the belly fairing and the keel beam side panel, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320–53–1259, dated November 6, 2012.
(1) Before the accumulation of 30,000 total flight cycles or 60,000 total flight hours, whichever occurs first after first flight of the airplane.
(2) Within 30,000 flight cycles or 60,000 flight hours, whichever occurs first after modification of the airplane as required by paragraph (g) of this AD, or after installation of new titanium angles, provided that, prior to installation, a rototest for cracking on the open holes has been accomplished with no crack findings, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320–53–1259, dated November 6, 2012.
(3) Within 3,000 flight cycles or 6,000 flight hours, whichever occurs first after the effective date of this AD.
If, during any inspection required by paragraph (h) of this AD, there is no crack finding: Accomplish the actions specified in either paragraph (i)(1) or (i)(2) of this AD.
(1) Repeat the inspection required by paragraph (h) of this AD at intervals not to exceed 5,000 flight cycles or 10,000 flight hours, whichever occurs first
(2) Before further flight after the inspection required by paragraph (h) of this AD, remove all inspected titanium angles, accomplish a rototest for cracking on the open holes and, provided no cracks are found, install new titanium angles, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320–53–1259, dated November 6, 2012.
If, during any inspection required by paragraph (h) of this AD, there is any crack finding: Before further flight, remove the affected titanium angle(s), accomplish a rototest for cracking on the open holes, and, provided no cracks are found, install new titanium angles, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320–53–1259, dated November 6, 2012.
For airplanes on which new titanium angles were installed as specified in paragraph (i)(2) or (j) of this AD: Within 30,000 flight cycles or 60,000 flight hours, whichever occurs first after the installation, accomplish a detailed inspection for cracking of the four titanium angles between the belly fairing and the keel beam side panel, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320–53–1259, dated November 6, 2012. Repeat the inspection thereafter at intervals not to exceed 5,000 flight cycles or 10,000 flight hours, whichever occurs first.
If, during any inspection as required by paragraph (k) of this AD, there is any crack finding: Before further flight, remove the affected titanium angles, accomplish a rototest for cracking on the open holes, and, provided no cracks are found, install new titanium angles, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320–53–1259, dated November 6, 2012.
If, during any rototest as required by paragraph (i), (j), or (l) of this AD, any crack is found: Before further flight, repair using a method approved by the Manager, International Branch, ANM–116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).
Repair or replacement of parts as specified in this AD does not terminate the repetitive inspections required by this AD.
The following provisions also apply to this AD:
(1)
(2)
Refer to Mandatory Continuing Airworthiness Information (MCAI) European Aviation Safety Agency, Airworthiness Directive 2013–0122, dated June 5, 2013, for related information. You may examine the MCAI in the AD docket on the Internet at
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(3) The following service information was approved for IBR on November 7, 2014.
(i) Airbus Service Bulletin A320–53–1014, Revision 2, dated September 1, 1994, including supplementary page 7A. Pages 1–3, 15, 19, 20, and 25 of this document are identified as Revision 2, dated September 1, 1994; pages 4–8, 10, 12, 16–18, and 21–24 are identified as Revision 1, dated May 26, 1993; and pages 9, 11, 13, 14, and 26 are identified as the original, dated June 25, 1992.
(ii) Airbus Service Bulletin A320–53–1259, dated November 6, 2012.
(4) The following service information was approved for IBR on January 10, 1994 (59 FR 64875, December 10, 1993).
(i) Airbus Industrie Service Bulletin A320–53–1014, dated June 25, 1992.
(ii) Airbus Industrie Service Bulletin A320–53–1014, Revision 1, dated May 26, 1993.
(5) For service information identified in this AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
(6) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425–227–1221.
(7) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule; request for comments.
We are adopting a new airworthiness directive (AD) for certain Bombardier, Inc. Model CL–600–2B16 (CL–601–3A, CL–601–3R, and CL–604 Variants) airplanes. This AD requires repetitive inspections for any fuel leak in the right-hand landing lights compartment, and related investigative and corrective actions if necessary. This AD also provides for an optional replacement of the connector of the fuel boost pump canister of the auxiliary power unit (APU), which terminates the repetitive inspections. This AD was prompted by a report of fuel leaks in the connector cavity of the APU fuel boost pump canister and at the electrical conduit connection of the APU fuel boost pump in the right-hand landing lights compartment. We are issuing this AD to detect and correct fuel leaks in the right-hand landing lights compartment, which, in combination with the heat generated by the taxi lights and landing lights on the ground reaching the auto-ignition temperature of the fuel, could result in ignition of any fuel or fumes present in the right-hand landing lights compartment.
This AD becomes effective October 20, 2014.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of October 20, 2014.
We must receive comments on this AD by November 17, 2014.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514–855–5000; fax 514–855–7401; email
You may examine the AD docket on the Internet at
Assata Dessaline, Aerospace Engineer, Avionics and Services Branch, ANE–172, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516–228–7301; fax 516–794–5531.
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF–2014–21, dated July 10, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model CL–600–2B16 (CL–601–3A, CL–601–3R, and CL–604 Variants) airplanes. The MCAI states:
Bombardier Inc. has discovered fuel leakage in the auxiliary power unit (APU) fuel Boost Pump (BP) canister connector cavity. On some of those aeroplanes, leakage was also noticed at the APU fuel BP electrical conduit connection in the right hand landing light compartment. The root cause of the subject fuel leak is identified to be the improper length of the female connector keyway located in the fuel BP canister, causing a shift of the electrical harness and its seals.
Available data indicates that on a hot day, due to the heat generated by the taxi light and/or landing lights on the ground, temperature in the landing light compartment can reach the fuel auto ignition temperature. Therefore, presence of any fuel in the right hand landing light compartment is considered to be a safety hazard [fuel or fumes present in the right-hand landing lights compartment might ignite] that warrants mitigating action.
In order to help mitigate the potential safety hazard precipitated by any fuel leakage in the right hand landing light compartment, Bombardier Inc., has revised the Aircraft Flight Manual (AFM) through Temporary Revisions (TRs) 604/38 and 605/20 dated 16 June 2014 to restrict the operation of Taxi and Landing lights on the ground. Transport Canada issued Emergency [Canadian] AD CF–2014–17 [(
To address the root cause of the subject fuel leakage from the APU fuel boost pump canister wiring conduit, Bombardier Inc. issued Alert Service Bulletin (ASB) A605–28–008 that requires periodic [repetitive general visual] inspection[s] for fuel leaks and [applicable related investigative and corrective actions and] eventual the replacement of the discrepant fuel BP canister connectors [including related investigative and corrective actions] on affected aeroplanes. The ASB has been revised to include an additional inspection of the new connector wiring for damage and this [Canadian] AD is issued to mandate the compliance with ASB A605–28–008 Revision 2 requirements.
Bombardier, Inc. has issued Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014. The actions described in this service information are intended to
On July 24, 2014, the FAA issued AD 2014–15–17, Amendment 39–17919 (79 FR 44268, July 31, 2014), for certain Bombardier, Inc. Model CL–600–2B16 (CL–604 Variant) airplanes. AD 2014–15–17 requires revising the airplane flight manual to incorporate temporary revisions that introduce additional limitations for operation of taxi and landing lights. AD 2014–15–17 requires revising the airplane flight manual only for Bombardier, Inc. Model CL–600–2B16 (CL–604 Variant) airplanes, serial numbers 5301 through 5665 inclusive, and 5701 and subsequent. This AD requires repetitive inspections for any fuel leak in the right-hand landing lights compartment, and related investigative and corrective actions if necessary, for Bombardier, Inc. Model CL–600–2B16 (CL–601–3A, CL–601–3R, and CL–604 Variants) airplanes, serial numbers 5906, 5910, 5912, 5917, 5919 through 5932 inclusive, 5934, 5935, 5939, 5940, 5942, and 5948.
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.
The MCAI and Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014, do not specify corrective actions if any cut is found on the wires or if any damage is found on the O-rings during certain related investigative actions. This AD requires that a replacement be done using a method approved by the FAA, TCCA, or Bombardier, Inc.'s TCCA Design Approval Organization (DAO).
An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because fuel leaks in the right-hand landing lights compartment, in combination with the heat generated by the taxi lights and landing lights on the ground reaching the auto-ignition temperature of the fuel, could result in ignition of any fuel or fumes present in the right-hand landing lights compartment. Therefore, we determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in fewer than 30 days.
This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
This AD is considered to be interim action. We are currently considering requiring a replacement of the connector of the fuel boost pump canister of the APU, and applicable related investigative and corrective actions, which will constitute terminating action for the repetitive inspections required by this AD action. However, the planned compliance time for the replacement would allow enough time to provide notice and opportunity for prior public comment on the merits of the replacement and applicable related investigative and corrective actions.
We estimate that this AD affects 92 airplanes of U.S. registry.
We also estimate that it will take about 2 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $15,640, or $170 per product.
In addition, we estimate that any necessary follow-on actions will take about 22 work-hours and require parts costing $0, for a cost of $1,870 per product. We have no way of determining the number of aircraft that might need these actions.
According to the manufacturer, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.
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 AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. 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 amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD becomes effective October 20, 2014.
None.
This AD applies to Bombardier, Inc. Model CL–600–2B16 (CL–601–3A, CL–601–3R, and CL–604 Variants) airplanes, certificated in any category, serial numbers 5906, 5910, 5912, 5917, 5919 through 5932 inclusive, 5934, 5935, 5939, 5940, 5942, and 5948.
Air Transport Association (ATA) of America Code 28, Fuel.
This AD was prompted by a report of fuel leaks in the auxiliary power unit (APU) fuel boost pump canister connector cavity and in the right-hand landing lights compartment from the APU fuel boost pump electrical conduit connection. We are issuing this AD to detect and correct fuel leaks in the right-hand landing lights compartment, which, in combination with the heat generated by the taxi lights and landing lights on the ground reaching the auto-ignition temperature of the fuel, could result in ignition of any fuel or fumes present in the right-hand landing lights compartment.
Comply with this AD within the compliance times specified, unless already done.
Within 25 flight hours after the effective date of this AD: Do a general visual inspection for any fuel leak in the right-hand landing lights compartment, and do all applicable related investigative and corrective actions, in accordance with Part A of the Accomplishment Instructions of Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014, except as required by paragraph (h) of this AD. Do all applicable related investigative and corrective actions before further flight. Repeat the inspection thereafter at intervals not to exceed 8 flight hours until the replacement specified in paragraph (i) of this AD has been accomplished.
If any fuel leak is found during the related investigative actions required by paragraph (g) of this AD: Before further flight, do the terminating action specified in paragraph (i) of this AD, or repair using a method approved by the Manager, New York Aircraft Certification Office (ACO), ANE–170, Engine and Propeller Directorate, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO).
Replacing the connector of the fuel boost pump canister of the APU and doing all applicable related investigative actions, in accordance with Part B of the Accomplishment Instructions of Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014, terminates the actions required by paragraph (g) of this AD provided that the following actions are done, as applicable.
(1) If any damage (cuts) is found on the wires, before further flight, replace the wire with a new wire identified in kit 605K28–008A, in accordance with the Accomplishment Instructions of Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014.
(2) If any damage is found on the O-rings, before further flight, replace the O-ring with a new O-ring, in accordance with the Accomplishment Instructions of Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014.
(3) If any fuel leak is found, before further flight, repair using a method approved by the Manager, New York ACO, ANE–170, Engine and Propeller Directorate, FAA; or TCCA; or Bombardier, Inc.'s TCCA DAO.
For airplanes having new connectors installed in accordance with Part B of the Accomplishment Instructions of Bombardier Alert Service Bulletin A605–28–008, dated April 21, 2014: Within 6 months or 150 flight hours after the effective date of this AD, whichever occurs first, do a detailed inspection for damage (cuts) of the connector wiring, in accordance with Part B of the Accomplishment Instructions of Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014. If any damage (cuts) is found on the wires, before further flight, replace the wire with a new wire identified in kit 605K28–008A, in accordance with the Accomplishment Instructions of Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014.
This paragraph provides credit for actions required by paragraph (i) of this AD, if those actions were performed before the effective date of this AD using Bombardier Alert Service Bulletin A605–28–008, Revision 01, dated May 28, 2014, which is not incorporated by reference in this AD.
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF–2014–21, dated July 10, 2014, for related information. You may examine the MCAI on the Internet at
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (n)(3) and (n)(4) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Bombardier Alert Service Bulletin A605–28–008, Revision 02, dated July 9, 2014.
(ii) Reserved.
(3) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514–855–5000; fax 514–855–7401; email
(4) You may view this service information at the FAA, Transport Airplane Directorate,
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule.
We are adopting a new airworthiness directive (AD) for certain Lockheed Martin Corporation/Lockheed Martin Aeronautics Company Model L–1011 series airplanes. This AD was prompted by reports of cracked rib cap castellations. This AD requires repetitive inspections for castellation and skin clips cracked or damaged between stringers and cracked stringer clips of the wing box pylon back-up structure, and front spar to rear spar; repetitive inspections for cracking, damage, or failure of the pylon back-up torque box structure; repetitive inspections for cracking or damage of the wing box external areas at the drag brace aft wing fitting; repetitive inspections of the outer surface of the wing upper and lower skins for cracks or damage along the rib attachment at the fastener holes and between the two rows of attachment; and corrective actions if necessary. We are issuing this AD to detect and correct cracked or damaged rib cap castellations, which could degrade the structural capabilities of the airplane.
This AD is effective November 7, 2014.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of November 7, 2014.
For service information identified in this AD, contact Lockheed Martin Corporation/Lockheed Martin Aeronautics Company, L1011 Technical Support Center, Dept. 6A4M, Zone 0579, 86 South Cobb Drive, Marietta, GA 30063–0579; telephone 770–494–5444; fax 770–494–5445; email
You may examine the AD docket on the Internet at
Carl Gray, Aerospace Engineer, Airframe Branch, ACE–117A, FAA, Atlanta Aircraft Certification Office (ACO), 1701 Columbia Avenue, College Park, GA 30337; phone: 404–474–5554; fax: 404–474–5605; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Lockheed Martin Corporation/Lockheed Martin Aeronautics Company Model L–1011 series airplanes. The NPRM published in the
We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM (79 FR 30748, May 29, 2014) or on the determination of the cost to the public.
We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM (79 FR 30748, May 29, 2014) for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 30748, May 29, 2014).
We estimate that this AD affects 26 airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
We estimate the following costs to do any necessary repairs that would be required based on the results of the inspections. We have no way of determining the number of aircraft that might need these repairs:
Other than the modification stated above, we have received no definitive data that would enable us to provide cost estimates for the crack repair actions specified in this AD.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this AD is 2120–0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES–200.
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.
This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under 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 amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective November 7, 2014.
None.
This AD applies to Lockheed Martin Corporation/Lockheed Martin Aeronautics Company Model L–1011–385–1, L–1011–385–1–14, L–1011–385–1–15, and L–1011–385–3 airplanes, certificated in any category, as identified in Lockheed Martin Service Bulletin 093–57–207, Revision 5, dated November 14, 2008.
Air Transport Association (ATA) of America Code 57, Wings.
This AD was prompted by reports of cracked rib cap castellations. We are issuing this AD to detect and correct cracked or damaged rib cap castellations, which could degrade the structural capabilities of the airplane.
Comply with this AD within the compliance times specified, unless already done.
For Model L–1011–385–1, L–1011–385–1–14, L–1011–385–1–15, and L–1011–385–3 airplanes, serial numbers 1189 and subsequent: At the applicable compliance time specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD, do the inspections specified in paragraphs (g)(1) through (g)(4) of this AD. Repeat the inspections thereafter at intervals not to exceed 3,600 flight cycles or 7,200 flight hours, whichever occurs first.
(1) Do a detailed inspection for castellation and skin clips cracked or damaged (including cracks, loose or missing fasteners, oversized and missed drilled fastener holes, corrosion, dents, scratches and other signs of distress) between stringers and cracked stringer clips of the wing box pylon back-up structure, and front spar to rear spar, in accordance with the Accomplishment Instructions of Lockheed Martin Service Bulletin 093–57–207, Revision 5, dated November 14, 2008.
(2) Do a general visual inspection for cracking or damage (including cracks, loose or missing fasteners, oversized and missed drilled fastener holes, corrosion, dents, scratches and other signs of distress) of the pylon back-up torque box structure, in accordance with the Accomplishment Instructions of Lockheed Martin Service Bulletin 093–57–207, Revision 5, dated November 14, 2008.
(3) Do a general visual inspection for cracking, damage (including cracks, loose or missing fasteners, oversized and missed drilled fastener holes, corrosion, dents, scratches and other signs of distress), or failure of the wing box external areas at the
(4) Do a general visual inspection for cracking or damage (including cracks, loose or missing fasteners, oversized and missed drilled fastener holes, corrosion, dents, scratches and other signs of distress) of the outer surface of the wing upper and lower skins for cracks along the rib attachment at the fastener holes and between the two rows of attachments, in accordance with the Accomplishment Instructions of Lockheed Martin Service Bulletin 093–57–207, Revision 5, dated November 14, 2008.
(1) For airplanes that have not accomplished the inspections described in Lockheed Martin Service Bulletin 093–57–207 prior to the effective date of this AD: At the later of the compliance times specified in paragraphs (h)(1)(i) and (h)(1)(ii) of this AD.
(i) Before the accumulation of 15,000 total flight cycles or 27,000 total flight hours, whichever occurs first.
(ii) Within 1,800 flight cycles or 3,600 flight hours, whichever occurs first, after the effective date of this AD.
(2) For airplanes that have accomplished the inspections described in Lockheed Martin Service Bulletin 093–57–207 prior to the effective date of this AD: Within 3,600 flight cycles or 7,200 flight hours, whichever occurs first, after the completion of the most recent inspections, except as specified in paragraph (h)(3) of this AD.
(3) For rib caps that have been modified as described in Lockheed Martin Service Bulletin 093–57–207: Before the accumulation of 15,000 total flight cycles or 27,000 total flight hours, whichever occurs first, for that rib cap only.
If any cracking, damage, or failure is found during any inspection required by paragraph (g) of this AD: Before further flight, do all applicable corrective actions, in accordance with the Accomplishment Instructions of Lockheed Martin Service Bulletin 093–57–207, Revision 5, dated November 14, 2008, except where this service bulletin specifies that all other damaged structural items should be repaired using the best shop practices, following procedures in Structural Repair Manual 57–12–00, this AD requires repairing the damage before further flight, in accordance with a method approved by the Manager, Atlanta Aircraft Certification Office (ACO), FAA. For a repair method to be approved by the Manager, Atlanta ACO, as required by this paragraph, the Manager's approval letter must specifically refer to this AD.
Submit a report of positive findings of the inspection for cracking, damage, or failure required by this AD to the Manager, Atlanta ACO, at the applicable time specified in paragraph (j)(1) or (j)(2) of this AD. The report must include the inspection results, a description of the discrepancies found, the airplane serial number, and the number of landings and flight hours on the airplane.
(1) If the inspection was done on or after the effective date of this AD: Submit the report within 30 days after the inspection.
(2) If the inspection was done before the effective date of this AD: Submit the report within 30 days after the effective date of this AD.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB Control Number. The OMB Control Number for this information collection is 2120–0056. Public reporting for this collection of information is estimated to be approximately 5 minutes per response, including the time for reviewing instructions, completing and reviewing the collection of information. All responses to this collection of information are mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at: 800 Independence Ave. SW., Washington, DC 20591, Attn: Information Collection Clearance Officer, AES–200.
This paragraph provides credit for actions required by paragraphs (g) and (i) of this AD, if those actions were performed before the effective date of this AD using Lockheed Martin Service Bulletin 093–57–207, Revision 3, dated November 22, 1991.
(1) The Manager, Atlanta 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 (n)(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 Carl Gray, Aerospace Engineer, Airframe Branch, ACE–117A, FAA, Atlanta Aircraft Certification Office (ACO), 1701 Columbia Avenue, College Park, GA 30337; phone: 404–474–5554; fax: 404–474–5605; email:
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (o)(3) and (o)(4) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) Lockheed Martin Service Bulletin 093–57–207, Revision 5, dated November 14, 2008.
(ii) Reserved.
(3) For Lockheed service information identified in this AD, contact Lockheed Martin Corporation/Lockheed Martin Aeronautics Company, L1011 Technical Support Center, Dept. 6A4M, Zone 0579, 86 South Cobb Drive, Marietta, GA 30063–0579; telephone 770–494–5444; fax 770–494–5445; email
(4) You may view this service information at FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, Washington. For information on the availability of this material at the FAA, call 425–227–1221.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule; technical amendment.
This action updates the name of the controlling agency for restricted areas R–2502N Fort Irwin, CA; R–2505 China Lake, CA; R–2506 China Lake South, CA; R–2508 Complex, CA; R–2515 Muroc Lake, CA and R–2524 Trona, CA to read “FAA, Joshua Control Facility, Edwards AFB, CA.” This is an administrative change only as there are no changes to the dimensions, time of designation or activities conducted within the affected restricted areas.
Effective date: 0901 UTC, January 8, 2015.
Jason Stahl, Airspace Policy and Regulations Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267–8783.
This action amends Title 14 Code of Federal Regulations (14 CFR) part 73 by amending the controlling agency name for the following Restricted Areas located in California: R–2502N Fort Irwin, CA, R–2505 China Lake, CA, R–2506 China Lake South, CA, R–2508 Complex, CA, R–2515 Muroc Lake, CA, and R–2524 Trona, CA. The controlling agency for these restricted areas is changed from “FAA, Hi-Desert TRACON, Edwards AFB, CA” to “FAA, Joshua Control Facility, Edwards AFB, CA.”
This is an administrative change to update the name of the controlling agency for the above listed restricted areas. It does not affect the boundaries, designated altitudes, or activities conducted within the restricted areas; therefore, notice and public procedure under 5 U.S.C. 553(b) are unnecessary.
The FAA has determined that this action 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 United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.
This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the 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 amends the descriptions of restricted areas to reflect current facility names.
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 311d. This airspace action is an administrative change to the descriptions of the affected restricted areas to update the controlling agency name. It does not alter the dimensions, altitudes, or times of designation of the airspace; therefore, it is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exists that warrant preparation of an environmental assessment.
Airspace, Prohibited areas, Restricted areas.
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 73, as follows:
49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–1963 Comp., p. 389.
By removing the current controlling agency and adding in its place:
“Controlling agency. FAA, Joshua Control Facility, Edwards AFB, CA.”
By removing the current controlling agency and adding in its place:
“Controlling agency. FAA, Joshua Control Facility, Edwards AFB, CA.”
By removing the current controlling agency and adding in its place:
“Controlling agency. FAA, Joshua Control Facility, Edwards AFB, CA.”
By removing the current controlling agency and adding in its place:
“Controlling agency. FAA, Joshua Control Facility, Edwards AFB, CA.”
By removing the current controlling agency and adding in its place:
“Controlling agency. FAA, Joshua Control Facility, Edwards AFB, CA.”
By removing the current controlling agency and adding in its place:
“Controlling agency. FAA, Joshua Control Facility, Edwards AFB, CA.”
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Announcement of commencement of compliance.
On September 16, 2014, HUD published an interim rule that revised the financial reporting deadlines for operators participating in FHA's program for insurance of health care facilities under section 232 of the National Housing Act (Section 232 program) to bring the operators in-line with the reporting periods prescribed in HUD's Uniform Financial Reporting Standards. In accordance with HUD's regulations implementing its Uniform Financial Reporting Standards, HUD is providing notice that it has issued guidance on the manner in which the reports by operators are to be submitted to HUD.
Vance T. Morris, Office of Residential Care Facilities, Office of Healthcare Programs, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Room 6264, Washington, DC 20410–8000; telephone number 202–708–0599 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 1–800–877–8339.
Through a final rule published on September 7, 2012, at 77 FR 5512, HUD revised and updated the regulations for FHA's Section 232 program, regulations that had not been revised since 1996. HUD revised the Section 232 program regulations to reflect current policy and practices, and improve accountability and strengthen risk management in the Section 232 program.
Included in the updates made by the 2012 rulemaking were revisions to 24 CFR 5.801 (Uniform Financial Reporting Standards) and 24 CFR 232.1009 (Financial Reports), both of which contained reporting requirements applicable to the Section 232 program. HUD revised these regulatory sections to include operators of projects insured or held by HUD as entities that must submit financial statements to HUD. Owners and borrowers have long been required to submit financial reports. Sections 5.801(c)(4) and 232.1009 provide that operators must submit financial statements to HUD quarterly within 30 calendar days of the date of the end of each fiscal quarter, and 60 calendar days from the end of the fiscal-year-end. The other entities in the Section 232 program required to submit reports were provided slightly longer periods to prepare and submit the reports than that provided to operators. Accordingly, the September 7, 2012, rule placed operators on a different submission deadline than that required of owners.
HUD's interim rule published on September 16, 2014, at 79 FR 55360, revised the financial reporting deadlines for operators to bring them in-line with the reporting periods prescribed in HUD's Uniform Financial Reporting Standards, to which owners and borrowers are subject. The interim rule increases the amount of time operators have to comply with the reporting requirements provided in §§ 5.801(c)(4) and 232.1009. The interim rule provides that operators will have an additional 30 calendar days to comply with the financial statement reporting requirements. Operators will now have 60 calendar days following the end of a fiscal quarter and 90 calendar days following the end of the fiscal-year-end quarter to comply with HUD's financial statement reporting requirements.
Section 5.801(d)(4) of HUD's Uniform Financial Reporting Standards regulations provides that operators of projects with Section 232 insured mortgages (the entities described in § 5.801(a)(6)) must comply with the requirements of § 5.801 with respect to fiscal years commencing on or after the date that is 60 calendar days after the date on which HUD announces, through
This document serves as the notice required by § 5.801(d)(4) that HUD has issued guidance on the manner in which the operator financial reports will be transmitted to HUD. That guidance can be found under the Guidance for Lenders' Operator Financial Statement section at
The information collection requirements contained in this rule were reviewed by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520), and assigned OMB Control Number 2502–0605. In accordance with the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a currently valid OMB control number.
Coast Guard, DHS.
Notice of enforcement of regulation.
The Coast Guard will enforce a safety zone for the Three Rivers Towing Association Head of the Ohio Regatta on the Allegheny River, from mile 0.0 to 3.3, extending the entire width of the river. This zone will be in effect on October 4, 2014 from 6:00 a.m. until 6:00 p.m. This zone is needed to protect vessels transiting the area and event spectators from the hazards associated with the Three Rivers Towing Association Head of the Ohio Regatta. During the enforcement period, entry into, transiting, or anchoring in the safety zone is prohibited to all vessels not registered with the sponsor as participants or official patrol vessels, unless specifically authorized by the Captain of the Port (COTP) Pittsburgh or a designated representative.
The regulations in 33 CFR 100.801 will be enforced with actual notice on October 4, 2014.
If you have questions on this notice of enforcement, call or email Ariana Mohnke, Marine Safety Unit Pittsburgh, U.S. Coast Guard, at telephone (412) 644–5808, email
The Coast Guard will enforce the Safety Zone for the annual Three Rivers Towing Association Head of the Ohio Regatta listed in 33 CFR 100.801 Table 1, Entry No. 31; Sector Ohio Valley.
Under the provisions of 33 CFR 100.801, entry into the safety zone listed in Table 1, Entry No. 31; Sector Ohio Valley is prohibited unless authorized by the COTP or a designated representative. Persons or vessels desiring to enter into or passage through the safety zone must request permission from the COTP Pittsburgh or a designated representative. If permission is granted, all persons and vessels shall comply with the instructions of the
This notice is issued under authority of 5 U.S.C. 552(a); 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Public Law 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1. In addition to this notice in the
If the COTP Pittsburgh or designated representative determines that the safety zone need not be enforced for the full duration stated in this notice of enforcement, he or she may use a Broadcast Notice to Mariners to grant general permission to enter the regulated area.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for all waters of the Tennessee River between mile 4.8 and 5.8. This safety zone is needed to protect persons, property, and infrastructure from potential damage and safety hazards associated with using explosives to demolish the section of the bridge that is over the navigation channel and the resulting recovery of the section from the waterway. Entry into the safety zone is prohibited unless specifically authorized by the Captain of the Port (COTP) Ohio Valley or a designated representative.
This rule is effective without actual notice from October 3, 2014 until October 31, 2014. For the purposes of enforcement, actual notice will be used from September 16, 2014, until October 3, 2014.
Documents mentioned in this preamble are part of docket [USCG–2014–0831]. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Chief Heather Norman, Marine Safety Unit Paducah Waterways Management Branch, U.S. Coast Guard; telephone 270–442–1621, email
The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule.
On September 16, 2014 demolition will begin on the George Rogers Clark Memorial Bridge at mile 5.3 Tennessee River, creating a hazardous condition. This situation requires immediate emergency safety measures to protect persons and property, and a safety zone is in effect to stop all vessel traffic from transiting from mile 4.8 to mile 5.8 Tennessee River. Deviation from this rule may be requested from the Captain of the Port and requests to deviate and transit through this area may be permitted on a case-by-case basis. Once demolition and recovery of bridge debris is completed, the safety zone will be canceled. Delaying this rulemaking to provide a comment period before implementing the necessary safety zone would be contrary to the public interest by delaying the immediate action needed to protect persons, property, and infrastructure from the potential damage and safety hazards associated with the demolition of this bridge.
For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this emergency rule effective less than 30 days after publication in the
The legal basis and authorities for this rule are found in 33 U.S.C. 1231, 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Public Law 107–295, 116 Stat. 2064; and Department of Homeland Security Delegation No. 0170.1, which collectively authorize the Coast Guard to establish and define safety zones.
The purpose of this safety zone is to protect persons and vessels from the bridge demolition operations, which pose a significant safety hazard at mile 5.3 Tennessee River. For this reason, the Coast Guard is prohibiting entry into this zone by all vessels during the enforcement period unless authorized by the COTP Ohio Valley or a designated representative.
The Coast Guard is establishing a temporary safety zone on the Tennessee River from mile 4.8 to 5.8, extending the entire width of the river. Entry into this zone is prohibited to all vessels and persons unless specifically authorized by the COTP Sector Ohio Valley or a designated representative.
This rule is effective and enforceable with actual notice on September 16, 2014 through October 31, 2014, or until all demolition debris has been removed from the waterway and deemed to no longer pose a threat to the public. At that time the safety zone will be canceled. Any exceptions to these operational restrictions must be
We developed this 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 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. This rule establishes a temporary safety zone for vessels on all waters of the Tennessee River, extending the entire width from mile 4.8 to 5.8. Notifications to the marine community will be made through Broadcast Notices to Mariners (BNM). The impacts on routine navigation are expected to be minimal as the restrictions will be enforced only as necessary while demolition and debris recovery operations of the George Rogers Clark Memorial Bridge, mile 5.3 Tennessee River, are conducted. After demolition and debris recovery operations are complete, the safety zone will be canceled. Additionally, deviation from the safety zone restriction may be requested from the COTP Ohio Valley or designated representative and will be considered on a case-by-case basis.
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 Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit the Tennessee River from mile 4.8 to 5.8 from September 16, 2014 through October 31, 2014. This safety zone will not have a significant economic impact on a substantial number of small entities. Traffic in this area is limited to almost entirely recreational vessels and commercial towing vessels, and the restrictions will be enforced only as necessary while the demolition and debris removal of the George Rogers Clark Memorial Bridge is being conducted. When this is completed, the safety zone will be canceled. Deviation from the safety zone restriction may be requested from the COTP Ohio Valley or designated representative and will be considered on a case-by-case basis.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this 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
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This 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 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 rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does 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 action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 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 concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule involves the creation of a safety zone in response to an emergency situation. The safety zone is implemented to protect persons and property due to a structurally deficient bridge at mile 5.3 Tennessee River. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2–1 of the Commandant Instruction. An environmental analysis checklist and a categorical exclusion determination will be made available as indicated under the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR Part 165 as follows:
33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1
(a)
(b)
(c)
(2) All persons and vessels shall comply with the instructions of the COTP and designated on-scene patrol personnel. On-scene patrol personnel include commissioned, warrant, and petty officers of the U.S. Coast Guard.
(3) Persons or vessels may request deviation from the safety zone restriction prescribed under paragraph (c)(1) of this section from the COTP Ohio Valley or a designated representative who may be a commissioned, warrant, or petty officer of the Coast Guard. The COTP Ohio Valley may be contacted by telephone at 1–800–253–7465 or on VHF–FM channel 16.
(d)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing three temporary safety zones on the waters of the Delaware Bay and North Atlantic Ocean adjacent to Cape May, New Jersey. The safety zones will restrict vessel traffic on a portion of the Delaware Bay and North Atlantic Ocean while a Navy exercise is taking place. These temporary safety zones are necessary to protect the surrounding public and vessels from the hazards associated the exercise.
This rule is effective October 3, 2014 through October 24, 2014 and will be enforced from October 16, 2014 to October 24, 2014 from 6:00 a.m. until 8:00 p.m. each day.
Documents mentioned in this preamble are part of docket [USCG–2014–0855]. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email If you have questions on this temporary rule, call or email Lieutenant Brennan Dougherty, U.S. Coast Guard, Sector Delaware Bay, Chief Waterways Management Division, Coast Guard; telephone (215) 271–4851, email
The Coast Guard is issuing this final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule as publishing an NPRM is impracticable given that the final details for this event were not received by the Coast Guard until September 8, 2014, and this exercise is scheduled to take place from October 16, 2014 to October 24, 2014. Further, allowing this event to go forward
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The legal basis for the rule is the Coast Guard's authority to establish regulated navigation areas and other limited access areas: 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Public Law 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
From October 16, 2014, until October 24, 2014, a Navy exercise will take place in a portion of the Delaware Bay and the North Atlantic Ocean near Cape May, New Jersey. This regulation is necessary because of the ongoing hazards associated with the exercise. Once operations are concluded, an informational broadcast will inform mariners that the saftey zone is no longer being enforced. The Captain of the Port is establishing this safety zone to ensure the safety of life and property of all mariners and vessels transiting the local area.
To mitigate the risks associated with the Navy exercise, the Captain of the Port, Sector Delaware Bay will enforce temporary safety zones in Delaware Bay and the North Atlantic Ocean near Cape May, New Jersey. The safety zones will encompass two areas within Delaware Bay and one area in the North Atlantic Ocean.
The first safety zone will encompass all waters of the Delaware Bay, bounded by a line connecting the following points; latitude 38°54′10″ N, longitude 075°03′12″ W thence north to latitude 39°02′24″ N, longitude 075°02′38″ W thence east to latitude 39°02′24″ N, longitude 075°01′42″ W thence southeast to latitude 38°54′22″ N, longitude 075°01′18″ W thence west to point of origin.
The second safety zone will encompass all waters of the Delaware Bay bounded by a line connecting the following points; latitude 38°54′17″ N, longitude 075°07′50″ W thence northwest to latitude 39°04′06″ N, longitude 075°13′54″ W thence northeast to latitude 39°04′39″ N, longitude 074°12′39″ W thence southeast to latitude 38°55′04″ N, longitude 075°06′38″ W thence southwest to point of origin.
The third safety zone will encompass a portion of the North Atlantic Ocean bounded by a line connecting the following points; latitude 38°49′57″ N, longitude 074°47′41″ W thence northeast to latitude 38°54′28″ N, longitude 074°43′15″ W thence southeast to latitude 38°54′11″ N, longitude 074°42′45″ W thence southwest to latitude 38°49′39″ N, longitude 074°47′10″ W thence northwest to point of origin, off the coast of Cape May, NJ.
All of the safety zones will be effective and enforced from October 16, 2014 to October 24, 2014 from 6:00 a.m. until 8:00 p.m. each day. Entry into, transiting, or anchoring within the safety zone is prohibited.
We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes or executive orders.
This 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. Although this regulation will restrict access to the regulated area, the effect of this rule will not be significant because: (i) the Coast Guard will make extensive notification of the Safety Zone to the maritime public via maritime advisories so mariners can alter their plans accordingly; (ii) this rule will be enforced until the area is deemed safe to transit.
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 rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to anchor or transit along a portion of Delaware Bay and North Atlantic Ocean adjacent to Cape May, New Jersey from October 16, 2014 to October 24, 2014 from 6:00 a.m. until 8:00 p.m. each day, unless cancelled earlier by the Captain of the Port once all operations are completed. Once operations are concluded, an informational broadcast will inform mariners that the safety zone is no longer being enforced.
This safety zone will not have a significant economic impact on a substantial number of small entities for the following reason: the zone is limited in size and duration. Sector Delaware Bay will issue maritime advisories widely available to users of the Delaware River.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this 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
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This 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 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 rule will not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does 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 action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 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 determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves implementation of regulations within 33 CFR Part 165, applicable to safety zones on the navigable waterways. The zones will temporarily restrict vessel traffic from transiting a portion of the Delaware Bay and North Atlantic Ocean in vicinity of Cape May, New Jersey, in order to protect the safety of life and property on the waters until the exercise is complete. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2–1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1
(a)
(2) All waters of the Delaware Bay bounded by a line connecting the following points; latitude 38°54′17″ N, longitude 075°07′50″ W thence northwest to latitude 39°04′06″ N, longitude 075°13′54″ W thence northeast to latitude 39°04′39″ N, longitude 074°12′39″ W thence southeast to latitude 38°55′04″ N, longitude 075°06′38″ W thence southwest to point of origin.
(3) All waters of the North Atlantic Ocean bounded by a line connecting the following points; latitude 38°49′57″ N, longitude 074°47′41″ W thence northeast to latitude 38°54′28″ N, longitude 074°43′15″ W thence southeast to latitude 38°54′11″ N, longitude 074°42′45″ W thence southwest to latitude 38°49′39 ″N, longitude 074°47′10″ W thence northwest to point of origin, off the coast of Cape May, NJ.
(c)
(1) This section applies to all vessels wishing to transit through the Safety
(i) Enforcing laws;
(ii) Servicing aids to navigation; and
(iii) Emergency response vessels.
(2) No person or vessel may enter or remain in a safety zone without the permission of the Captain of the Port;
(3) Each person and vessel in a safety zone shall obey any direction or order of the Captain of the Port;
(4) No person may board, or take or place any article or thing on board, any vessel in a safety zone without the permission of the Captain of the Port; and
(5) No person may take or place any article or thing upon any waterfront facility in a safety zone without the permission of the Captain of the Port.
(e)
Environmental Protection Agency.
Final rule.
The Environmental Protection Agency (EPA) is approving revisions to the Washington State Implementation Plan (SIP) submitted by the Department of Ecology (Ecology) on January 27, 2014. These revisions were submitted in accordance with the requirements of section 110 of the Clean Air Act, which requires states to develop a plan for the implementation, maintenance, and enforcement of the National Ambient Air Quality Standards (NAAQS). The revisions update the general air quality regulations that apply to sources within Ecology's jurisdiction, except for major source specific provisions which the EPA is addressing separately.
This final rule is effective on November 3, 2014.
The EPA has established a docket for this action under Docket ID No. EPA–R10–OAR–2014–0141. All documents in the docket are listed on the
For information on the New Source Review permitting program, please contact Donna Deneen at (206) 553–6706 or
For the purpose of this document, we are giving meaning to certain words or initials as follows:
(i) The words or initials “Act” or “CAA” mean or refer to the Clean Air Act, unless the context indicates otherwise.
(ii) The words “EPA”, “we”, “us” or “our” mean or refer to the United States Environmental Protection Agency.
(iii) The initials “SIP” mean or refer to State Implementation Plan.
(iv) The words “Washington” and “State” mean the State of Washington.
Title I of the CAA, as amended by Congress in 1990, specifies the general requirements for states to submit SIPs to attain or maintain the NAAQS and the EPA's actions regarding approval of those SIPs. On January 27, 2014, Ecology submitted updates to portions of Chapter 173–400 of the Washington Administrative Code (WAC) currently in the Federally-approved Washington SIP (40 CFR part 52, subpart WW). Ecology did not submit to the EPA those sections of Chapter 173–400 WAC that have not changed since the last SIP approval by the EPA. Ecology also did not submit certain provisions of Chapter 173–400 WAC because they are not related to the criteria pollutants regulated under title I of the CAA, not essential for meeting and maintaining the NAAQS, or not related to the requirements for SIPs under section 110 of the CAA. The SIP revisions covered by this action are explained in more detail in the proposed rulemaking, along with an evaluation of how these rules comply with the CAA requirements for SIPs (79 FR 39351, July 10, 2014). Also included in the proposed rulemaking is a discussion of how the EPA intends to act on the remainder of Ecology's submittal, covering the Prevention of Significant Deterioration (PSD), Nonattainment New Source Review (NNSR), and visibility permitting programs for major sources. See also the EPA's proposed rulemaking on the NNSR-specific provisions (79 FR 43345, July 25, 2014).
The EPA received one set of comments on its proposal.
The EPA is approving into the SIP at 40 CFR part 52, subpart WW, the Ecology regulations listed in Table 1. It is important to note that Ecology did not submit for approval into the SIP certain provisions of Chapter 173–400 WAC, generally because they are not related to the criteria pollutants regulated under title I of the CAA, are not essential for meeting and maintaining the NAAQS, or are not related to the requirements for SIPs under section 110 of the CAA. These exceptions are noted in the “Explanation” column of the table. The EPA's review and approval of the revised WAC 173–400–110 through –113, 173–400–036, 173–400–171, and 173–400–560 in this action is not a determination that these revised regulations meet requirements for major sources such as a SIP-approved PSD permitting program (40 CFR 51.166), a SIP-approved major NNSR permitting program (40 CFR 51.165), or a SIP-approved visibility program (40 CFR 51.307). These regulations are marked with asterisks in Table 1. The EPA will evaluate these regulations for consistency with the requirements for major NSR permitting programs and visibility in a separate action.
As discussed in the proposed rulemaking for this action, with respect to WAC 173–400–020,
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 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).
The SIP is not approved to apply on any Indian reservation land in Washington except as specifically noted below and is also not approved to apply in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law. Washington's SIP is approved to apply on non-trust land within the exterior boundaries of the Puyallup Indian Reservation, also known as the 1873 Survey Area. Under the
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 December 2, 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, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
For the reasons set forth in the preamble, 40 CFR part 52 is amended as follows:
42 U.S.C. 7401 et seq.
(c)
Environmental Protection Agency (EPA).
Correcting amendments.
The Environmental Protection Agency (EPA) published a final rule in the
This final rule is effective on October 3, 2014.
Christos Panos, Environmental Engineer, Attainment Planning and Maintenance Section, Air Programs Branch (AR–18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 353–8328,
EPA published a final rule document on June 2, 2014, (79 FR 31566) updating 40 CFR part 81, “Designation of Areas for Air Quality Planning Purposes” for the 1997 and 2006 PM
Environmental protection, Air pollution control, National parks, Wilderness areas.
40 CFR part 81 is corrected by making the following correcting amendments:
42 U.S.C. 7401
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule; correction.
This document corrects technical and typographical errors in the final rule that appeared in the August 22, 2014
Ing Jye Cheng, (410) 786–4487, Operating Prospective Payment, Capital Prospective Payment, and New Medical Service and Technology Add-On Payment Corrections.
Donald Thompson, (410) 786–6504, Operating Prospective Payment, Wage Index, and Capital Prospective Payment Corrections.
James Poyer, (410) 786–2261, PPS-Exempt Cancer Hospital Quality Reporting and Hospital Inpatient Quality Reporting Corrections.
Mary Pratt, (410) 786–2261, Long-term Care Hospital Quality Data Reporting Corrections.
Kellie Shannon, (410) 786–0416, Administrative Appeals by Providers and Judicial Review Corrections.
Thomas Hamilton, (410) 786–6763, Organ Transplant Center Corrections.
In FR Doc. 2014–18545 which appeared in the August 22, 2014
On page 49865, in our discussion of the summary of costs and benefits of the payment adjustment of the Hospital-Acquired Condition (HAC) Reduction Program for FY 2015, we made a technical error in the amount by which overall payments would decrease.
On page 49918, in our discussion of new technology add-on payments, we made an error in the amount of the maximum add-on payment for Voraxaze®.
On page 49940, we made an error in our discussion of the FY 2015 new technology add-on payment for the
On pages 50246 through 50249, in the table titled “Previously Adopted Hospital IQR Program Measures And Measures Newly Finalized in this Final Rule for the FY 2017 Payment Determination and Subsequent Years,” we inadvertently listed VTE–3 as a “voluntary electronic clinical quality measure” only and inadvertently omitted PN–6 from the table, which should have been listed as a voluntary electronic clinical quality measure.
On pages 50279 and 52084, in our discussion of the PPS-exempt Cancer Hospital Quality Reporting Program (PCHQR), we provided a Web site link that is not functional due to a typographical error, and made other typographical and technical errors.
On pages 50298, 50302, and 50306, we made typographical and technical errors in our discussion of the Long-Term Care Hospital Quality Reporting (LTCHQR) Program.
On page 50335, we made typographical and technical errors in our discussion of organ transplant centers.
On page 50350, in the regulations text at § 405.1811(c) and § 405.1835(c), we made technical errors in specifying the requirements regarding a provider's right to contractor or Board hearings resulting from untimely contractor determinations.
In calculating the final FY 2015 IPPS operating and capital rates and impacts, we made two technical errors.
First, there was a technical error in our determination of payments under the postacute care transfer policy for certain MS–DRGs within the ratesetting process. Specifically, we inadvertently did not treat those MS–DRGs that qualified for a special payment under the postacute care transfer policy (see § 412.4(f)(6)) in FY 2015 as MS–DRGs subject to the postacute care transfer policy. Consequently, the FY 2015 transfer-adjusted case-mix indexes and cases used to model IPPS payments in the ratesetting process were incorrect, and resulted in a miscalculation of the operating and capital IPPS budget neutrality factors, outlier threshold, operating standardized amounts, capital Federal rates, and impacts for the FY 2015 IPPS/LTCH PPS final rule. To conform with our established methodology, we are recalculating the FY 2015 transfer-adjusted case-mix indexes and cases used to model IPPS payments in the ratesetting process after properly treating those MS–DRGs that qualified for a special payment under the postacute care transfer policy in FY 2015 as MS–DRGs subject to the postacute care transfer policy. Therefore, we are recalculating the operating and capital IPPS budget neutrality factors, outlier threshold, operating standardized amounts, capital Federal rates, and impacts for FY 2015 using our established methodology.
The second error was the inadvertent error in identifying claims for indirect medical education (IME) payments for Medicare Advantage (MA) beneficiaries (MA IME claims) in the ratesetting process for the FY 2015 IPPS/LTCH PPS final rule. Per the methodology established in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50422 through 50433), in order to identify IME MA claims, we first search the MedPAR file for all claims with an IME payment greater than zero. Then, we filter these claims for a subset of claims with a group health organization (GHO) paid indicator with a value of “1” or with the IME payment field equal to the DRG payment field. For the reasons described later in this section, in applying this methodology for the FY 2015 IPPS/LTCH PPS final rule, we did not identify certain MA IME claims using the filter for claims where the IME payment field is equal to the DRG payment field.
The Budget Control Act of 2011 requires mandatory across-the-board reductions in Federal spending, also known as sequestration. The American Taxpayer Relief Act of 2012 postponed sequestration for 2 months. As required by law, President Obama issued a sequestration order on March 1, 2013.
For FY 2015, we used claims from the FY 2013 MedPAR in our ratesetting process to determine the operating and capital IPPS budget neutrality factors, outlier threshold, operating standardized amounts, capital Federal rates, and the IPPS impact analyses presented in the FY 2015 IPPS/LTCH PPS final rule. Claims for discharges occurring on or after April 1, 2013 had the 2-percent reduction for sequestration applied to the DRG payment field. As a result, in applying the methodology described previously for the FY 2015 IPPS/LTCH PPS final rule, we inadvertently did not properly identify certain claims for IME MA payments because the DRG payment field reflected the 2-percent reduction for sequestration (and therefore, the IME payment field did not equal the DRG payment field for those claims). As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50364 and 50365), under our established methodology, payments for MA IME claims are used in our operating IPPS budget neutrality calculations. Therefore, the inadvertent omission of these MA IME claims resulted in a miscalculation of the operating budget neutrality calculations. (We note this error did not affect the calculation of the outlier threshold or the MS–DRG relative weights because, under our established methodology for the respective calculations of these IPPS payment factors, we only include claims with a “Claim Type” of 60, and the claims that were not properly identified as MA IME claims did not have a “Claim Type” of 60.) We are recalculating the operating budget neutrality factors that are used to determine the standardized amounts for FY 2015 to conform with our established methodology as stated in the FY 2015 IPPS/LTCH PPS final rule. Specifically, for this correcting document, we are restoring the 2-percent reduction for sequestration to the DRG payment field in order to ensure that we properly identify all claims where the IME payment field is equal to the DRG payment field consistent with our established methodology.
As described previously, one or both of these two technical errors resulted in errors to our calculation of the operating and capital IPPS budget neutrality factors, outlier threshold, operating standardized amounts, capital Federal rates, and impacts. As a result of these technical errors we are correcting the following errors:
• In the operating and capital budget neutrality factors, outlier threshold, operating standardized amounts, capital Federal rates, and capital IPPS payment estimates that appear on the following pages of the Addendum of the FY 2015 IPPS/LTCH PPS final rule: 50367 through 50370, 50373 and 50374, 50380 through 50383, 50385 and 50386, 50388 through 50390, and 50404 (Tables 1A through 1D).
• In the data presented in the tables referred to in the FY 2015 IPPS/LTCH PPS final rule and available via the Internet on the CMS Web site (see section II.D. of this correcting document).
• In the operating and capital impacts that appear in the following pages of the Appendices of the FY 2015 IPPS/LTCH PPS final rule: 50405, 50407, 50409 through 50418, 50420 through 50429, 50435 and 50436, and 50446.
The errors described previously also affect the calculation of the Hospital Readmissions Reduction Program payment adjustment factors and the Hospital Value-Based Purchasing (VBP)
We use the same methodology described previously to identify only Medicare Part A claims in the MedPAR file and to remove IME MA claims when calculating the Hospital Readmissions Reduction Program and the Hospital VBP Program payment adjustment factors. In addition, we use the claims in the MedPAR file to determine the base operating DRG payment amounts used in the calculation of these payment adjustment factors. Consequently, in determining the base-operating DRG payment amounts used in our calculation of the proxy readmissions adjustment factors (Table 15A) and the updated proxy Hospital VBP payment adjustment factors (Table 16A) for the FY 2015 IPPS/LTCH PPS final rule, we inadvertently failed to properly exclude all of the IME MA claims, and also inadvertently included the 2-percent sequestration reduction for claims in the FY 2013 MedPAR with a discharge date after April 1, 2013. Therefore, to properly account for how sequestration is reflected in the FY 2013 MedPAR data in the calculation of these payment adjustment factors, we restored the 2-percent sequestration reduction to the DRG payment field on the MedPAR claim (as described previously). This correction ensures that we identify and remove all IME MA claims when the IME payment field is equal to the DRG payment field and correctly determine the base-operating DRG payment amount used in the calculation of the readmission and Hospital VBP payment adjustment factors for FY 2015.
At the time of the issuance of the FY 2015 IPPS/LTCH PPS final rule, under the Hospital Readmissions Reduction Program, applicable hospitals had not yet had the opportunity to review and correct data from the FY 2015 applicable period before they were made public under our policy regarding the reporting of hospital-specific information. Therefore, in Table 15A listed in the Addendum of the FY 2015 IPPS/LTCH PPS final rule, we provided proxy FY 2015 readmission payment adjustment factors, and stated that we expected to publish the final FY 2015 readmissions payment adjustment factors in Table 15B on the CMS IPPS Web site by October 2014, and would use those final factors for determining payments for discharges occurring on or after October 1, 2014 (79 FR 50048). Similarly, in the final rule, we provided updated proxy value-based incentive payment adjustment factors for FY 2015 in Table 16A listed in the Addendum of that final rule to reflect changes based on the March 2014 update to the FY 2013 MedPAR file. These updated proxy value-based incentive payment adjustment factors for FY 2015 were based on historic FY 2014 Program TPSs because hospitals had not been given the opportunity to review and correct their actual TPSs for the FY 2015 Hospital VBP Program at the time we issued that final rule. We stated that after hospitals had been given an opportunity to review and correct their actual TPSs for FY 2015, we would publish Table 16B to display the actual value-based incentive payment adjustment factors, and that we expected Table 16B to be posted on the CMS Web site in October 2014 (79 FR 50049).
The review and corrections period for the data from the FY 2015 applicable period under the Hospital Readmissions Reduction Program resulted in no changes to the proxy adjustment factors shown in Table 15A. However, the calculation of the FY 2015 readmissions payment adjustment factors was affected by the inadvertent errors resulting from our use of claims in the FY 2013 MedPAR with a discharge date after April 1, 2013 without properly accounting for how sequestration was reflected in those data. Because we use claims data from July 1, 2010 to June 30, 2013 to calculate the FY 2015 readmissions payment adjustment factors, only a portion of that data (that is, the claims between April 1, 2013 and June 30, 2013) was impacted by the errors described previously. As a result of the correction of those errors, the FY 2015 readmissions payment adjustment factors have changed for 60 hospitals. The final FY 2015 readmissions payment adjustment factors, which were calculated after correcting the errors discussed previously, are posted in Table 15B on the CMS Web site at:
We note that we are not correcting the proxy FY 2015 readmissions payment adjustment factors for FY 2015 shown in Table 15A or the updated proxy value-based incentive payment adjustment factors for FY 2015 shown in Table 16A. However, consistent with the methodology for calculating the operating budget neutrality factors for the FY 2015 IPPS/LTCH PPS final rule (79 FR 50366), we used corrected proxy payment adjustment factors in the recalculation of the IPPS rates for this correcting document. These factors can be found in the IPPS Impact File that
On page 50366, we made an error in the description of our budget neutrality methodology with respect to the readmissions payment adjustment factors that we used for the purpose of modeling aggregate payments when determining all budget neutrality factors. As we discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50048), for that final rule we determined proxy FY 2015 readmission payment adjustment factors (shown in Table 15A), which were calculated based on data from the FY 2015 applicable period of July 1, 2010 to June 30, 2013.
In addition, we made a typographical error in the March 2013 and 2014 operating national average case weighted cost-to charge ratios (CCRs) set forth in the FY 2015 IPPS/LTCH PPS final rule. Also, we made a technical error in the calculation of the capital CCR adjustment factor that is applied to determine the capital CCRs used in our ratesetting process. This inadvertent technical error caused a miscalculation of the capital CCRs used in the determination of the operating and capital budget neutrality factors and the calculation of the outlier threshold for the FY 2015 IPPS/LTCH PPS final rule. Therefore, we are correcting the capital CCR adjustment factor and the capital CCRs used in our determination of the operating and capital budget neutrality factors as well as our calculation of the outlier threshold.
Lastly, we made technical and typographical errors in the table heading for Table 2–2 which is listed in the Addendum of the FY 2015 IPPS/LTCH PPS final rule as one of the tables that are only available through the Internet on the CMS Web site (page 50403).
The following corrections are being made to the tables listed on pages 50402 and 50403 of the FY 2015 IPPS/LTCH PPS final rule that are only available through the Internet on the CMS Web site at
In Table 2–2.—Acute Care Hospitals Case-Mix Indexes for Discharges Occurring in Federal Fiscal Year 2012; Hospital Wage Indexes for Federal Fiscal Year 2015; Hospital Average Hourly Wages for Federal Fiscal Years 2013 (2009 Wage Data), 2014 (2010 Wage Data), and 2015 (2011 Wage Data; Based on FY 2015 CBSA Delineations); and 3-Year Average of Hospital Average Hourly Wages, we are correcting the table heading as noted in section II.C. of this correcting document. We are also correcting the entries in column “FY 2015 Wage Index” as a result of the technical errors discussed in section II.C. of this correcting document.
We are correcting the following tables in the entirety as a result of the technical errors discussed in section II.C. of this correcting document:
• Table 4A–1.—Wage Index and Capital Geographic Adjustment Factor (GAF) for Acute Care Hospitals in Urban Areas by CBSA and by State—FY 2015; Based on CBSA Delineations Used in FY 2014.
• Table 4A–2.—Wage Index and Capital Geographic Adjustment Factor (GAF) for Acute Care Hospitals in Urban Areas by CBSA and by State—FY 2015; Based on CBSA Delineations Used in FY 2015.
• Table 4B–1.—Wage Index and Capital Geographic Adjustment Factor (GAF) for Acute Care Hospitals in Rural Areas by CBSA and by State—FY 2015; Based on CBSA Delineations Used in FY 2014.
• Table 4B–2.—Wage Index and Capital Geographic Adjustment Factor (GAF) for Acute Care Hospitals in Rural Areas by CBSA and by State—FY 2015; Based on FY 2015 CBSA Delineations.
• Table 4C–1.—Wage Index and Capital Geographic Adjustment Factor (GAF) for Acute Care Hospitals That Are Reclassified by CBSA and by State—FY 2015; Based on CBSA Delineations Used in FY 2014.
• Table 4C–2.—Wage Index and Capital Geographic Adjustment Factor (GAF) for Acute Care Hospitals That Are Reclassified by CBSA and by State—FY 2015; Based on CBSA Delineations Used in FY 2015.
• Table 4D–1.—States Designated as Frontier, with Acute Care Hospitals Receiving at a Minimum the Frontier State Floor Wage Index; Urban Areas with Acute Care Hospitals Receiving the Statewide Rural Floor or Imputed Floor Wage Index—FY 2015; Based on CBSA Delineations Used in FY 2014.
• Table 4D–2.—States Designated as Frontier, with Acute Care Hospitals Receiving at a Minimum the Frontier State Floor Wage Index; Urban Areas with Acute Care Hospitals Receiving the Statewide Rural Floor or Imputed Floor Wage Index—FY 2015; Based on CBSA Delineations Used in FY 2015.
• Table 4J.—Out-Migration Adjustment for Acute Care Hospitals—FY 2015
• Table 10.—New Technology Add-On Payment Thresholds
Table 5.—List of Medicare Severity Diagnosis-Related Groups (MS–DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay—FY 2015. We are correcting this table by correcting typographical and technical errors in the columns titled “Geometric Mean LOS” and “Arithmetic Mean LOS”.
Table 8B.—FY 2015 Statewide Average Capital Cost-to-Charge Ratios (CCRs) for Acute Care Hospitals. We are correcting typographical and technical errors in this table.
Table 18.—FY 2015 Medicare DSH Uncompensated Care Payment Factor 3 and Supplemental Medicare DSH File—FY 2015 Uncompensated Care Payment Factors. For the FY 2015 IPPS/LTCH PPS final rule, we published a list of hospitals that we identified to be subsection (d) hospitals and subsection (d) Puerto Rico hospitals eligible to receive empirically justified Medicare DSH payment adjustments and uncompensated care payments for FY 2015. As stated in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50022), we allowed the public an additional period after the issuance of the final rule to review and submit comments on the accuracy of the list of mergers that we identified in the final rule. Based on the comments received during this additional period, we are updating Table 18 and the Supplemental Medicare DSH File to reflect the merger information received in response to the final rule and are also making one other correction to Table 18 and the Supplemental Medicare DSH File. We have discovered that in calculating Factor 3 of the uncompensated care payment methodology, we inadvertently
On page 50428, in our discussion of the effects of the new technology add-on payment policy, we made an error in the costs of the add-on payments for Voraxaze® for FY 2015.
On pages 50405, 50407, and 50409 through 50429; we made errors in the operating impacts as described in section II.C. of this correcting document.
On pages 50435 through 50437, we made errors in the capital impacts as described in section II.C. of this correcting document.
On page 50446, we made an error in the estimated expenditures under the IPPS as a result of the errors described in section II.C. of this correcting document.
We ordinarily publish a notice of proposed rulemaking in the
Section 553(d) of the APA ordinarily requires a 30-day delay in effective date of final rules after the date of their publication in the
In our view, this correcting document does not constitute a rule that would be subject to the APA notice and comment or delayed effective date requirements. This correcting document corrects technical and typographic errors in the preamble, regulation text, addendum, payment rates, tables, and appendices included or referenced in the FY 2015 IPPS/LTCH PPS final rule but does not make substantive changes to the policies or payment methodologies that were adopted in the final rule. As a result, this correcting document is intended to ensure that the information in the FY 2015 IPPS/LTCH PPS final rule accurately reflects the policies adopted in that final rule.
In addition, even if this were a rule to which the notice and comment procedures and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this document into the final rule or delaying the effective date would be contrary to the public interest because it is in the public's interest for providers to receive appropriate payments in as timely a manner as possible, and to ensure that the FY 2015 IPPS/LTCH PPS final rule accurately reflects our policies. Furthermore, such procedures would be unnecessary, as we are not altering our payment methodologies or policies, but rather, we are simply implementing correctly the policies that we previously proposed, received comment on, and subsequently finalized. This correcting document is intended solely to ensure that the FY 2015 IPPS/LTCH PPS final rule accurately reflects these payment methodologies and policies. Therefore, we believe we have good cause to waive the notice and comment and effective date requirements.
In FR Doc. 2014–18545 of August 22, 2014 (79 FR 49853), make the following corrections:
1. On page 49865, third column, third bulleted paragraph, line 12, the figure “$369” is corrected to read “$373”.
2. On page 49918, second column, first partial paragraph:
a. Lines 7 through 12, the sentences “The cost of Voraxaze® is $22,500 per vial. The applicant stated that an average of four vials is used per Medicare beneficiary. Therefore, the average cost per case for Voraxaze® is $90,000 ($22,500 × 4).” are corrected to read “Based on the latest data from the manufacturer, the cost of Voraxaze® is $23,625 per vial. The applicant stated that an average of four vials is used per Medicare beneficiary. Therefore, the average cost per case for Voraxaze® is $94,500 ($23,625 × 4).”
b. Lines 18 through 20, the sentence “As a result, the maximum new technology add-on payment for Voraxaze® is $45,000 per case.” is corrected to read “As a result, based on the latest data from the manufacturer, the maximum new technology add-on payment for Voraxaze® for FY 2015 is $47,250 per case.”
3. On page 49940, third column, last paragraph, fourth line from the bottom, the phrase “the maximum payment” is corrected to read “the maximum add-on payment”.
4. On pages 50246 through 50249, the table titled “Previously Adopted Hospital IQR Program Measures and Measures Newly Finalized in this Final Rule for the FY 2017 Payment Determination and Subsequent Years” is corrected as follows:
a. Adding the following entry (short name VTE–3) immediately preceding the entry VTE–5:
b. Removing the entry for VTE–3 that follows the entry for Stroke-10.
c. Adding the following entry for PN–6 immediately preceding the entry for VTE–4:
5. On 50279, second column, second full paragraph, lines 10 through 13, the hyperlink, “
6. On page 50284:
a. Second column, first partial paragraph:
(1) Line 7, the phrase “However the six” is corrected to read “However for the six”.
(2) Line 12, the phrase “four quarters data” is corrected to read “four quarters of data”.
b. Third column, third full paragraph, lines 14 and 15, the parenthetical phase “(and not limited to orthopedic surgeries)” is corrected to read “(and are not limited to orthopedic surgeries)”.
7. On page 50298, second column, first partial paragraph, line 6, the phrase “the CAM® Instrument” is corrected to read “the short CAM® instrument”.
8. On page 50302, third column, second full paragraph, lines 3 and 4, the phrase “of long-term mechanical ventilation” is corrected to read “with patients on prolonged mechanical ventilation”.
9. On page 50306, lower two-thirds of the page, third column, partial paragraph, lines 18 and 19, the phrase “tobacco performance measure set” is corrected to read “tobacco treatment performance measure set”.
10. On page 50335, first column, first full paragraph:
a. Line 34, the phrase “that because available” is corrected to read “that became available”.
b. Lines 38 and 39, the phrase “not enter into an SIA” is corrected to read “not entered into an SIA”.
1. On page 50350, in the first column, in § 405.1811(c) introductory text, lines 7 and 8, the phrase “for a cost reporting period if—” is corrected to read “for specific items for a cost reporting period if—”.
2. On page 50350, in the third column, in § 405.1835(c), in lines 7 through 9, the phrase “for specific items claimed for a cost reporting period if—” is corrected to read “for specific items for a cost reporting period if—”.
1. On page 50366, first column, first full paragraph the paragraph beginning with the phrase “For the purpose of calculating the FY” and ending with the phrase “to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53399 through 53400).)” is corrected to read as follows:
“For the purpose of calculating the proposed FY 2015 readmissions payment adjustment factors in the proposed rule, we used excess readmission ratios and aggregate payments for excess readmissions based on admissions from the prior fiscal year's applicable period because hospitals have had the opportunity to review and correct these data before the data were made public under the policy we adopted regarding the reporting of hospital-specific readmission rates, consistent with section 1886(q)(6) of the Act. As discussed in section IV.H.11. of this preamble, because the review and corrections period will still be ongoing through August 19, 2014, which extends beyond the issuance of this FY 2015 IPPS/LTCH PPS final rule, we are calculating proxy FY 2015 readmissions payment adjustment factors using excess readmission ratios and aggregate payments for excess readmissions based on admissions from the finalized applicable period for FY 2015. We will determine the final readmissions payment adjustment factors that will be used for payments in FY 2015 after the completion of the review and correct process. (For additional information on our general policy for the reporting of hospital-specific readmission rates, consistent with section 1886(q)(6) of the Act, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53399 through 53400).)”
2. On page 50367, third column, first full paragraph:
a. Line 3, the figure “0.997543” is corrected to read “0.998761”.
b. Line 8, the figure “0.997543” is corrected to read “0.998761”.
3. On page 50368:
a. First column, first partial paragraph, line 19, the figure “0.997543” is corrected to read “0.998761”.
b. Third column:
(1) First partial paragraph, line 11, the figure “0.997543” is corrected to read “0.998761”.
(2) Last paragraph:
(a) Line 9, the figure “1.001443” is corrected to read “1.001421”.
(b) Line 13, the figure “0.997543” is corrected to read “0.998761”.
(c) Line 15, the figure “1.001443” is corrected to read “1.001421”.
(d) Line 21, the figure “0.998982” is corrected to read “1.000180”.
4. On page 50369, first column, last partial paragraph, line 13, the figure “0.990406” is corrected to read “0.990429”.
5. On page 50370, first column, second full paragraph:
a. Line 3, the figure “0.989507” is corrected to read “0.989525”.
b. Line 5, the figure “0.991291” is corrected to read “0.991293”.
6. On page 50373:
a. First column, last paragraph, line 3, the figure “0.998859” is corrected to read “0.998854”.
b. Second column, first partial paragraph, line 1, the figure “0.998859” is corrected to read “0.998854”.
7. On page 50374, second column, second full paragraph, line 5, the figure “0.99931” is corrected to read “0.999313”.
8. On page 50380:
a. First column:
(1) First paragraph:
(a) Line 4, the figure “0.292377” is corrected to read “0.292376”.
(b) Line 6, the figure “0.28714” is corrected to read “0.287139”.
(2) Second paragraph:
(a) Line 7, the figure “0.024849” is corrected to read “0.024649”.
(b) Line 18, the figure “0.988307” is corrected to read “0.980352”.
c. Third column, second full paragraph, line 9, the figure “$24,758” is corrected to read “$24,626”.
9. On page 50381:
a. First column:
(1) First full paragraph, line 15, the figure “6.27” is corrected to read “6.18”.
(2) Third full paragraph, the table is corrected to read as follows:
b. Third column, third full paragraph:
(1) Line 4, the figure “5.71” is corrected to read “5.68”.
(2) Line 6, the figure “0.61” is corrected to read “0.58”.
(3) Line 10, the figure “5.71” is corrected to read “5.68”.
10. On pages 50382 and 50383, the table titled, “Comparison of FY 2014 Standardized Amounts to the FY 2015 Standardized Amounts” is corrected to read as follows:
11. On page 50383, the table titled, “Comparison of FY 2014 Puerto Rico-Specific Payment Rate to the FY 2015 Puerto Rico-Specific Payment Rate” is corrected to read as follows:
12. On page 50385, lower half of the page, first column, second paragraph, line 15, the figure “0.997543” is corrected to read “0.998761”.
13. On page 50386, second column, last partial paragraph, line 6, the figure “1.2” is corrected to read “1.3”.
14. On page 50388:
a. First column:
(1) Second full paragraph:
(a) Line 9, the figure “6.27” is corrected to read “6.18”.
(b) Line 13, the figure “0.9373” is corrected to read “0.9382”
(2) Third full paragraph:
(a) Line 6, the phrase “0.9373 is a −0.21 percent” is corrected to read “0.9382 is a −0.12 percent”.
(b) Line 11, the mathematical expression “0.9979 (0.9373/0.9393)” is corrected to read “0.9988 (0.9382/0.9393)”.
(c) Line 13, the figure “0.21 percent” is corrected to read “0.12 percent”
b. Second column, second full paragraph:
(1) Line 12, the figure “0.9987” is corrected to read”0.9994”.
(2) Line 17, the figure “0.9877” is corrected to read “0.9884”.
(3) Line 18, the figure “1.0075” is corrected to read “1.0082”.
c. Third column:
(1) Third full paragraph, line 9, the figure “$434.26” is corrected to read “$434.97”.
(2) Fifth full paragraph (second bulleted paragraph), last line, the figure “0.9986” is corrected to read “0.9993”.
(3) Sixth full paragraph (third bulleted paragraph), last line, the figure “0.9373” is corrected to read “0.9382”.
15. On page 50389:
a. Top of page, third column, partial paragraph:
(1) Line 1, the figure “0.14” is corrected to read “0.07”.
(2) Line 4, the figure “0.21”is corrected to read “0.11”.
(3) Line 7, the figure “1.15” is corrected to read “1.32”.
b. Top half of the page, first table titled, “Comparison of Factors and Adjustments: FY 2014 Capital Federal Rate and FY 2015 Capital Federal Rate” the table and table footnotes are corrected to read as follows:
c. Middle of the page, second table titled, “Comparison of Factors and Adjustments: Proposed FY 2015 Capital Federal Rate and Final FY 2015 Capital Federal Rate” is corrected to read as follows:
d. Bottom half of the page, third column, second full paragraph, last line, the figure “$209.10.” is corrected to read “$209.45.”
16. On page 50390, second column, first partial paragraph, last line, the figure “$24,758” is corrected to read “$24,626”.
17. On page 50403, first column, first paragraph (table heading for Table 2–2), the heading, “Table 2–2.—Acute Care Hospitals Case-Mix Indexes for Discharges Occurring in Federal Fiscal Year 2012; Hospital Wage Indexes for Federal Fiscal Year 2015; Hospital Average Hourly Wages for Federal Fiscal Years 2013 (2009 Wage Data), 2014 (2010 Wage Data), and 2015 (2011 Wage Data; Based on FY 2015 CBSA Delineations); and 3-Year Average of Hospital Average Hourly Wages” is corrected to read “Table 2–2.—Acute Care Hospitals Case-Mix Indexes for Discharges Occurring in Federal Fiscal Year 2013; Hospital Wage Indexes for Federal Fiscal Year 2015; Hospital Average Hourly Wages for Federal Fiscal Years 2013 (2009 Wage Data; Based on FY 2014 CBSA Delineations), 2014 (2010 Wage Data; Based on FY 2014 CBSA Delineations), and 2015 (2011 Wage Data; Based on FY 2015 CBSA Delineations); and 3-Year Average of Hospital Average Hourly Wages (Based on FY 2014 and FY 2015 CBSA Delineations)”.
18. On page 50404:
a. Top one-sixth of the page, the first table titled “Table 1A.—National Adjusted Operating Standardized Amounts, Labor/Nonlabor (69.6 Percent Labor Share/30.4 Percent Nonlabor Share If Wage Index Is Greater Than 1)—FY 2015” is corrected to read as follows:
b. Top third of the page, the second table titled “Table 1B.—National Adjusted Operating Standardized Amounts, Labor/Nonlabor (62 Percent Labor Share/38 Percent Nonlabor Share If Wage Index Is Less Than Or Equal To 1)—FY 2015” is corrected to read as follows:
c. Middle of the page, the third table titled “Table 1C.—Adjusted Operating Standardized Amounts For Puerto Rico, Labor/Nonlabor (National: 62 Percent Labor Share/38 Percent Nonlabor Share Because Wage Index Is Less Than Or Equal To 1; Puerto Rico: 63.2 Percent Labor Share/36.8 Percent Nonlabor Share If Wage Index Is Greater Than 1 Or 62 Percent Labor Share/38 Percent Nonlabor Share If Wage Index Is Less Than Or Equal To 1—FY 2015” is corrected to read as follows:
d. Lower third of the page, the fourth table titled “Table 1D.—Capital Standard Federal Payment Rate—FY 2015” is corrected to read as follows:
1. On page 50405, first column, first paragraph:
a. Line 10, the figure “$654” is corrected to read “$623”.
b. Line 12, the figure “$132” is corrected to read “$128”.
c. Line 14, the figure “1.6” is corrected to read “1.5”.
2. On page 50407, second column, last partial paragraph, line 3, the figure “5.71” is corrected to read “5.68”.
3. On pages 50409 through 50419, table titled “Table I.—Impact Analysis of Changes to the IPPS For Operating Costs for FY 2015” the table and table footnotes are corrected as follows:
4. On page 50420:
a. First column, last partial paragraph, last line, the figure “0.997543” is corrected to read “0.998761”.
b. Second column, first partial paragraph, line 6, the figure “0.3” is corrected to read “0.2”.
c. Third column:
(1) First full paragraph, line 26, the figure “1.001443” is corrected to read “1.001421”.
(2) Last partial paragraph, line 6, the phrase “2 urban hospital” is corrected to read “2 urban hospitals”.
5. On page 50421, bottom half of the page:
a. First column, first full paragraph:
(1) Line 9, the figure “1.001443” is corrected to read “1.001421”.
(2) Line 11, the figure “0.997543” is corrected to read “0.998761”.
(3) Line 18, the figures “0.998982” and “0.10” are corrected to read “1.000180” and “0.018”, respectively.
b. Second column, second full paragraph:
(1) Line 6, the figure “0.990406” is corrected to read “0.990429”.
(2) Line 13, the figure “1.5” is corrected to read “1.6”.
c. Third column, first full paragraph, line 8, the figure “0.989507” is corrected to read “0.989525”.
6. On page 50422:
a. First column, second partial paragraph:
(1) Line 1, the figure “422” is corrected to read “423”.
(2) Line 3, the figure “2,974” is corrected to read “2,973”.
(3) Line 6, the figure “0.989507” is corrected to read “0.989525”.
b. Second column:
(1) First paragraph, line 23, the phrase, “this final rule for a complere” is corrected to read “this final rule for a complete”.
(2) Second paragraph, line 8, the figure “0.991291” is corrected to read “0.991293”.
(3) Last paragraph, line 7, the figure “1.121” is corrected to read “1.1093”.
(4) Last paragraph, last line, the figure “$1.9” is corrected to read “$1.8”.
7. On page 50423, the table titled “FY 2015 IPPS Estimated Payments Due to Rural Floor and Imputed Floor with National Budget Neutrality” is corrected to read as follows:
8. On page 50424:
a. Second column, first partial paragraph, line 9, the figure “0.998859” is corrected to read “0.998854”.
b. Third column, first full paragraph, line 18, the figure “273” is corrected to read “279”.
9. On page 50425:
a. First column, first partial paragraph, last line, the figure “$424” is corrected to read “$428”.
b. Second column, first full paragraph, line 1, the phrase “Rural West South” is corrected to read “Rural West North”.
c. Third column:
(1) First partial paragraph, line 6, the figure “5.71” is corrected to read “5.68”.
(2) First full paragraph, line 14, the figure “0.7” is corrected to read “0.6”.
10. On pages 50426 and 50427, the table titled “Table II.—Impact Analysis of Changes for FY 2015 Acute Care Hospital Operating Prospective Payment System (Payments Per Discharge)” is corrected to read as follows:
11. On page 50428, first column, first paragraph, lines 31 through 35, the sentence “Based on the applicant's estimate from FY 2013, we currently estimate that new technology add-on payments for Voraxaze® will increase overall FY 2015 payments by $6,300,000.” is corrected to read “Based on the latest data from the
12. On page 50429:
a. First column, second paragraph, line 6, the figure “$5.3” is corrected to read “$8.8”.
b. First column, third paragraph, line 16, the figure “166” is corrected to read “116”.
c. Second column, first partial paragraph, line 4, the figure “$70.7” is corrected to read “$71”.
13. On page 50435, upper three-fourths of the page:
a. First column, fourth bulleted paragraph:
(1) Line 4, the figure “0.9986” is corrected to read “0.9993”.
(2) Line 5, the figure “0.9373” is corrected to read “0.9382”.
b. Second column, first partial paragraph, line 2, the figure”1.2” is corrected to read “1.3”.
c. Third column:
(1) Second full paragraph, second sentence, is corrected to read, “The increase in capital payments for voluntary and proprietary hospitals is estimated at 1.5 percent, and for government hospitals the increase is estimated to be 1.3 percent.”
(2) Third full paragraph:
(a) Line 20, the figure “0.7” is corrected to read “0.8”.
(b) Line 24, the figure “(2.2 percent)” is corrected to read “(2.3 percent)”.
14. On pages 50435 through 50437, the table titled, “Table III. Comparison of Total Payments Per Case” is corrected to read as follows:
a. Upper three-fourths of the page:
(1) Second column, first paragraph:
(a) Line 2, the figure “$654” is corrected to read “$623”.
(b) Line 14, the figure “$457” is corrected to read “$428”.
(c) Line 22, the figure “$369” is corrected to read “$373”.
(d) Line 44, the figure “$457” is corrected to read “$428”.
(e) Line 45, the figure “$888” is corrected to read “$862”.
(f) Line 51, the figure “$132” is corrected to read “$128”.
(g) Line 55, the figure “$756” is corrected to read “$734”.
(2) Third column, last paragraph, last line, the figure “$756” is corrected to read “$734”.
b. Lower quarter of the page, the table titled “Table V.—Accounting Statement: Classification of Estimated Expenditures under the IPPS from FY 2014 to FY 2015” is corrected to read as follows:
Nuclear Regulatory Commission.
Proposed rule.
The U.S. Nuclear Regulatory Commission (NRC) is proposing to amend its spent fuel storage regulations by revising the Holtec International HI-STORM FLOOD/WIND (FW) System listing within the “List of approved spent fuel storage casks” to include Amendment No. 1 to Certificate of Compliance (CoC) No. 1032. Amendment No. 1 adds a new heat load pattern for the multipurpose canister (MPC)–37, broadens the back pressure range for MPC–37 and MPC–89, and updates certain definitions related to fuel classification. Also, the amendment makes a correction to the expiration date of CoC No. 1032.
Submit comments by November 3, 2014. Comments received after this date will be considered if it is practical to do so, but the NRC staff is able to ensure consideration only for comments received on or before this date.
You may submit comments by any one of the following methods (unless this document describes a different method for submitting comments on a specific subject):
•
•
•
•
•
For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Naiem S. Tanious, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–415–6103, email:
Please refer to Docket IDNRC–2014–0102 when contacting the NRC about the availability of information for this proposed rule. You may obtain publicly-available information related to this proposed rule by any of the following methods:
• Federal Rulemaking Web site: Go to
• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly-available documents online in the ADAMS Public Documents collection 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.
Please include Docket ID NRC–2014–0102 in the subject line of your comment submission, in order to ensure that the NRC is able to make your comment submission available to the public in this docket.
The NRC cautions you not to include identifying or contact information in comment submissions that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
This proposed rule is limited to the changes contained in Amendment No. 1 to CoC No. 1032 and does not include other aspects of the Holtec International HI-STORM FW System design. Because the NRC considers this action noncontroversial and routine, the NRC is publishing this proposed rule concurrently with a direct final rule in the Rules and Regulations section of this issue of the
A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:
(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:
(a) The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;
(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or
(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.
(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.
(3) The comment causes the NRC staff to make a change (other than editorial) to the rule, CoC, or Technical Specifications.
For additional procedural information, the regulatory analysis, and the environmental assessment and finding of no significant impact, see the direct final rule published in the Rules and Regulations section of this issue of the
Section 218(a) of the Nuclear Waste Policy Act (NWPA) of 1982, as amended, requires that “the Secretary [of the Department of Energy] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more technologies that the [Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.” Section 133 of the NWPA states, in part, that “[the Commission] shall, by rule, establish procedures for the licensing of any technology approved by the Commission under Section 219(a) [sic: 218(a)] for use at the site of any civilian nuclear power reactor.”
To implement this mandate, the Commission approved dry storage of spent nuclear fuel in NRC-approved casks under a general license by publishing a final rule which added a new subpart K in part 72 of Title 10 of the
The Plain Writing Act of 2010 (Pub. L. 111–274) requires Federal agencies to write documents in a clear, concise, well-organized manner that also follows other best practices appropriate to the subject or field and the intended audience. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883). The NRC requests comment on the proposed rule with respect to clarity and effectiveness of the language used.
The documents identified in the following table are available to interested persons through one or more of the following methods, as indicated.
The NRC may post materials related to this document, including public comments, on the Federal rulemaking Web site at
Administrative practice and procedure, Criminal penalties, Manpower training programs, Nuclear materials, Occupational safety and health, Penalties, Radiation protection, Reporting and recordkeeping requirements, Security measures, Spent fuel, Whistleblowing.
For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; the Nuclear Waste Policy Act of 1982, as amended; and 5 U.S.C. 552 and 553; the NRC is proposing to adopt the following amendments to 10 CFR part 72.
Atomic Energy Act secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183, 184, 186, 187, 189, 223, 234, 274 (42 U.S.C. 2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2232, 2233, 2234, 2236, 2237, 2273, 2282, 2021); Energy Reorganization Act secs. 201, 202, 206, 211 (42 U.S.C. 5841, 5842, 5846, 5851); National Environmental Policy Act sec. 102 (42 U.S.C. 4332); Nuclear Waste Policy Act secs. 131, 132, 133, 135, 137, 141, 148 (42 U.S.C. 10151, 10152, 10153, 10155, 10157, 10161, 10168); sec. 1704 112 Stat. 2750 (44 U.S.C. 3504 note); Energy Policy Act of 2005, Pub. L. 109–58, 119 Stat. 549 (2005).
Section 72.44(g) also issued under Nuclear Waste Policy Act secs. 142(b) and 148(c), (d) (42 U.S.C. 10162(b), 10168(c), (d)).
Section 72.46 also issued under Atomic Energy Act sec. 189 (42 U.S.C. 2239); Nuclear Waste Policy Act sec. 134 (42 U.S.C. 10154).
Section 72.96(d) also issued under Nuclear Waste Policy Act sec. 145(g) (42 U.S.C. 10165(g)).
Subpart J also issued under Nuclear Waste Policy Act secs. 117(a), 141(h) (42 U.S.C. 10137(a), 10161(h)).
Subpart K also issued under sec. 218(a) (42 U.S.C. 10198).
Certificate Number: 1032.
Initial Certificate Effective Date: June 13, 2011.
Amendment Number 1 Effective Date: December 17, 2014.
SAR Submitted by: Holtec International, Inc.
SAR Title: Final Safety Analysis Report for the HI–STORM FW System.
Docket Number: 72–1032.
Certificate Expiration Date: June 12, 2031.
Model Number: HI–STORM FW MPC–37, MPC–89.
For the Nuclear Regulatory Commission.
Federal Aviation Administration (FAA), DOT.
Supplemental notice of proposed rulemaking (SNPRM); reopening of comment period.
We are revising and reopening the comment period for an earlier notice of proposed rulemaking (NPRM) for certain Bell Helicopter Textron Canada Limited (Bell) Model 206L–3 and 206L–4 helicopters. The NPRM proposes to require installing a placard and revising the limitations section of the rotorcraft flight manual (RFM). The NPRM was prompted by several incidents of third stage engine turbine wheel failures caused by excessive vibrations at certain engine speeds during steady-state operations. This action proposes to revise the NPRM by adding certain Model 206L1 helicopters to the applicability, excluding certain Model 206L3 and 206L4 helicopters from the applicability, and changing the procedures for updating the RFM. Since these actions impose an additional burden over that proposed in the NPRM, we are reopening the comment period to allow the public the chance to comment on these proposed changes.
We must receive comments on this SNPRM by December 2, 2014.
You may send comments by any of the following methods:
•
•
•
•
You may examine the AD docket on the Internet at
For service information identified in this proposed AD, contact Bell Helicopter Textron Canada Limited, 12,800 Rue de l'Avenir, Mirabel, Quebec J7J1R4; telephone (450) 437–2862 or (800) 363–8023; fax (450) 433–0272; or at
James Blyn, Aviation Safety Engineer, Regulations and Policy Group, Rotorcraft Directorate, FAA, 2601 Meacham Blvd., Fort Worth, Texas 76137; telephone (817) 222–5110; email
We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.
We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.
We issued an NPRM to amend 14 CFR part 39 to add an airworthiness directive (AD) that would apply to certain Bell Model 206L–3 and 206L–4 helicopters. The NPRM was published in the
The NPRM was prompted by Transport Canada Civil Aviation (TCCA) AD No. CF–2005–28R1, dated June 14, 2007, to correct an unsafe condition for certain Model 206L–3 and 206L–4 helicopters. TCCA, which is the aviation authority for Canada, advises of several failures of third stage turbine wheels used in Rolls-Royce 250–C30S and 250–C47B engines. According to TCCA, Rolls-Royce determined that detrimental vibrations can occur within a particular range of turbine speeds, and may be a contributing factor to these failures. Bell has revised the RFM and provided a corresponding decal to inform pilots to avoid steady-state operations between 71.8% and 91.5% turbine speeds. The TCCA AD requires amending the RFMs, advising pilots of the change, and installing a decal as described in Bell Alert Service Bulletin (ASB) No. 206L–05–134, dated June 8, 2005, or later revisions.
Since we issued the NPRM (78 FR 34282, June 7, 2013), we determined that Bell Model 206L1 helicopters with Engine Upgrade Kit Part Number (P/N) 206–706–520 installed should be included in the applicability. Engine Upgrade Kit P/N 206–706–520 replaces the Rolls-Royce 250–C28B engine with a Rolls-Royce 250–C30P engine. The condition causing the failures of third stage turbine wheels used in Rolls-Royce 250–C30S and 250–C–47B engines could also exist in Rolls-Royce 250–C30P engines. Lastly, we have determined that Bell Model 206L3 and 206L4 helicopters having Rolls-Royce 250–C20R engines installed under Supplemental Type Certificate (STC) number SR00036SE are exempt from the requirements of the proposed AD because that engine is not affected by the unsafe condition. This SNPRM also changes the procedures for modifying the RFM Limitations Section from inserting revised pages to making pen and ink changes.
We gave the public the opportunity to comment on the previous NPRM (78 FR 34282, June 7, 2013), and we received a comment from one commenter.
Rolls-Royce Corporation requested that in addition to requiring the placard on the instrument panel, we allow operators the option to temporarily mark the N
We disagree. Marking the glass surface of the gauge can create parallax issues when viewing the avoidance ranges on the gauge, resulting in erroneous readings.
We are proposing this SNPRM because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of these same type designs. Certain changes described above expand the scope of the original NPRM (78 FR 34282, June 7, 2013). As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this SNPRM.
Bell issued ASB No. 206L–05–134, Revision A, dated April 9, 2007, which describes procedures for installing a placard on the instrument panel below the main rotor RPM (Nr)/power turbine RPM (N2) dual tachometer and for inserting the RFM changes into the flight manual. Revision A of the ASB was issued to exclude Bell Model 206L–3 and 206L–4 helicopters with 250–C20R engines installed under STC No. SR00036SE from the requirements of the ASB.
This proposed AD would require installing a placard on the instrument panel below the NR/N2 dual tachometer and also requires revising the Operating Limitations section of the Model 206L3 and 206L4 RFMs to limit steady-state operations between speeds of 71.8% and 91.5%.
The TCCA AD requires compliance within 10 calendar days; this proposed AD would require compliance within 30 days. This proposed AD would be applicable to Model 206L–1 helicopters with Engine Upgrade Kit P/N 206–706–520 installed because the same unsafe condition exits on this model, and the TCCA AD is not.
We estimate that this proposed AD would affect 616 helicopters of U.S. Registry. We estimate that operators may incur the following costs in order to comply with this AD. Based on an average labor rate of $85 per hour, amending the RFM would require about 0.5 work-hour, for a cost per helicopter of about $43 and a cost to U.S. operators of $26,488. Installing the decal would require about 0.2 work-hour, and required parts would cost $20, for a cost per helicopter of $37 and a cost to U.S. operators of $22,792. Based on these estimates, the total cost of this proposed AD would be $80 per helicopter and $49,280 for the fleet.
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, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.
Air transportation, Aircraft, Aviation safety, Incorporation by Reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD applies to the following helicopters, certificated in any category:
(1) Bell Model 206L–1 with an Engine Upgrade Kit Part Number (P/N) No. 206–706–520–101 installed;
(2) Bell Model 206L–3, serial number (S/N) 51001 through 51612, except those with a Rolls-Royce 250–C20R engine installed under Supplemental Type Certificate (STC) No. SR00036SE; and
(3) Bell Model 206L–4, S/N 52001 through 52313, except those with a Rolls-Royce 250–C20R engine installed under STC No. SR00036SE.
This AD defines the unsafe condition as a third stage turbine vibration, which could result in turbine failure, engine power loss, and subsequent loss of control of the helicopter.
We must receive comments by December 2, 2014.
You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.
Within 30 days:
(1) Install placard P/N 230–075–213–117, or equivalent, on the instrument panel directly below the dual tachometer.
(2) Revise the Operating Limitations section of the Rotorcraft Flight Manual (RFM) by inserting a copy of this AD into the RFM or by making pen and ink changes as follows:
(i) In the Power Plant section, beneath the Power Turbine RPM header, add: Avoid continuous operations 71.8% to 91.5%.
(ii) In the Placards and Decals section, add: AVOID CONT OPS 71.8% TO 91.5% N2” with the location identification “Location: Instrument Panel.
(1) The Manager, Safety Management Group, FAA, may approve AMOCs for this AD. Send your proposal to: James Blyn, Aviation Safety Engineer, Regulations and Policy Group, Rotorcraft Directorate, FAA, 2601 Meacham Blvd., Fort Worth, Texas 76137; telephone (817) 222–5110; email
(2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.
(1) Bell Alert Service Bulletin No. 206L–05–134, Revision A, dated April 9, 2007, which is not incorporated by reference, contains additional information about the subject of this AD. For service information identified in this AD, contact Bell Helicopter Textron Canada Limited, 12,800 Rue de l'Avenir, Mirabel, Quebec J7J1R4; telephone (450) 437–2862 or (800) 363–8023; fax (450) 433–0272; or at
(2) The subject of this AD is addressed in Transport Canada Civil Aviation (TCCA) AD No. CF–2005–28R1, dated June 14, 2007. You may view the TCCA AD at
Joint Aircraft Service Component (JASC) Code: 7250, Turbine Section.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for Kaman Model K–1200 helicopters with certain main rotor blades (MRB) installed. This proposed AD would require inspecting each MRB for a crack or damage. This proposed AD is prompted by a report that a crack was found on an MRB during a tear-down inspection. The proposed actions are intended to detect a crack in the MRB, which could lead to failure of the MRB and subsequent loss of control of the helicopter.
We must receive comments on this proposed AD by December 2, 2014.
You may send comments by any of the following methods:
•
•
•
•
You may examine the AD docket on the Internet at
For service information identified in this proposed AD, contact Kaman Aerospace Corporation, Old Windsor Rd., P.O. Box 2, Bloomfield, CT 06002–0002; telephone (860) 242–4461; fax (860) 243–7047; or at
Nicholas Faust, Aviation Safety Engineer, Boston Aircraft Certification Office, Engine & Propeller Directorate, 12 New England Executive Park, Burlington, Massachusetts 01803; telephone (781) 238–7763; email
We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.
We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is
We are proposing to adopt a new AD for Kaman Model K–1200 helicopters with an MRB, part number (P/N) K911001–009, K911001–010, K911001–109, or K911001–110, installed. We received reports that during x-ray and teardown inspections with the MRB removed from the helicopter, cracks are being found in the MRB spar. To detect this unsafe condition, we are proposing requiring repetitive x-ray and visual inspections of the MRB for a crack, wood split, void, or delamination at intervals not exceeding 1,000 hours time-in-service (TIS). If there is a crack, wood split, void, or delamination, the proposed AD would require repairing or replacing the MRB before further flight. The proposed AD would also require that any inspection or repair procedure performed in compliance with this AD receive prior approval from the Boston Aircraft Certification Office. The proposed actions are intended to detect a crack in the MRB, which could lead to failure of the MRB and subsequent loss of control of the helicopter.
We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other products of these same type designs.
We reviewed Kaman Maintenance Manual 04–00–00, Continued Airworthiness, Revision 31, dated August 1, 2013, which establishes the airworthiness limitations for the Model K–1200 helicopter. The airworthiness limitations establish an MRB life limit of 8,000 hours TIS and also establish a recurring 1,000 hour Rotor Blade Spar Inspection for each MRB with 3,000 or more hours TIS.
We also reviewed Kaman Maintenance Manual 05–20–06, 1,000 Hour Rotor Blade Spar Inspection, Revision 31, dated August 1, 2013, which specifies returning each MRB to Kaman every 1,000 hours for inspection after the MRB accumulates 3,000 hours TIS.
This proposed AD would require performing repetitive X-Ray and visual inspections of each wooden MRB for a crack, wood split, void, or delamination at intervals not exceeding 1,000 hours TIS. If there is a crack, wood split, void, or delamination, the proposed AD would require repairing or replacing the MRB before further flight. The inspections and repairs required by the proposed AD would be accomplished by a method approved by the Manager of the Boston Aircraft Certification Office.
We estimate that this proposed AD would affect 11 helicopters of U.S. Registry.
We estimate that operators may incur the following costs in order to comply with this proposed AD. At an average labor cost of $85 per hour, inspecting each matched pair of main rotor blades would require about 160 work-hours and required parts would cost about $2,000, for a cost per MRB set of $15,600 and a cost per helicopter of $31,200 per inspection cycle. If required, repairing a cracked MRB would require about 335 work-hours and required parts would cost about $15,000, for a cost per MRB of $43,475. If required, replacing a MRB set would require about 4 work-hours, and required parts would cost about $495,000, for a cost per helicopter of $495,340.
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, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.
Air transportation, Aircraft, Aviation safety, Incorporation by Reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD applies to Kaman Aerospace Incorporated (Kaman) Model K–1200 helicopters with a main rotor blade (MRB) part number K911001–009, K911001–010, K911001–109, or K911001–110 installed, certificated in any category.
This AD defines the unsafe condition as a crack in an MRB, which could lead to failure of the MRB and subsequent loss of control of the helicopter.
We must receive comments by December 2, 2014.
You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.
(1) Before the MRB reaches 3,000 hours time-in-service (TIS) or within 50 hours TIS,
(i) X-Ray inspect each MRB between station (STA) 30 and 289 for a crack, a wood split, a void, and delamination.
(ii) Using a 10× or higher power magnifying glass, inspect each spar plank between STA 33 and STA 78 for a wood split or a crack, and inspect each spar plank to plank glueline for a void or delamination.
(2) If there is a crack, wood split, void, or delamination within maximum repair damage limits in an MRB, before further flight, repair the MRB. If there is a crack, wood split, void, or delamination exceeding maximum repair damage limits in an MRB, before further flight, replace the MRB with an airworthy MRB.
(3) Each inspection and repair procedure required for compliance with Paragraphs (e)(1) and (e)(2) of this AD must be accomplished by a method approved by the Manager, Boston Aircraft Certification Office (ACO). For a repair method to be approved by the Manager, Boston ACO, as required by this AD, the Manager's approval letter must specifically refer to this AD.
(1) The Manager, Boston ACO, FAA, may approve AMOCs for this AD. Send your proposal to: Nicholas Faust, Aviation Safety Engineer, Boston Aircraft Certification Office, Engine & Propeller Directorate, 12 New England Executive Park, Burlington, Massachusetts 01803; telephone (781) 238–7763; email
(2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.
Kaman Aerospace Corporation Maintenance Manual 04–00–00, Continued Airworthiness, Revision 31, dated August 1, 2013, and Kaman Aerospace Corporation Maintenance Manual 05–20–06, 1,000 Hour Rotor Blade Spar Inspection, Revision 31, dated August 1, 2013, which are not incorporated by reference, contain additional information about the subject of this AD. You may review a copy of this information at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth Texas 76137. For information on the availability of this material at the FAA, call (817) 222–5110.
Joint Aircraft Service Component (JASC) Code: 6210: Main Rotor MRB.
Food and Drug Administration, HHS.
Notice of petition.
The Food and Drug Administration (FDA or we) is announcing that we have filed a petition, submitted by Casa de Mesquite LLC, proposing that the food additive regulations be amended to provide for the safe use of ionizing radiation to treat mesquite bean flour.
The food additive petition was filed on August 11, 2014.
Teresa A. Croce, Center for Food Safety and Applied Nutrition (HFS–265), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740–3835, 240–402–1281.
Under the Federal Food, Drug, and Cosmetic Act (section 409(b)(5) (21 U.S.C. 348(b)(5))), we are giving notice that we have filed a food additive petition (FAP 4M4807), submitted by Casa de Mesquite LLC, 10021 Pacheco Pass Hwy., Hollister, CA 95023. The petition proposes to amend the food additive regulations in § 179.26 (21 CFR 179.26),
We have determined under 21 CFR 25.32(j) that this action is of a 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.
Departmental Offices, Treasury.
Proposed rule.
In accordance with the requirements of the Privacy Act of 1974, as amended, 5 U.S.C. 552a, the Department of the Treasury gives notice of a proposed amendment to update its Privacy Act regulations, and to add an exemption from certain provisions of the Privacy Act for a system of records related to the Office of Intelligence and Analysis.
Comments must be received no later than November 3, 2014.
Written comments should be sent to the Director Intelligence Information Systems, Office of Intelligence and Analysis, Department of the Treasury, 1500 Pennsylvania Ave. NW., Washington, DC 20220. The Department will make such comments available for public inspection and copying in the Department's Library, Room 1020, Annex Building, 1500 Pennsylvania Ave. NW., Washington, DC 20220, on official business days between the hours of 10 a.m. and 5 p.m. Eastern Standard Time. You must make an appointment to inspect comments by telephoning (202) 622–0990 (not a toll free number). You may also submit comments through the Federal rulemaking portal at
Director Intelligence Information Systems, Office of Intelligence and Analysis, Department of the Treasury, at (202) 622–1826, facsimile (202) 622–1829, or email
The Department is establishing “Treasury/DO. 411—Intelligence Enterprise Files,” maintained by the Office of Intelligence and Analysis.
Under 5 U.S.C. 552a(k)(1), the head of an agency may promulgate rules to exempt a system of records from certain provisions of 5 U.S.C. 552a if the system of records is subject to the provisions of 5 U.S.C. 552(b)(1), which regards matters specifically authorized under criteria established by an Executive
To the extent that records in this system of records contain information subject to the provisions of 5 U.S.C. 552(b)(1), the Department of the Treasury proposes to exempt those records from the following provisions of the Privacy Act pursuant to 5 U.S.C. 552a(k)(1):
(1) From subsection 5 U.S.C. 552a(c)(3) (Accounting for Disclosures) because release of the accounting of disclosures of the records in this system could alert individuals whether they have been identified as a national security threat or the subject of an investigation related to the national security interests of the United States, including threats to the national security, foreign policy, or economy of the United States, to the existence of the investigation and reveal investigative interest on the part of the Department of the Treasury as well as the recipient agency. Disclosure of the accounting would present a serious impediment to efforts to protect national security interests by giving individuals an opportunity to learn whether they have been identified as suspects or subjects of a national security-related investigation. As further described in the following paragraph, access to such knowledge would impair the Department's ability to carry out its mission, since individuals could:
(i) Take steps to avoid detection;
(ii) Inform associates that an investigation is in progress;
(iii) Learn the nature of the investigation;
(iv) Learn the scope of the investigation;
(v) Begin, continue, or resume conduct that may pose a threat to national security upon inferring they may not be part of an investigation because their records were not disclosed; or
(vi) Destroy information relevant to the national security investigation.
(2) From subsection 5 U.S.C. 552a(d)(1), (d)(2), (d)(3), and (d)(4), (Access to Records) because access to a portion of the records contained in this system of records could inform individuals whether they have been identified as a national security threat or the subject of an investigation related to the national security interests of the United States, including threats to the national security, foreign policy, or economy of the United States, to the existence of the investigation and reveal investigative interest on the part of the Department of the Treasury or another agency. Access to the records would present a serious impediment to efforts to protect national security interests by permitting the individual who is the subject of a record to learn whether they have been identified as suspects or subjects of a national security-related investigation. Access to such knowledge would impair the Department's ability to carry out its mission, since individuals could take steps to impede the investigation and avoid detection or apprehension, including the steps described in paragraph (1)(i)–(vi) of this section. Amendment of the records would interfere with ongoing investigations and law enforcement activities and impose an impossible administrative burden by requiring investigations to be continuously reinvestigated. The information contained in the system may also include classified information, the release of which would pose a threat to the national security, foreign policy, or economy of the United States. In addition, permitting access and amendment to such information could disclose sensitive security information that could be detrimental to the Department of the Treasury.
(3) From subsection 5 U.S.C. 552a(e)(1), (Relevance and Necessity of Information) because in the course of its operations, OIA must be able to review information from a variety of sources. What information is relevant and necessary may not always be apparent until after the evaluation is completed. In the interests of national security, it is appropriate to include a broad range of information that may aid in identifying and assessing the nature and scope of terrorist or other threats to the United States. Additionally, investigations into potential violations of federal law, the accuracy of information obtained or introduced, occasionally may be unclear or the information may not be strictly relevant or necessary to a specific investigation. In the interests of effective enforcement of federal laws, it is appropriate to retain all information that may aid in establishing patterns of suspicious or unlawful activity.
(4) From subsection 5 U.S.C. 552a(e)(4)(G), (H), and (I) (Agency Requirements), and 5 U.S.C. 552a(f), because portions of this system are exempt from the access and amendment provisions of subsection (d). The reason for invoking the exemption is to protect material authorized to be kept secret in the interest of national security, which includes threats to the national security, foreign policy, or economy of the United States, pursuant to Executive Orders 12968, 13526, successor or prior Executive Orders, and other legal authorities relevant to the intelligence responsibilities of the Department of the Treasury.
The Department of the Treasury will publish separately in the
As required by Executive Order 12866, it has been determined that this rule is not a significant regulatory action, and therefore, does not require a regulatory impact analysis. Pursuant to the requirements of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601–612, it is hereby certified that this rule will not have significant economic impact on a substantial number of small entities. The term “small entity” is defined to have the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction” as defined in the RFA.
The proposed regulation, issued under section 552a(k) of the Privacy Act, is to exempt certain information maintained by the Department in the above system of records from notification, access, and amendment of a record by individuals. Inasmuch as the Privacy Act rights are personal, small entities, as defined in the RFA, are not provided rights under the Privacy Act and are outside the scope of this regulation.
Privacy.
Part 1, subpart C of title 31 of the Code of Federal Regulations is proposed to be amended as follows:
5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C. 552a.
(e) * * *
(1) * * *
(i) * * *
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard proposes to establish a safety zone on the navigable waters of the Chesapeake Bay in the vicinity of Bayshore Road in the Cape Charles Harbor, Cape Charles, VA. This proposed safety zone would restrict vessel movement in the specified area during the Town of Cape Charles New Years Eve fireworks display between 10 p.m. and 10:30 p.m. on December 31, 2014. This action is necessary to provide for the safety of life and property on the surrounding navigable waters during the fireworks displays.
Comments and related material must be received by the Coast Guard on or before November 3, 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 LCDR Gregory Knoll, Waterways Management Division Chief, Sector Hampton Roads, Coast Guard; telephone (757) 668–5580, 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. However, you may submit a request for one at least 15 days prior to the end of the comment period specified in
The town of Cape Charles has not held a fireworks show for the New Year in the past. This same location is used for other fireworks displays during the year that are already in 33 CFR 165.506.
The legal basis for the rule is the Coast Guard's authority to establish regulated navigation areas and other limited access areas: 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Public Law 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
Spectator vessels may gather nearby to view the fireworks display. Due to the need for vessel control during the fireworks display, vessel traffic will be temporarily restricted to provide for the
The Captain of the Port of Hampton Roads proposes to establish a safety zone on specified waters of the Chesapeake Bay within a 700 foot radius of the position: 37°–15′–47″ N / 076°–01′–29″ W (NAD 1983), in the vicinity of Bayshore Road in the Cape Charles Harbor, Cape Charles, Virginia. This safety zone will be enforced on December 31, 2014 between the hours of 10 p.m. and 10:30 p.m. Access to the safety zone will be restricted during the specified date and time.
Except for vessels authorized by the Captain of the Port or his Representative, no person or vessel may enter or remain in the safety zone during the time frame listed. The Captain of the Port will give notice of the enforcement of the safety zone by all appropriate means to provide the widest dissemination of notice among the affected segments of the public. This will include publication in the Local Notice to Mariners and Marine Information Broadcasts.
We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on these statutes and 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 primary impact of these regulations will be on vessels wishing to transit the affected waterways during the safety zone on the Chesapeake Bay in the vicinity of Bayshore Road in the Cape Charles Harbor, Cape Charles, VA from 10 p.m. until 10:30 p.m. on December 31, 2014. Although these regulations prevent traffic from transiting a portion of the Chesapeake Bay during this event, that restriction is limited in duration, affects only a limited area, and will be well publicized to allow mariners to make alternative plans for transiting the affected area.
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 will affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in waters of the Chesapeake Bay during the outlined timeframe.
This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: (i) The safety zone will only be in place for a limited duration, and (ii) before the enforcement period, maritime advisories will be issued allowing mariners to adjust their plans accordingly.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 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
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
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 will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This proposed rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This 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
This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does 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 determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves the establishment of a safety zone. This proposed rule is categorically excluded from further review under paragraph 34–g of Figure 2–1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
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; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
(a) Definitions. For the purposes of this section, Captain of the Port means the Commander, Sector Hampton Roads.
(b) Location. The following area is a proposed safety zone: Specified waters of the Captain of the Port Sector Hampton Roads zone, as defined in 33 CFR 3.25–10, in the Chesapeake Bay in the vicinity of Bayshore Road in the Cape Charles Bay, Cape Charles, VA all waters within a 700 foot radius of 37°–15′–47″ N/076°–01′–29″ W (NAD 1983).
(c) Regulations.
(1) In accordance with the general regulations in 165.23 of this part, entry into this zone is prohibited unless authorized by the Captain of the Port, Hampton Roads or his designated representatives.
(2) The operator of any vessel in the immediate vicinity of this safety zone shall:
(i) Contact on scene contracting vessels via VHF channel 13 and 16 for passage instructions.
(ii) If on scene proceed as directed by any commissioned, warrant or petty officer on shore or on board a vessel that is displaying a U.S. Coast Guard Ensign.
(3) The Captain of the Port, Hampton Roads can be reached through the Sector Duty Officer at Sector Hampton Roads in Portsmouth, Virginia at telephone number (757) 668–5555.
(4) The Coast Guard Representatives enforcing the safety zone can be contacted on VHF–FM marine band radio channel 13 (165.65Mhz) and channel 16 (156.8 Mhz).
(d) Enforcement Period: This section will be enforced from 10 p.m. until 10:30 p.m. on December 31, 2014.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve the State of Maryland's request to redesignate to attainment the Baltimore, Maryland Nonattainment Area (Baltimore Area or Area) for the 1997 annual fine particulate matter (PM
Written comments must be received on or before November 3, 2014.
Submit your comments, identified by Docket ID Number EPA–R03–OAR–2014–0387 by one of the following methods:
A.
B.
C.
D.
Marilyn Powers, at (215) 814–2308, or by email at
The first air quality standards for PM
On January 5, 2005 (70 FR 944, 1014), EPA published air quality area designations for the 1997 PM
On October 17, 2006 (71 FR 61144), EPA retained the annual average standard at 15 μg/m
On May 22, 2012 (77 FR 30208), EPA determined that the Baltimore Area had attained the 1997 annual PM
On December 12, 2013, the State of Maryland, through the Maryland Department of the Environment (MDE), formally submitted a request to redesignate the Baltimore Area from nonattainment to attainment for the 1997 annual PM
The CAA provides the requirements for redesignating a nonattainment area to attainment. Specifically, section 107(d)(3)(E) of the CAA allows for redesignation providing that: (1) EPA determines that the area has attained the applicable NAAQS; (2) EPA has fully approved the applicable implementation plan for the area under section 110(k) of the CAA; (3) EPA determines that the improvement in air quality is due to permanent and enforceable reductions in emissions resulting from implementation of the applicable SIP and applicable Federal air pollution control regulations and other permanent and enforceable reductions; (4) EPA has fully approved a maintenance plan for the area as meeting the requirements of section 175A of the CAA; and, (5) the state containing such area has met all requirements applicable to the area under section 110 and part D of the CAA. Each of these requirements are discussed in section V (EPA's Analysis
EPA has provided guidance on redesignation in the “State Implementation Plans; General Preamble for the Implementation of Title I of the CAA Amendments of 1990,” (57 FR 13498, April 16, 1992) (the “General Preamble”) and has provided further guidance on processing redesignation requests in the following documents: (1) “Procedures for Processing Requests to Redesignate Areas to Attainment,” Memorandum from John Calcagni, Director, Air Quality Management Division, September 4, 1992 (hereafter referred to as the “1992 Calcagni Memorandum”); (2) “SIP Actions Submitted in Response to CAA Deadlines,” Memorandum from John Calcagni, Director, Air Quality Management Division, October 28, 1992; and, (3) “Part D New Source Review (Part D NSR) Requirements for Areas Requesting Redesignation to Attainment,” Memorandum from Mary D. Nichols, Assistant Administrator for Air and Radiation, October 14, 1994.
Section 175A of the CAA sets forth the elements of a maintenance plan for areas seeking redesignation from nonattainment to attainment. Under section 175A of the CAA, the plan must demonstrate continued attainment of the applicable NAAQS for at least 10 years after EPA approves the redesignation of an area to attainment. Eight years after the redesignation, the state must submit a revised maintenance plan demonstrating that attainment will continue to be maintained for the 10 years following the initial 10-year period. To address the possibility of future NAAQS violations, the maintenance plan must contain such contingency measures, with a schedule for implementation, as EPA deems necessary to assure prompt correction of any future PM
The 1992 Calcagni Memorandum provides additional guidance on the content of a maintenance plan. The memorandum states that a maintenance plan should address the following provisions: (1) An attainment emissions inventory; (2) a maintenance demonstration showing maintenance for 10 years; (3) a commitment to maintain the existing monitoring network; (4) verification of continued attainment; and, (5) a contingency plan to prevent or correct future violations of the NAAQS.
Under the CAA, states are required to submit, at various times, control strategy SIP revisions and maintenance plans for nonattainment areas and for areas seeking redesignation to attainment for a given NAAQS. These emission control strategy SIP revisions (e.g., RFP and attainment demonstration SIP revisions) and maintenance plans create MVEBs based on onroad mobile source emissions for the relevant criteria pollutants and/or their precursors, where appropriate, to address pollution from onroad transportation sources. The MVEBs are the portions of the total allowable emissions that are allocated to onroad vehicle use that, together with emissions from all other sources in the area, will provide attainment, RFP, or maintenance, as applicable. The budget serves as a ceiling on emissions from an area's planned transportation system. Under 40 CFR part 93, an MVEB for an area seeking a redesignation to attainment is established for the last year of the maintenance plan.
The maintenance plan for the Baltimore Area includes 2017 and 2025 PM
EPA is proposing to take several rulemaking actions related to the redesignation of the Baltimore Area to attainment for the 1997 annual PM
EPA previously determined that the Baltimore Area had attained the 1997 annual PM
In this proposed rulemaking action, EPA considers the effects of three legal decisions on this redesignation. EPA first considers the effects of the D.C. Circuit Court and U.S. Supreme Court's decisions in
EPA has considered the recent decisions from the U.S. Supreme Court and the D.C. Circuit Court regarding EPA's CSAPR, and has concluded that the decisions do not affect the Agency's proposal to redesignate the Baltimore Area from nonattainment to attainment for the 1997 annual PM
In its submission, MDE does not rely on either CAIR or CSAPR for emission reductions that contributed to the Baltimore Area's attainment of the 1997 annual PM
The status of CSAPR is not relevant to this redesignation. CSAPR was promulgated in June 2011, and the rule was stayed by the D.C. Circuit Court just six months later, before the trading programs it created were scheduled to go into effect. Therefore, the Baltimore Area's attainment of the 1997 annual PM
On January 4, 2013, in
Prior to the January 4, 2013 decision, the states had worked towards meeting the air quality goals of the 1997 annual PM
On June 2, 2014 (79 FR 31566) EPA finalized the “Identification of Nonattainment Classification and Deadlines for Submission of SIP Provisions for the 1997 PM
In this proposed rulemaking action, EPA addresses the effect of the D.C. Circuit Court's January 4, 2013 ruling and the proposed PM
With respect to the 1997 PM
EPA's view that, for purposes of evaluating the redesignation of the Baltimore Area, the subpart 4 requirements were not due at the time Maryland submitted the redesignation request is in keeping with the EPA's interpretation of subpart 2 requirements for subpart 1 ozone areas redesignated subsequent to the D.C. Circuit Court's decision in
EPA's interpretation derives from the provisions of section 107(d)(3). Section 107(d)(3)(E)(v) states that, for an area to be redesignated, a state must meet “all requirements `applicable' to the area under section 110 and part D.” Section 107(d)(3)(E)(ii) provides that the EPA must have fully approved the “applicable” SIP for the area seeking redesignation. These two sections read together support EPA's interpretation of “applicable” as only those requirements that came due prior to submission of a complete redesignation request. First, holding states to an ongoing obligation to adopt new CAA requirements that arose after the state submitted its redesignation request, in order to be redesignated, would make it problematic or impossible for EPA to act on redesignation requests in accordance with the 18-month deadline Congress set for EPA action in section 107(d)(3)(D). If “applicable requirements” were interpreted to be a continuing flow of requirements with no reasonable limitation, states, after submitting a redesignation request, would be forced continuously to make additional SIP submissions that in turn would require EPA to undertake further notice-and-comment rulemaking actions to act on those submissions. This would create a regime of unceasing rulemaking that would delay action on the redesignation request beyond the 18-month timeframe provided by the CAA for this purpose.
Second, a fundamental premise for redesignating a nonattainment area to attainment is that the area has attained the relevant NAAQS due to emission reductions from existing controls. Thus, an area for which a redesignation request has been submitted would have already attained the NAAQS as a result of satisfying statutory requirements that came due prior to the submission of the request. Absent a showing that unadopted and unimplemented requirements are necessary for future maintenance, it is reasonable to view the requirements applicable for purposes of evaluating the redesignation request as including only those SIP requirements that have already come due. These are the requirements that led to attainment of the NAAQS. To require, for redesignation approval, that a state also satisfy additional SIP requirements coming due after the state submits its complete redesignation request, and while EPA is reviewing it, would compel the state to do more than is necessary to attain the NAAQS, without a showing that the additional requirements are necessary for maintenance.
In the context of this redesignation, the timing and nature of the D.C. Circuit Court's January 4, 2013 decision in
To require Maryland's fully-completed and pending redesignation request for the 1997 annual PM
Even if EPA were to take the view that the D.C. Circuit Court's January 4, 2013 decision requires that, in the context of pending redesignations for the 1997 annual PM
With respect to evaluating the relevant substantive requirements of subpart 4 for purposes of redesignating the Baltimore Area, EPA notes that subpart 4 incorporates components of subpart 1, which contains general air quality planning requirements for areas designated as nonattainment.
For the purposes of this redesignation request, in order to identify any additional requirements which would apply under subpart 4, consistent with EPA's June 2, 2014 PM
The permit requirements of subpart 4, as contained in section 189(a)(1)(A), refer to and apply the subpart 1 permit provisions requirements of sections 172 and 173 to PM
With respect to the specific attainment planning requirements under subpart 4,
The General Preamble also explained that: “The section 172(c)(9) requirements are directed at ensuring RFP and attainment by the applicable
It is evident that even if we were to consider the D.C. Circuit Court's January 4, 2013 decision in
Moreover, even outside the context of redesignations, EPA has viewed the obligations to submit attainment-related SIP planning requirements of subpart 4 as inapplicable for areas that EPA determines are attaining the 1997 annual PM
Elsewhere in this notice, EPA proposes to determine that the Baltimore Area has attained and continues to attain the 1997 annual PM
The D.C. Circuit Court in
The D.C. Circuit Court in its January 4, 2013 decision made reference to both section 189(e) and 40 CFR 51. 1002, and stated that: “In light of our disposition, we need not address the petitioners' challenge to the presumptions in [40 CFR 51.1002] that volatile organic compounds and ammonia are not PM
For a number of reasons, EPA believes that its proposed redesignation of the Baltimore Area for the 1997 annual PM
However, even if EPA takes the view that the requirements of subpart 4 were deemed applicable at the time the State submitted the redesignation request, and disregards the 1997 PM
Precursors in subpart 4 are specifically regulated under the provisions of section 189(e), which requires, with important exceptions, control requirements for major stationary sources of PM
In the General Preamble, EPA discusses its approach to implementing section 189(e).
EPA notes that its 1997 PM
Although, as EPA has emphasized, its consideration here of precursor requirements under subpart 4 is in the context of a redesignation to attainment, EPA's existing interpretation of subpart 4 requirements with respect to precursors in attainment plans for PM
EPA is proposing several rulemaking actions for the Baltimore Area: (1) To redesignate the Area to attainment for the 1997 annual PM
EPA has previously determined that the Baltimore Area has attained the 1997 annual PM
Maryland's redesignation request submittal included the historic monitoring data for the annual PM
The Baltimore Area's recent monitoring data supports EPA's previous determinations that the Area has attained the 1997 annual PM
In accordance with section 107(d)(3)(E)(v) of the CAA, the SIP revisions for the 1997 annual PM
Section 110(a)(2) of Title I of the CAA delineates the general requirements for a SIP, which include enforceable emissions limitations and other control measures, means, or techniques, provisions for the establishment and operation of appropriate devices necessary to collect data on ambient air quality, and programs to enforce the limitations. The general SIP elements and requirements set forth in section 110(a)(2) of the CAA include, but are not limited to the following: (1) Submittal of a SIP that has been adopted by the state after reasonable public notice and hearing; (2) provisions for establishment and operation of appropriate procedures needed to monitor ambient air quality; (3) implementation of a source permit program; provisions for the implementation of Part C requirements (PSD); (4) provisions for the implementation of Part D requirements for NSR permit programs; (5) provisions for air pollution modeling; and, (6) provisions for public and local agency participation in planning and emission control rule development.
Section 110(a)(2)(D) of the CAA requires that SIPs contain certain measures to prevent sources in a state from significantly contributing to air quality problems in another state. To implement this provision, EPA has required certain states to establish programs to address the interstate transport of air pollutants in accordance with the NO
In addition, EPA believes that the other section 110(a)(2) elements of the CAA which are not connected with nonattainment plan submissions and not linked with an area's attainment
EPA has reviewed the Maryland SIP and has concluded that it meets the general SIP requirements under section 110(a)(2) of the CAA to the extent they are applicable for purposes of redesignation. EPA has previously approved provisions of Maryland's SIP addressing section 110(a)(2) requirements, including provisions addressing PM
Subpart 1 sets forth the basic nonattainment plan requirements applicable to PM
As noted previously, EPA has determined that the Baltimore Area has attained the 1997 annual PM
The requirement under section 172(c)(3) was not suspended by EPA's clean data determination for the 1997 annual PM
On December 10, 2012 (77 FR 73313), EPA approved a 2002 emissions inventory for the 1997 annual PM
Section 172(c)(4) of the CAA requires the identification and quantification of allowable emissions for major new and modified stationary sources in an area, and section 172(c)(5) of the CAA requires source permits for the construction and operation of new and modified major stationary sources anywhere in the nonattainment area. EPA has determined that, since the PSD requirements will apply after redesignation, areas being redesignated need not comply with the requirement that a nonattainment NSR program be approved prior to redesignation, provided that the area demonstrates maintenance of the NAAQS without part D NSR. A more detailed rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994 entitled, “Part D New Source Review Requirements for Areas Requesting Redesignation to Attainment.” Maryland's PSD program for the 1997 annual PM
Section 172(c)(7) of the CAA requires the SIP to meet the applicable provisions of section 110(a)(2) of the CAA. As noted previously, EPA believes the Maryland SIP meets the requirements of section 110(a)(2) of the CAA that are applicable for purposes of redesignation.
Section 175A of the CAA requires a state seeking redesignation to attainment to submit a SIP revision to provide for the maintenance of the NAAQS in the area “for at least 10 years after the redesignation.” In conjunction with its request to redesignate the Baltimore Area to attainment status, Maryland submitted a SIP revision to provide for maintenance of the 1997 annual PM
Section 176(c) of the CAA requires states to establish criteria and procedures to ensure that Federally supported or funded projects conform to the air quality planning goals in the applicable SIP. The requirement to determine conformity applies to transportation plans, programs, and projects developed, funded or approved under Title 23 of the United States Code
Thus, for purposes of redesignating the Baltimore Area to attainment for the 1997 annual PM
EPA has fully approved all applicable requirements of the Maryland SIP for the Baltimore Area for purposes of redesignaton to attainment for the 1997 annual PM
For redesignating a nonattainment area to attainment, section 107(d)(3)(E)(iii) of the CAA requires EPA to determine that the air quality improvement in the area is due to permanent and enforceable reductions in emissions resulting from implementation of the SIP and applicable Federal air pollution control regulations and other permanent and enforceable reductions. Maryland's redesignation request indicates that a variety of federal vehicle control programs have created emission reductions that contributed to attainment in 2007. In making this demonstration, Maryland has calculated the change in emissions for the on-road sector between 2002, one of the years used to designate the Area as nonattainment, and 2007, one of the years the Area monitored attainment, as shown in Table 2.
The reduction in emissions and the corresponding improvement in air quality from 2002 to 2007 in the Baltimore Area can be attributed to a number of regulatory control measures that have been implemented in the Baltimore Area and contributing areas in recent years. An evaluation of the State's 2002 comprehensive emissions inventory for the Baltimore Area is provided in the TSD prepared by EPA for the December 7, 2012 rulemaking action approving the base year inventory.
Reductions in PM
EPA issued the Heavy-Duty Diesel Engine Rule in July 2000. This rule includes standards limiting the sulfur content of diesel fuel, which went into effect in 2004. A second phase took effect in 2007 which reduced PM
On June 29, 2004 (69 FR 38958), EPA promulgated the Nonroad Diesel Rule for large nonroad diesel engines, such as those used in construction, agriculture, and mining, to be phased in between 2008 and 2014. The rule phased in requirements for reducing the sulfur content of diesel used in nonroad diesel engines. The reduction in sulfur content prevents damage to the more advanced emission control systems needed to meet the engine standards. It will also reduce fine particulate emissions from diesel engines. The rule also reduces the sulfur content in nonroad diesel fuel by over 99%. Prior to 2006, nonroad diesel fuel averaged approximately 3,400 ppm sulfur. Starting in 2007, this rule limited nonroad diesel sulfur content to 500 ppm, with a further reduction to 15 ppm in 2010. The combined engine standards and the sulfur in fuel reductions will reduce NO
In November 2002, EPA promulgated emission standards for groups of previously unregulated nonroad engines. These engines include large spark-ignition engines such as those used in forklifts, airport ground service equipment, and farm and construction equipment; recreational vehicles using spark-ignition engines such as off highway motorcycles, all-terrain vehicles and snowmobiles; and recreational marine diesel engines. Emission standards from large spark-ignition engines were implemented in two tiers, with Tier 1 starting in 2004 and Tier 2 in 2007. Recreational vehicle emission standards were phased in from 2006 through 2012. Marine diesel engine standards were phased in from 2006 through 2009. With full implementation of the entire nonroad spark-ignition engine and recreational engine standards, an 80% reduction in NO
On December 12, 2013, MDE submitted a maintenance plan for the Baltimore Area for the 1997 annual PM
Section 172(c)(3) requires states to submit a comprehensive, accurate, current inventory of actual emissions from all sources in the nonattainment area. For a maintenance plan, states are required to submit an inventory to identify the level of emissions in the area which is sufficient to attain the NAAQS, referred to as the attainment inventory (or the maintenance plan base year inventory), and which should be based on actual emissions. MDE submitted an attainment inventory for 2007, one of the years in the period during which the Baltimore Area monitored attainment of the 1997 annual PM
For the 2007 emissions inventory for point, nonpoint, and nonroad source categories, MDE submitted the 2007 Version 3 emissions inventory developed through the Mid-Atlantic Regional Air Management Association (MARAMA) regional planning process. Details related to the development of the 2007 emissions inventory can be found in the January 23, 2012 MARAMA TSD entitled “Technical Support Document for the Development of the 2007 Emissions Inventory for the Regional Air Quality Modeling in the Northeast/Mid-Atlantic Region Version 3.3”, which may be found in Appendix D of the State's submittal, and is available in the docket for this proposed rulemaking action.
The 2007 point source inventory includes emissions from EGUs and non-EGU sources as developed by MARAMA in consultation with MDE. The nonpoint source emissions inventory for 2007 was developed using 2007 specific activity data along with EPA emission factors and the most recently available emission calculation methodologies. The 2007 nonroad mobile source emissions was generated using EPA's National Mobile Inventory Model (NMIM) 2008, which used the NONROAD 2008a emissions model. Since marine, air and rail/locomotive (MAR) emissions are not part of the NONROAD model, they were calculated separately outside of the NONROAD model using the most recent methodologies and inputs.
The 2007 onroad mobile source inventory was developed by using EPA's highway mobile source emissions model MOVES2010a. A mix of default and local data was used to develop the inventory. The 2007 onroad emissions inventory, including a summary of the methodology and data assumptions used for the analysis may be found in Appendix F of the State's submittal, which is available in the docket for this proposed rulemaking action.
EPA has reviewed the documentation provided by MDE and found the emissions inventory to be approvable. For more information on the 2007 inventory submitted by MDE and EPA's analysis of the inventory, see Appendix A of the State's submittal and EPA's emissions inventory TSD dated July 23, 2014, both of which are available in the docket for this proposed rulemaking action.
Section 175A requires a state seeking redesignation to attainment to submit a SIP revision to provide for the maintenance of the NAAQS in the area “for at least 10 years after the redesignation.” EPA has interpreted this as a showing of maintenance “for a period of ten years following redesignation.” Where the emissions inventory method of showing maintenance is used, its purpose is to show that emissions during the maintenance period will not increase over the attainment year inventory.
For a demonstration of maintenance, emissions inventories are required to be projected to future dates to assess the influence of future growth and controls; however, the maintenance demonstration need not be based on modeling.
To show that the Baltimore Area will remain in attainment, MDE uses projection inventories derived by applying appropriate growth and control factors to the 2007 attainment year emissions inventory. MDE developed projection inventories for an interim year of 2017 and a maintenance plan end year of 2025 to show that future emissions of SO
For EGU emissions, the Department of Energy 2011 Annual Energy Outlook growth factors, delineated by region and fuel, were used to develop the projected EGU emissions. Non-EGU emissions were developed using employment projections and other state specific
EPA has determined that the emissions inventories discussed above as provided by MDE are approvable. For detailed information on the projected inventories,
Table 3 shows that between 2007 and 2017, the Baltimore Area is projected to reduce SO
There are eight PM
To provide for tracking of the emission levels in the Baltimore Area, MDE will periodically update the emissions inventory, consisting of annual and periodic evaluations. Annual emissions updates of stationary sources, the Highway Performance Monitoring System vehicle miles travelled data reported to the Federal Highway Administration, and other growth indicators, which will be compared to the growth assumptions to determine if the projected growth and observed growth are consistent. MDE will also submit comprehensive tracking inventories to EPA every three years as required by EPA's Air Emissions Reporting Requirements (AERR) or as required by other federal regulations during the maintenance plan period.
The contingency plan provisions for maintenance plans are designed to promptly correct a violation of the NAAQS that occurs after redesignation. Section 175A of the CAA requires that a maintenance plan include such contingency measures as EPA deems necessary to ensure that a state will promptly correct a violation of the NAAQS that occurs after redesignation. The maintenance plan should identify the events that would “trigger” the adoption and implementation of a contingency measure(s), the contingency measure(s) that would be adopted and implemented, and the schedule indicating the time frame by which the state would adopt and implement the measure(s).
Maryland's maintenance plan outlines the procedures for the adoption and implementation of contingency measures to further reduce emissions should a violation occur. These procedures would be triggered in one of three situations: (1) When the annual actual emissions of SO
If any future year emissions inventory indicates that the Baltimore Area's total emissions of SO
As explained in greater detail in the Baltimore Area maintenance plan, the candidate contingency measures include the following: (1) PM
Section 176(c) of the CAA requires Federal actions in nonattainment and maintenance areas to “conform to” the goals of SIPs. This means that such actions will not cause or contribute to violations of a NAAQS, worsen the severity of an existing violation, or delay timely attainment of any NAAQS or any interim milestone. Actions involving Federal Highway Administration (FHWA) or Federal Transit Administration (FTA) funding or approval are subject to the transportation conformity rule (40 CFR Part 93, subpart A). Under this rule, metropolitan planning organizations (MPOs) in nonattainment and maintenance areas coordinate with state air quality and transportation agencies, EPA, and the FHWA and FTA to demonstrate that their long range transportation plans and transportation improvement programs (TIP) conform to applicable SIPs. This is typically determined by showing that estimated emissions from existing and planned highway and transit systems are less than or equal to the MVEBs contained in the SIP.
On December 12, 2013, Maryland submitted a SIP revision that contains the 2017 and 2025 PM
EPA's substantive criteria for determining adequacy of MVEBs are set out in 40 CFR 93.118(e)(4). Additionally, to approve the MVEBs, EPA must complete a thorough review of the SIP, in this case the PM
On April 30, 2014, EPA initiated an adequacy review of the MVEBs for the 1997 annual PM
EPA is proposing to approve the request submitted by Maryland to redesignate the Baltimore Area from nonattainment to attainment for the 1997 annual PM
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, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely proposes to approve state law as meeting Federal requirements and does
• is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this rule proposing to approve Maryland's redesignation request, associated maintenance plan, and MVEBs for transportation conformity purposes for the Baltimore Area for the 1997 annual PM
Environmental protection, Air pollution control, Incorporation by reference, Nitrogen oxides, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
Environmental protection, Air pollution control, National parks, Wilderness areas.
42 U.S.C. 7401
Office of Inspector General (OIG), HHS.
Proposed rule.
This proposed rule would amend the safe harbors to the anti-kickback statute and the civil monetary penalty (CMP) rules under the authority of the Office of Inspector General (OIG). The proposed rule would add new safe harbors, some of which codify statutory changes set forth in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and the Patient Protection and Affordable Care Act, Public Law 111–148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Public Law 111–152, 124 Stat. 1029 (2010) (ACA), and all of which would protect certain payment practices and business arrangements from criminal prosecution or civil sanctions under the anti-kickback statute. We also propose to codify revisions to the definition of “remuneration,” added by the Balanced Budget Act (BBA) of 1997 and ACA, and add a gainsharing CMP provision in our regulations.
To ensure consideration, comments must be delivered to the address provided below by no later than 5 p.m. Eastern Standard Time on December 2, 2014.
In commenting, please reference file code OIG–403–P3. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. However, you may submit comments using one of three ways (no duplicates, please):
1.
2.
Patrice Drew, Office of Inspector General, Department of Health and Human Services, Attention: OIG–403–P, Room 5269, Cohen Building, 330 Independence Avenue SW., Room 5269, Washington, DC 20201.
Please allow sufficient time for mailed comments to be received before the close of the comment period.
3.
Patrice Drew, Office of Inspector General, Department of Health and Human Services, Cohen Building, 330 Independence Avenue SW., Room 5269, Washington, DC 20201.
Because access to the interior of the Cohen Building is not readily available to persons without Federal Government identification, commenters are encouraged to schedule their delivery with one of our staff at (202) 619–1368.
Heather Westphal, Office of Counsel to the Inspector General, (202) 619–0335, for questions relating to the proposed rule.
MMA and ACA include exceptions to the anti-kickback statute, and BBA of 1997 and ACA include exceptions to the definition of “remuneration” under the civil monetary penalties law. OIG proposes to codify those changes here. At the same time, OIG proposes additional changes to make technical corrections to an existing regulation and proposes new safe harbors to the anti-
We propose to amend 42 CFR 1001.952 by modifying certain existing safe harbors to the anti-kickback statute and by adding safe harbors that provide new protections or codify certain existing statutory protections. These changes include:
• A technical correction to the existing safe harbor for referral services;
• protection for certain cost-sharing waivers, including:
• Pharmacy waivers of cost-sharing for financially needy Medicare Part D beneficiaries; and
• waivers of cost-sharing for emergency ambulance services furnished by State- or municipality-owned ambulance services;
• protection for certain remuneration between Medicare Advantage organizations and federally qualified health centers;
• protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and
• protection for free or discounted local transportation services that meet specified criteria.
We propose to amend the definition of “remuneration” in the CMP regulations at 42 CFR 1003 by adding certain statutory exceptions for:
• Copayment reductions for certain hospital outpatient department services;
• certain remuneration that poses a low risk of harm and promotes access to care;
• coupons, rebates, or other retailer reward programs that meet specified requirements;
• certain remuneration to financially needy individuals; and
• copayment waivers for the first fill of generic drugs.
We also propose to codify the gainsharing CMP set forth in section 1128A(b) of the Social Security Act (the Act) (42 U.S.C. 1320a–7a(b)).
There are no significant costs associated with the proposed regulatory revisions that would impose any mandates on State, local, or tribal governments or on the private sector.
This notice of proposed rulemaking is part of a rulemaking that was identified in the Unified Agenda by the title “Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Office of Inspector General's Safe Harbors Under the Anti-Kickback Statute, Exclusion Authorities, and Civil Monetary Penalty Rules.” OIG has proposed additional rulemaking in the following areas: CMP authorities (42 CFR part 1003); inflation adjustment for CMPs (42 CFR part 1003); and exclusion authorities and the duties and responsibilities of State Medicaid Fraud Control Units (MFCUs) 42 CFR parts 1000, 1001, 1002, and 1006. Each of the proposed rules is a stand-alone, independent rule, and thus, one can comment meaningfully on this proposed rule independent of the proposed rules concerning CMP authorities, inflation adjustment for CMPs, exclusion authorities, or authorities and duties of the MFCUs.
Section 1128B(b) of the Act (42 U.S.C. 1320a–7b(b), the anti-kickback statute) provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs, as defined in section 1128B(f) of the Act. The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. Violations may also result in the imposition of CMPs under section 1128A(a)(7) of the Act (42 U.S.C. 1320a–7a(a)(7)), program exclusion under section 1128(b)(7) of the Act (42 U.S.C. 1320a–7(b)(7)), and liability under the False Claims Act (31 U.S.C. 3729–33).
The types of remuneration covered specifically include, without limitation, kickbacks, bribes, and rebates, whether made directly or indirectly, overtly or covertly, in cash or in kind. In addition, prohibited conduct includes not only the payment of remuneration intended to induce or reward referrals of patients, but also the payment of remuneration intended to induce or reward the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursable by any Federal health care program.
Because of the broad reach of the statute, concern was expressed that some relatively innocuous commercial arrangements were covered by the statute and, therefore, potentially subject to criminal prosecution. In response, Congress enacted section 14 of the Medicare and Medicaid Patient and Program Protection Act of 1987, Public Law 100–93 (section 1128B(b)(3)(E) of the Act), which specifically requires the development and promulgation of regulations, the so-called safe harbor provisions, that would specify various payment and business practices that would not be treated as criminal offenses under the anti-kickback statute, even though they may potentially be capable of inducing referrals of business under the Federal health care programs.
Section 205 of the Health Insurance Portability and Accountability Act of 1996, Public Law 104–191, established section 1128D of the Act, which includes criteria for modifying and establishing safe harbors. Specifically, section 1128D(a)(2) of the Act provides that, in modifying and establishing safe harbors, the Secretary of Health and Human Services (Secretary) may consider whether a specified payment practice may result in:
• An increase or decrease in access to health care services;
• an increase or decrease in the quality of health care services;
• an increase or decrease in patient freedom of choice among health care providers;
• an increase or decrease in competition among health care providers;
• an increase or decrease in the ability of health care facilities to provide services in medically underserved areas or to medically underserved populations;
• an increase or decrease in the cost to Federal health care programs;
• an increase or decrease in the potential overutilization of health care services;
• the existence or nonexistence of any potential financial benefit to a health care professional or provider, which benefit may vary depending on whether the health care professional or provider decides to order a health care item or service or arrange for a referral of health care items or services to a particular practitioner or provider;
• any other factors the Secretary deems appropriate in the interest of preventing fraud and abuse in Federal health care programs.
Since July 29, 1991, we have published in the
Health care providers and others may voluntarily seek to comply with safe harbors so that they have the assurance that their business practices will not be subject to enforcement action under the anti-kickback statute, the CMP provision for anti-kickback violations, or the program exclusion authority related to kickbacks. We note, however, that compliance with a safe harbor insulates an individual or entity from liability under the anti-kickback statute and the beneficiary inducements CMP
Section 101 of MMA added a new section 1860D to the Act, establishing the Part D prescription drug benefit in the Medicare program. Section 101(e) of MMA amends section 1128B(b)(3) of the Act to permit pharmacies to waive or reduce cost-sharing imposed under Part D as long as specified conditions are met. In addition, section 237 of MMA added an exception to permit certain remuneration between Medicare Advantage organizations and federally qualified health centers.
ACA also includes a number of provisions that could affect liability under the anti-kickback statute. Section 3301 of ACA establishes the Medicare Coverage Gap Discount Program, codified at new section 1860D–14A of the Act (42 U.S.C. 1395w–114A). Pursuant to this program, prescription drug manufacturers have entered into agreements with the Secretary to provide certain beneficiaries access to discounts on drugs at the point of sale. Section 3301(d) of ACA amends the anti-kickback statute to protect the discounts provided for under the Medicare Coverage Gap Discount Program.
We are proposing to incorporate into our regulations safe harbors for payment and business practices permitted under MMA and ACA, as well as proposing new safe harbors pursuant to our authority under section 14 of the Medicare and Medicaid Patient and Protection Act of 1987 to protect practices that we view as posing a low risk to Federal health care programs as long as specified conditions are met.
In 1981, Congress enacted the CMP law, section 1128A of the Act, as one of several administrative remedies to combat fraud and abuse in Medicare and Medicaid. The law authorized the Secretary to impose penalties and assessments on persons who defrauded Medicare or Medicaid or engaged in certain other wrongful conduct. The CMP law also authorized the Secretary to exclude persons from Federal health care programs (as defined in section 1128B(f)(1) of the Act) and to direct the appropriate State agency to exclude the person from participating in any State health care programs (as defined in section 1128(h) of the Act). Congress later expanded the CMP law and the scope of exclusion to apply to all Federal health care programs, but the CMP applicable to beneficiary inducements remains limited to Medicare and State health care program beneficiaries. The Secretary delegated the law's CMP authorities to OIG. 53 FR 12993 (April 20, 1988). Since 1981, Congress has created various other CMP authorities covering numerous types of fraud and abuse, many of which were also delegated by the Secretary to OIG.
The BBA of 1997 and section 6402(d)(2)(B) of ACA amended the definition of “remuneration” for purposes of the beneficiary inducements CMP at section 1128A(a)(5) of the Act, as discussed below. We propose to incorporate these changes into the definition of “remuneration” under proposed § 1003.110
Public Law 99–509, the Omnibus Budget Reconciliation Act (OBRA) of 1986, authorized the Secretary to impose CMPs for certain incentive payments made to physicians by hospitals, risk-sharing health maintenance organizations (HMOs), and competitive medical plans. Over time, this provision, section 1128A(b) of the Act (the Gainsharing CMP), has been amended to repeal the provisions relating to HMOs and other risk-sharing entities and to make various other changes in terminology.
Section 1128A(b)(1) prohibits a hospital or a critical access hospital from knowingly making a payment, directly or indirectly, to a physician as an inducement to reduce or limit services provided to Medicare or Medicaid beneficiaries who are under the direct care of the physician. A hospital or a critical access hospital that makes such payment and the physician who knowingly accepts such payment are subject to CMPs of not more than $2,000 for each beneficiary for whom the payment is made.
Below is a description of the additional payment practices that we are proposing to incorporate under 42 CFR 1001.952 pursuant to the authorities cited under each heading and the rationale for their inclusion in this proposed rulemaking. Consistent with the criteria set forth in section 1128D(a)(2) for modifying and establishing safe harbors, our goal is to protect beneficial arrangements that enhance the efficient and effective delivery of health care and promote the best interests of patients, while also protecting the Federal health care programs and beneficiaries from undue risk of harm associated with referral payments. We seek to strike an appropriate balance between protections for beneficial arrangements and safeguards to prevent unscrupulous
We propose to make a technical correction to the safe harbor for referral services, found at 42 CFR 1001.952(f). This safe harbor originally required that any fee a referral service charged a participant be “based on the cost of operating the referral service, and not on the volume or value of any referrals to or business otherwise generated by the participants for the referral service * * *”. This language created an unintended ambiguity, such that the safe harbor could have been viewed as permitting referral services to adjust their fees on the basis of the volume of referrals they make to the participants. In 1999, we finalized a modification to the language to clarify that the safe harbor precludes protection for payments from participants to referral services that are based on the volume or value of referrals to, or business otherwise generated by,
Generally, the reduction or waiver of Medicare or other Federal health care program cost-sharing amounts may implicate the anti-kickback statute. Our concern about potentially abusive waivers of cost-sharing amounts under the anti-kickback statue is longstanding. For example, we have previously stated that providers and suppliers that routinely waive Medicare cost-sharing amounts for reasons unrelated to individualized, good faith assessments of financial hardship may be held liable under the anti-kickback statute.
As noted in section I.A above, MMA specifically amended section 1128B(b)(3) of the Act by adding a new subparagraph (G) that excepts from liability under the anti-kickback statute waivers or reductions by pharmacies (including pharmacies of the Indian Health Service, Indian tribes, tribal organizations, and urban Indian organizations) of any cost-sharing imposed under Medicare Part D, as long as certain conditions are met. These conditions are specified in clauses (i) through (iii) of section 1128A(i)(6)(A) of the Act, and we propose to interpret them consistent with our regulations interpreting these conditions in paragraph (1) of the definition of “remuneration” at § 1003.101.
We propose to add a new § 1001.952(k)(3) reflecting this exception to the anti-kickback statute. Thus, consistent with the statute, a pharmacy waiving Part D cost-sharing qualifies for safe harbor protection if: (1) The waiver or reduction is not advertised or part of a solicitation; (2) the pharmacy does not routinely waive the cost-sharing; and (3) before waiving the cost-sharing, the pharmacy either determines in good faith that the beneficiary has a financial need or the pharmacy fails to collect the cost-sharing amount after making a reasonable effort to do so. If, however, the waiver or reduction of cost-sharing is made on behalf of a subsidy-eligible individual (as defined in section 1860D–14(a)(3) of the Act), then conditions (2) and (3) above are not required. We reiterate, however, that compliance with the conditions of this safe harbor, as with all safe harbors, protects a individual or an entity from liability only under the anti-kickback statute and the beneficiary inducements CMP, pursuant to section 1128A(i)(6)(B) of the Act. Providers, practitioners, and suppliers still must comply with other laws, regulations, and Centers for Medicare & Medicaid Services (CMS) program rules.
Over the years, we have received many advisory opinion requests concerning the reduction or waiver of coinsurance or deductible amounts owed for emergency ambulance services to an ambulance supplier that is owned and operated by a State or a political subdivision of a State, resulting in many favorable advisory opinions (that is, approving of such arrangements). Notwithstanding the vast body of favorable advisory opinions, we continue to receive similar requests for advisory opinions each year. In light of this, pursuant to our authority under section 1128B(b)(3)(E) of the Act, we propose to establish a safe harbor to protect those reductions or waivers that meet all the conditions enumerated in § 1001.952(k)(4).
First, we propose to require that the ambulance provider or supplier be owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe
A [State or local government] facility which reduces or waives its charges for patients unable to pay, or charges patients only to the extent of their Medicare and other health insurance coverage, is not viewed as furnishing free services and may therefore receive program payment.
Notwithstanding the use of the term “facility,” CMS has confirmed that this provision would apply to an ambulance provider or supplier that was owned
We also would require that the ambulance provider or supplier offer the reduction or waiver on a uniform basis, without regard to patient-specific factors. In addition, we propose to include an express prohibition against claiming the amount reduced or waived as bad debt for payment purposes under Medicare or a State health care program or otherwise shifting the burden of the reduction or waiver onto Medicare, a State health care program, other payers, or individuals. We solicit comments on these proposed conditions.
For purposes of this safe harbor, we plan to interpret the term “ambulance provider or supplier” as a provider or supplier of ambulance transport services that furnishes emergency ambulance services. The term would not include a provider or supplier of ambulance transport services that furnishes only nonemergency transport services, because the safe harbor would only apply to the waiver of cost-sharing in connection with emergency ambulance services. We plan to interpret “emergency ambulance services” in a manner consistent with the definition given to that term in 42 CFR 1001.952(v)(4)(iv). We solicit comments on this interpretation and on whether these terms need to be expressly defined in the regulatory text of this safe harbor.
Finally, we are considering whether to include reductions or waivers of cost-sharing amounts owed under other Federal health care programs (
This safe harbor would apply only to situations in which the governmental unit owns and operates the ambulance provider or supplier; it would not apply to contracts with outside ambulance providers or suppliers. For example, if a municipality contracted with an outside ambulance provider or supplier for rendering services to residents of its service area, the municipality could not require the ambulance provider or supplier to waive the collection from beneficiaries of out-of-pocket cost-sharing amounts unless the municipality paid the cost-sharing amounts owed or otherwise made provisions for paying them.
An individual enrolled in a Medicare Advantage (MA) plan may receive services from a federally qualified health center (FQHC) that has a written agreement with the MA plan. Section 237 of MMA amended 42 U.S.C. 1395w–27(e) by adding a new paragraph (3) regarding agreements between MA organizations and FQHCs. This new paragraph requires that the written agreement between the two entities specifically provide that the MA organization will pay the contracting FQHC no less than the level and amount of payment that the plan would make for the same services if the services were furnished by another type of entity. Section 237 also added a new statutory exception to the anti-kickback statute at section 1128B(b)(3)(H) of the Act (42 U.S.C. 1320a–7b(b)(3)(H)). This exception protects “any remuneration between a federally qualified health center (or an entity controlled by such a health center) and an MA organization pursuant to a written agreement described in section 1853(a)(4) [of the Act].”
Section 3301 of ACA establishes the Medicare Coverage Gap Discount Program, codified at section 1860D–14A of the Act. Under this program, prescription drug manufacturers enter into an agreement with the Secretary to provide certain beneficiaries access to discounts on drugs at the point of sale.
Section 3301(d) of ACA amends the anti-kickback statute by adding a new subparagraph (J) to section 1128B(b)(3) of the Act to protect the discounts provided for under the Medicare Coverage Gap Discount Program. To codify this self-implementing exception in our regulations, this proposed rule would add a new paragraph (aa) to the existing safe harbor regulations at 42 CFR 1001.952.
This new paragraph (aa) would protect a discount in the price of an “applicable drug” of a manufacturer that is furnished to an “applicable beneficiary” under the Medicare Coverage Gap Discount Program under section 1860D–14A, as long as the manufacturer participates in, and is in full compliance with all requirements of, the Medicare Coverage Gap Discount Program. The proposed regulation would incorporate by reference the following definitions of the terms “applicable beneficiary” and “applicable drug” which were added by a new section 1860D–14A(g) of the Act:
(A) is enrolled in a prescription drug plan or [a Medicare Advantage Prescription Drug (MA–PD)] plan;
(B) is not enrolled in a qualified retiree prescription drug plan;
(C) is not entitled to an income-related subsidy under section 1860D–14(a); and
(D) who—
(i) has reached or exceeded the initial coverage limit under section 1860D–2(b)(3) during the year; and
(ii) has not incurred costs for covered part D drugs in the year equal to the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B).
(A) approved under a new drug application under section 505(b) of the Federal Food, Drug, and Cosmetic Act or, in the case of a biologic product, licensed under section 351 of the Public Health Service Act (other than a product licensed under subsection (k) of such section 351); and
(B)(i) if the sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;
(ii) if the [prescription drug plan (PDP)] sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or
(iii) is provided through an exception or appeal.
Pursuant to our authority at section 1128B(b)(3)(E) of the Act, we propose to establish a new safe harbor at 42 CFR 1001.952(bb) to protect free or discounted local transportation services provided to Federal health care program beneficiaries. We explored this issue in the context of section 1128A(a)(5) in the past. According to the Act's legislative history, in enacting section 1128A(a)(5) of the Act, Congress intended that the statute not preclude the provision of complimentary local transportation of nominal value (H.R. Conf. Rep. No. 104–736 at 255 (1996)). We have interpreted “nominal value” to mean no more than $10 per item or service or $50 in the aggregate over the course of a year. (
On the basis of our experience in the years since the 2002 Solicitation and our continued concern that our interpretation of “nominal value” in the context of complimentary local transportation may be overly restrictive, we are proposing a safe harbor to the anti-kickback statute to protect not only certain free local transportation but also discounted local transportation that meets certain conditions. As explained above, by operation of section 1128A(i)(6)(B), practices permissible under the safe harbor would also be excepted from the definition of “remuneration” in section 1128A(i)(6) of the Act.
The proposed safe harbor would protect free or discounted local transportation made available to established patients (and, if needed, a person to assist the patient) to obtain medically necessary items and services. We also seek comments on a second format of transportation that would be akin to a shuttle service. We are mindful that certain types of entities may have legitimate financial and patient care interests in the provision of local transportation to patients and that such transportation could, depending on the circumstances, benefit Federal health care programs through reduced costs and Federal beneficiaries through better care, access, and convenience. In an effort to foster these beneficial arrangements without permitting arrangements that negatively impact beneficiaries or Federal health care programs, the safe harbor would impose a number of conditions on protected free or discounted local transportation services as set forth below.
(1) We propose to require that the free or discounted local transportation services be available only to established patients (as described in greater detail below) and be determined in a manner unrelated to the past or anticipated volume or value of Federal health care program business. This requirement is intended to reduce the risk that a health care provider or supplier could use a transportation program for the purpose of increasing business by transporting patients to its own premises or for the purpose of inappropriately inducing referrals from other providers or suppliers by transporting patients to theirs. We propose and solicit comments on a number of safeguards and limitations related to this proposed condition.
(a) We propose that the safe harbor protect free or discounted local transportation offered or provided by any individual or entity, except as provided below (for purposes of this safe harbor, an “Eligible Entity”), subject to meeting all proposed safeguards herein. The term “Eligible Entity” in the proposed safe harbor would not include individuals and entities (or family members or others acting on their behalf) that primarily supply health care items (including, but not limited to durable medical equipment (DME) suppliers or pharmaceutical companies) because we believe that there may be additional risk that these types of entities, which are heavily dependent upon practitioner prescriptions and referrals, would use transportation arrangements to generate business for themselves by steering transported patients to those who order their products. Moreover, these suppliers and manufacturers do not have the broader patient care responsibilities that, for example, hospitals, health systems, clinics, and physicians have, and thus they would seem to have less need to engage in free or discounted local transportation arrangements. We have similar concerns about the laboratory industry even though laboratories furnish services rather than items. Thus, we propose to exclude laboratories from the definition of “Eligible Entity” and solicit comments on that proposal.
For the same and other reasons, we are considering and solicit comments on whether certain other types of providers, suppliers of services, or other entities should be excluded, completely or partially, from protection as an Eligible Entity. In the context of partially limiting protection as an Eligible Entity, we are considering and seek comments on whether certain types of health care providers or suppliers of services should not be protected when they provide free or discounted local transportation to other health care providers or suppliers who refer to them. For example, our oversight experience suggests that overutilization may be occurring in the home health industry. We are concerned that protecting the provision of free or discounted local transportation by home health care providers to physician offices that are actual or potential referral sources might result in both steering (inducing the physician to refer to that particular home health care provider) and overutilization in the form of unnecessary physician visits or unnecessary home health care prescriptions. To address this concern, we are considering excluding home health care providers from safe harbor protection when they furnish free or discounted local transportation to their referral sources (but not excluding them from protection when they provide such transportation to non-referral sources, such as pharmacies). We also solicit comments on whether home health agencies should be excluded from the definition of “Eligible Entity” entirely.
At this time, we propose that the safe harbor criteria apply equally to all Eligible Entities offering the eligible forms of free or discounted local transportation services. In addition to considering whether to exclude certain types of providers or suppliers of services from protection as described above, we are also considering and solicit comments on whether there should be additional safeguards depending on the type of Eligible Entity offering the transportation services and, if so, what types of safeguards could be included to protect beneficial free or discounted local transportation arrangements while at the same time preventing abuses, such as overutilization, improper patient steering, or use of free or discounted local transportation to generate referrals, either referrals initiated by the transported patient or referrals from providers and others to whom the patients are transported.
(b) We propose and solicit comments on limiting safe harbor protection to free or discounted local transportation offered to established patients. Thus, for example, once a patient has selected an oncology practice and has attended an appointment with a physician in the group, the physician could offer transportation assistance to the patient who might have trouble reliably attending appointments for chemotherapy. However, safe harbor protection would not be available to a practice that offers or provides free or discounted transportation to new patients.
(c) We propose to allow free or discounted local transportation services to the premises of a health care provider or supplier, subject to certain limitations that we believe would reduce the risk of using the transportation services to increase referrals. First, the safe harbor would not protect free or discounted local transportation that an Eligible Entity makes available only to patients who were referred to it by particular health care providers or suppliers. Likewise, the safe harbor would not protect an offer of transportation that is contingent
(d) We also propose to require that the offer or granting of free or discounted local transportation services not be based on the type of treatment a patient might receive. Under the proposed safe harbor, an Eligible Entity would be permitted to restrict offers of free or discounted local transportation to patients whose conditions require frequent or critical (
(e) In addition, we are considering and seek comments on whether to require Eligible Entities to maintain documented beneficiary eligibility criteria, such as a requirement that the patient show transportation need or financial need or that the transportation assistance would address risks associated with failure to comply with a treatment regimen. Offering transportation to patients solely on the basis of number of appointments, without regard to transportation need, raises the possibility that the offer might be based upon the volume of Federal health care program business and thus would not be protected.
(f) Finally, we are considering and solicit comments on whether Eligible Entities should be limited for purposes of safe harbor protection to providing transportation for medical purposes or if Eligible Entities should also be protected under the safe harbor if they provide free or discounted local transportation for other purposes that relate to the patient's health care (
We are considering and solicit comments on whether the safe harbor should separately protect transportation supplied by an Eligible Entity, such as a hospital, in the form of bus or van service on regular routes that include neighborhoods served by the hospital, public transportation stops, and the hospital campus or other locations where referring physicians have offices. If we were to protect this type of transportation, protection would not necessarily be limited to established patients of an Eligible Entity. We recognize that certain communities may have a need for this type of service, but we also recognize that such a service presents opportunities for fraud and abuse. Thus, we solicit comments not simply on whether this type of service would be useful but also on what additional safeguards we could include to reduce the risk that Eligible Entities would use this service to bring in patients for unnecessary services, leading to overutilization or compromised quality of care.
(2) We propose to limit the form of transportation by excluding from safe harbor protection air, luxury (
(3) We propose and solicit comments on the following limitations, which would be designed to exclude from
(4) We propose to protect only local transportation services provided: (a) To the patient and, if needed, a family member or other person to assist the patient, to obtain medically necessary items or services and (b) within the local area of the health care provider or supplier to which the patient would be transported. We propose permitting the free or discounted local transportation to be extended to a family member, a friend, or other person involved in the patient's care. We recognize that it may be beneficial or necessary in some circumstances for the patient to be accompanied by another person, and we do not view this extension as increasing the risk of fraud and abuse. We do not intend to require that the need for a patient companion be documented, nor do we intend that transportation of a patient companion be required for the proposed safe harbor to apply to transportation of the patient.
Finally, we propose to limit the safe harbor to local transportation. In the interest of providing clear guidance, we propose that if the distance that the patient would be transported is no more than 25 miles, then the transportation would be deemed to be local. We solicit comments on whether 25 miles is an appropriate distance for this deeming provision. We also solicit comments on whether 25 miles should be a fixed limitation rather than a distance “deemed” to comply with the safe harbor.
We recognize that a distance-based test is not a one-size-fits-all solution. Therefore, we are considering and seek comments on other reasonable methods for interpreting the term “local” either alone or in combination with the 25-mile deeming provision. For example, we are considering and solicit comments on:
• Whether to allow a more expansive service area for patients who reside in rural or underserved areas, and if so, what the appropriate test should be and if “rural” or “underserved” should be defined;
○ If we were to include definitions, we solicit comments on: (1) Defining “underserved” as being located either in a Health Professional Shortage Area or a Medically Underserved Area; and (2) using the definition of “rural” accepted by the Office of Rural Health Policy (i.e., all counties outside a Metropolitan Statistical Area (MSA), plus counties within MSAs with Rural-Urban Commuting Codes 4–10). We also solicit comments on alternate definitions for these terms;
○ If we were to deem a greater distance to be “local” in rural or underserved areas, we solicit comments on expanding the distance to 35 miles or to the nearest facility capable of providing medically necessary items and services, whichever is greater;
• whether to permit free or discounted local transportation to the nearest facility capable of providing medically necessary items and services, even if the beneficiary resides farther away than the proposed mileage limits would otherwise allow;
• whether travel time might be more appropriate than a distance-based method;
• whether the general approach used in the regulations governing exceptions to the self-referral prohibition related to compensation arrangements regarding “geographic area served by the hospital,” which uses a calculation based on the contiguous ZIP Codes from which hospitals draw at least 75 percent of their inpatients (
• whether a more general approach, such as transportation offered to patients within the primary service area of the provider or supplier (or other location) to which the patient would be transported, would be appropriate.
(5) We propose requiring the Eligible Entity that makes the transportation available to bear the costs of the free or discounted local transportation services and not shift the burden of these costs onto Medicare, a State health care program, other payers, or individuals. Moreover, safe harbor protection would not be available if the Eligible Entity providing the transportation and the destination provider or supplier had any referral agreement tied to the transportation. For example, if an ambulance supplier had an agreement with a hospital to provide certain free transports to hospital outpatients (
This proposed rule would amend 42 CFR Part 1003 in two ways. First, we propose to amend the definition of “remuneration” related to the beneficiary inducements CMP to: (a) Add a self-implementing exception that was enacted in BBA of 1997 but was never codified in our regulations; and (b) codify amendments that were enacted in ACA. Second, we propose to codify in our regulations the Gainsharing CMP by interpreting terms used in that statute and adding a definition of “hospital” to the regulations.
This proposed rule would add exceptions to the regulations at Part 1003 addressing the civil monetary penalties prohibition against offering inducements to Medicare or Medicaid beneficiaries that the offeror knows or should know are likely to influence the selection of particular providers, practitioners or suppliers.
Section 4523 of the BBA of 1997 added section 1833(t)(5)(B) of the Act, which required the Secretary to establish a procedure to permit hospitals to elect to reduce copayment amounts for some or all covered hospital outpatient department (OPD) services (as defined in section 1833(t)(1)(B)) to no less than 20 percent of the Medicare OPD fee schedule
Section 4523 of the BBA of 1997 also added subsection (D) to the definition of “remuneration” at section 1128A(i)(6) of the Act. That subsection, which was subsequently redesignated subsection (E), excluded from the definition of “remuneration” “a reduction in the copayment amount for covered OPD services under section 1833(t)(5)(B) [of the Act].”
Section 6402(d)(2)(B) of ACA amends the statutory definition of “remuneration” at section 1128A(i)(6) of the Act by adding four new subparagraphs, (F)–(I), protecting certain charitable and other programs. We propose to amend the definition of “remuneration” in the regulations to include the new statutory exceptions. We believe these exceptions are intended to protect certain arrangements that offer beneficiaries incentives to engage in their wellness or treatment regimens or that improve or increase beneficiary access to care, including better care coordination. However, in structuring the proposals, we are also mindful of the significant potential for abusive arrangements that offer vulnerable beneficiaries (or, in some cases, cooperating beneficiaries) remuneration, whether in cash or in kind, to induce them to obtain items or services billable to Medicare or Medicaid that may be unnecessary, too expensive, or of poor quality. The proposals set forth below aim to ensure that additional protections offered for arrangements that benefit patient care do not lead to such abuses.
The first new exception to the definition of “remuneration,” added at section 1128A(i)(6)(F) of the Act, protects “any other remuneration which promotes access to care and poses a low risk of harm to patients and Federal health care programs (as defined in section 1128B(f) and designated by the Secretary under regulations).”
For purposes of this exception, we propose that the phrase “promotes access to care” mean that the remuneration provided improves a particular beneficiary's ability to obtain medically necessary health care items and services. We solicit comments on whether this phrase should be interpreted more broadly, particularly in light of the movement towards coordinated or integrated care arrangements that depend, in part, on patient engagement. For example, we are considering whether to interpret “promotes access to care” to include encouraging patients to access care, supporting or helping patients to access care, or making access to care more convenient for patients than it would otherwise be. We request that any such comments include specific examples of remuneration that would promote access to care under a broader definition that would not be included within the proposed interpretation above. When providing examples, we request that commenters bear in mind that not all forms of remuneration provided to beneficiaries would be prohibited by the beneficiary inducements CMP. The beneficiary inducements CMP applies only to remuneration that the donor “knows or should know is likely to influence [the recipient] to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made” by Medicare or Medicaid. Thus, remuneration that is not likely to influence a beneficiary to order or receive federally reimbursable items or services from a particular provider, practitioner, or supplier need not meet the conditions of this or any other exception.
We are also considering, and soliciting comments on, whether the test for the exception should be that the remuneration would promote access to care for a particular beneficiary or whether the exception should also apply to remuneration that promotes access to care for a defined beneficiary population generally, such as, by way of example, beneficiaries in a designated care network or beneficiaries being treated under a designated care protocol. Finally, we are considering, and soliciting comment on, whether we should more broadly interpret “access to care” to include care that is non-clinical but reasonably related to the patient's medical care, such as social services.
We propose to interpret the phrase “low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs” as meaning that the remuneration: (1) Is unlikely to interfere with, or skew, clinical decision-making; (2) is unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (3) does not raise patient-safety or quality-of-care concerns.
While some forms of remuneration covered by the prohibition at section 1128A(a)(5) of the Act may promote access to care and some forms may pose a low risk of harm to Medicare and Medicaid beneficiaries and the programs, the amendment to the statute applies only to forms of otherwise prohibited remuneration that meet both of these standards. By way of example, through our advisory opinion process, we have examined and approved arrangements that meet both requirements. In these arrangements, certain hospitals provide lodging assistance to patients and their families when the assistance was necessary for the patient to obtain appropriate care. Because of the specialized nature of these hospitals, the lodging programs were unlikely to steer patients to those particular hospitals, and the costs were not passed on to Federal programs. Yet, the programs enabled patients to get treatment that they might not otherwise have been able to access because of logistical hurdles.
However, not every program that benefits patients would meet the terms of this exception. We continue to believe that offering valuable gifts to beneficiaries in connection with direct or indirect marketing activities is not low risk to beneficiaries or to the Medicare and Medicaid programs. In addition, we are concerned that rewards offered by providers or suppliers to patients purportedly for compliance
While we are concerned about the significant potential for abuse when patients are offered rewards to induce them to receive items or services, we are also aware that, in some circumstances, patients might be offered incentives to encourage them to engage in arrangements that lower health care costs (without compromising quality) or that promote their own wellness and health care, for example, by participating fully in appropriate prescribed treatment, achieving appropriate treatment milestones, or following up with medically necessary appointments. We seek comments on whether otherwise prohibited incentives for compliance with treatment regimens should be permitted under this exception and if so, what limitations or safeguards should be required. For example, should the incentives be subject to specific dollar value limits? Should providers or suppliers offering the incentives be required to document the milestones reached to earn the incentives? Should the form of the incentive be required to bear a reasonable connection to the medical care? Are there quality or performance metrics or monitoring mechanisms that, if required for safe harbor compliance, would help ensure that protected patient incentives are not used to facilitate abusive arrangements that increase costs or compromise quality? Are there different considerations if the offeror of the incentive is at risk, in whole or in part (or directly or indirectly) for the treatment that the incentive is intended to encourage (
We recognize that the Department is undertaking a number of initiatives and demonstration programs with the goal of encouraging better care and better health at lower costs through innovative means, some of which could involve providing incentives to beneficiaries. These programs include, for example, a variety of permanent and demonstration programs testing accountable care organizations, medical homes, bundled payments, coordinated care programs, and other initiatives to improve the quality of care and reduce costs. Some participants in particular CMS models, such as the Bundled Payment for Care Initiative, may have waivers of the CMP for certain arrangements undertaken as part of the applicable CMS model.
We are also soliciting comments on other types of remuneration to beneficiaries not mentioned in this preamble that both promote access to care and pose a low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs, to inform our development of regulatory text for this exception. We are not providing regulatory text at this time, but we solicit proposals for language, including specific examples of the types of remuneration to beneficiaries, that would implement the principles described above.
Section 6402(d)(2)(B) of ACA adds the following exception as new section 1128A(i)(6)(G) of the Act:
The offer or transfer of items or services for free or less than fair market value by a person, if—
(i) the items or services consist of coupons, rebates, or other rewards from a retailer;
(ii) the items or services are offered or transferred on equal terms available to the general public, regardless of health insurance status; and
(iii) the offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by the program under title XVIII or a State health care program (as defined in section 1128(h)).
This exception concerns retailer rewards programs. We are aware that this genre of program has proliferated in recent years at grocery stores, drug stores, “big-box,” and other retailers. Although these retailer rewards programs vary in design, in general most attempt to incentivize and reward customer loyalty by providing benefits to shoppers. Many retailers offering such programs have pharmacies that sell items or services reimbursable by Federal health care programs.
OIG has interpreted the prohibition on offering gifts and other inducements to beneficiaries as permitting Medicare or Medicaid providers generally to offer beneficiaries inexpensive gifts or services (other than cash or cash equivalents) without violating the statute. For enforcement purposes, we have considered inexpensive gifts or services to be those that have a retail value of no more than $10 individually and no more than $50 in the aggregate annually per patient.
Section 6402(d)(2)(B) of ACA excludes from the definition of “remuneration” rewards pursuant to a retailer rewards program that meet three criteria. The first criterion provides that the free or less-than-fair-market-value items or services must “consist of coupons, rebates, or other rewards from a retailer.” We propose to interpret these terms as follows. We interpret a “coupon” as something authorizing a discount on merchandise or services. For instance, if Alpha Store's rewards program mails its customers a flyer offering 20 percent off the purchase price of any item in the store, the flyer would be considered a coupon. Another example of a coupon would be a “buy one get one free” reward. We propose to
The second criterion requires that the items or services be offered or transferred on equal terms to the public, regardless of health insurance status. We propose to interpret this requirement consistent with OIG's longstanding concern that providers and suppliers of items or services reimbursable in whole or in part by Federal health care programs not discriminate against (“lemon drop”)—or, conversely, “cherry pick”—certain patients on the basis of health insurance status. For example, we do not believe that a retailer that targets its rewards program to Medicare beneficiaries only would meet this criterion. On the other hand, if a retailer mailed a coupon for $10 off the next purchase of any item in its store, including prescriptions, to every resident in the surrounding ZIP Code, such a promotion likely would be in compliance with this provision because the coupon would be offered on equal terms to everyone in the ZIP Code, without regard to health insurance status.
The third criterion requires that the offer or transfer of the items or services not be tied to the provision of other items or services reimbursed in whole or in part by Medicare or an applicable State health care program. We believe that the objective of this criterion is to attenuate any connection between federally payable items and services and a loyalty program's rewards; this attenuation should be present both in the manner in which a reward is earned and in the manner in which the reward is redeemed, as explained further below. We do not interpret the prohibition on tying the free or below-market items and services to federally reimbursable services as requiring a complete severance of the offer from the medical care of the individual. At the front end of a transaction (“earning” the reward), the reward should not be conditioned on the purchase of goods or services reimbursed in whole or in part by a Federal health care program and should not treat federally reimbursable items and services in a manner that is different from that in which non-reimbursable items and services are treated. For instance, a drugstore program that offered a $20 coupon to customers, including Medicare beneficiaries, who transferred their prescriptions to the drugstore would not meet this criterion because the $20 coupon would be tied to the drugstore's getting the recipients' Medicare Part D prescription drug business. On the other hand, a program that awarded a $20 coupon once a customer spent $1,000 out-of-pocket in the store—even if a portion of that $1,000 included copayments for prescription drugs—would likely meet the criterion. We also believe that this attenuation must be present on the “redeeming” end of the transaction and therefore interpret it to exclude from protection rewards programs in which the rewards themselves are items or services reimbursed in whole or in part by a Federal health care program. Thus, if Epsilon Store allowed its customers to redeem reward points only for cost-sharing (
A third new statutory provision, added at 1128A(i)(6)(H) of the Act, excepts from the definition of “remuneration” the offer or transfer of items or services for free or at less than fair market value after a determination that the recipient is in financial need and meets certain other criteria.
We begin our consideration of this new provision by noting that it concerns “the offer or transfer of items or services.” The term “items or services” does not include cash or instruments convertible to cash. This interpretation is consistent with our interpretation of “permissible incentives for preventive care” under section 1128A(i)(6)(D), as explained in the preamble to that final rule (“we are excluding from the scope of permissible exceptions cash and instruments convertible to cash” (65 FR 24400, 24409 (Apr. 26, 2000)). Other proposed limits on what may be transferred are discussed in the paragraphs below.
The statute provides that protected items or services may not be offered as part of any advertisement or solicitation. We are including this requirement in our proposed regulation.
The second statutory criterion is that “the items or services are not tied to the provision of other services reimbursed in whole or in part by the program under title XVIII or a State health care program. . . .” To interpret this criterion in a meaningful way, it is necessary to consider it together with the next requirement, which is that there must be a reasonable connection between the items or services and the medical care of the individual. Each requirement is discussed in more detail below.
To be protected under the statute, the item or service being offered or transferred must not be tied to the provision of other reimbursed services. Consistent with our interpretation of the same criterion described in connection with the exception for retailer rewards programs described above, we do not interpret the prohibition on tying the free or below-market items and services to services reimbursable by Medicare or Medicaid as requiring a complete severance of the offer from the medical care of the individual. However, a provider's conditioning the offer or transfer of items or services on the patient's use of other services from the provider that would be reimbursed by Medicare or Medicaid would violate this requirement. For example, we interpret this criterion to exclude from protection offers by providers of lodging or transportation to receive a particular service from the provider.
The third statutory requirement is that there “is a reasonable connection between the items or services and the medical care of the individual.” We must interpret this requirement in the context of this particular exception. This exception is designed to help financially needy individuals access items or services related to their medical
For purposes of this requirement, we interpret “medical care” to refer to the treatment and management of illness or injury and the preservation of health through services offered by the medical, dental, pharmacy, nursing, and allied health professions. Consistent with the statutory language, our proposed regulation would require a “reasonable connection” between the remuneration and the patient's medical care. Whether a “reasonable connection” exists depends on a situation's specific facts and circumstances. In particular, this requirement warrants a dual consideration: Whether a reasonable connection exists from a medical perspective and whether a reasonable connection exists from a financial perspective. A reasonable connection exists from a medical perspective when the items or services would benefit or advance identifiable medical care or treatment that the individual patient is receiving. From a financial perspective, remuneration disproportionately large compared with the medical benefits conferred on the individual patient would not have a reasonable connection to the patient's medical care. Such remuneration gives rise to an inference that at least part of the transfer is being provided to induce beneficiaries to obtain additional services, and such remuneration would not be covered by the Financial-Need-Based Exception.
Examples of transfers of items or services that, in context, might qualify as reasonably connected to medical care include:
• Distribution of protective helmets and safety gear to hemophiliac children;
• distribution of pagers to alert patients with chronic medical conditions to take their drugs;
• provision of free blood pressure checks to hypertensive patients;
• distribution of free nutritional supplements to malnourished patients with end-stage renal disease (ESRD); and
• provision of air conditioners to asthmatic patients.
However, in another context, these same items and services would not likely qualify as reasonably connected to an individual patient's medical care. Most obviously, these would include transfers of items or services to an individual for whom they were not medically indicated. We are considering and seek comments, however, on the boundaries of the concept of “medically indicated.” For example, should a hospital be permitted to provide free bicycle helmets or other child safety devices to financially needy families when children are treated for injuries in the emergency department? We use this example, which arguably is not related to “care,” in order to inform comments on the limits of the “reasonable connection to care” requirement.
From a financial perspective, transfers of items or services of disproportionately large value compared with their medical benefit for the individual patient would not qualify. For example, transfer to a diabetic patient of a smartphone preloaded with an “app” relating to management of blood sugar levels would not likely qualify, while an offer to the diabetic patient of only a complimentary download of the app onto his or her own smartphone might.
We are considering whether we can (and, if so, whether we should) identify specific conditions under which remuneration would be deemed to be “reasonably connected” to the patient's medical care, and we solicit suggestions for possible conditions. For example, one condition we are considering is whether the patient's physician or other health care professional has concluded that the items or services would benefit the individual patient's treatment. Another possible condition is whether, absent the transfer of needed health care items or services, the patient would otherwise be expected to lack access to them for reasons including lack of payment resources; lack of appropriate health care facilities in the patient's community or the surrounding areas; and unique physical, behavioral, or mental health issues that might interfere with the patient's ability to otherwise obtain access. Such circumstances in a patient's case would support the argument for a reasonable connection. We solicit comments about what additional or alternative factors should be considered, if any, in the determination of a reasonable connection between items or services offered or transferred and the medical care of the individual.
The fourth and final statutory requirement is that the items or services may be provided only “after determining in good faith that the individual is in financial need.” We propose to interpret this provision as requiring an individualized assessment of the patient's financial need on a case-by-case basis. Moreover, the assessment must be conducted in good faith. We believe, among other things, that a good faith assessment requires the use of a reasonable set of income guidelines, uniformly applied. This reasonable set of financial need guidelines should be based on objective criteria and be appropriate for the applicable locality. Under our proposal, “financial need” would not be limited to “indigence,” but could include any reasonable measure of financial hardship. What constitutes a good faith determination of “financial need” may vary depending on the individual patient's circumstances; the individual or entity offering the items or services should have flexibility to consider relevant variables. We are considering whether we have authority to require documentation of the financial need assessment as a condition of the exception. Regardless, it would be prudent for those seeking protection under the proposed exception to maintain accurate and contemporaneous documentation of the need assessment and the criteria applied.
The fourth new provision added at section 1128A(i)(6)(I) of the Act excepts from the definition of “remuneration” waivers by a PDP sponsor of a Part D plan or MA organization offering MA–PD plans of any copayment that would be otherwise owed by their enrollees for the first fill of a covered Part D drug that is a generic drug. Section 6402(d)(2)(B) of ACA does not define the term “generic drug,” so we propose to rely on the definition in the Part D regulations at 42 CFR 423.4.
The type of waiver described in the statute is designed to minimize drug costs by encouraging the use of lower cost generic drugs. To implement this waiver, we propose interpreting this statutory provision consistently with current CMS guidance. Thus, sponsors desiring to offer these waivers to their enrollees would be required to disclose this incentive program in their benefit plan package submissions to CMS. We propose to include this requirement both to ensure consistency with current CMS practice and to ensure transparency to beneficiaries when they select Part D or MA plans. We propose to make this exception effective for coverage years beginning after publication of the final rule. We note, however, that CMS already permits these waivers as part of Part D and MA plan benefit designs. Although this proposed regulation will not be effective until a future date, we will not exercise our enforcement authority against plans complying with CMS requirements for these waivers in the interim.
The Gainsharing CMP is a self-implementing law that prohibits
We have previously observed that not all changes in practice necessarily constitute a reduction of services. Health care payment and delivery systems are changing, with greater emphasis on accountability for providing high quality care at lower costs. We propose to codify the Gainsharing CMP in our regulations and interpret certain provisions in a manner that reflects today's health care landscape.
OIG has recognized that gainsharing can be beneficial. In fact, we have approved 16 gainsharing arrangements through our advisory opinion process.
Citing to many of these advisory opinions, the Medicare Payment Advisory Commission (MedPAC) recommended that Congress authorize the Secretary to allow gainsharing arrangements and to regulate those arrangements to protect the quality of care and minimize financial incentives that could influence physician referrals.
Later that year, the Chief Counsel to the Inspector General testified to the House Committee on Ways and Means about gainsharing. The testimony highlighted three types of safeguards that the OIG looked for when evaluating the risks posed by a gainsharing program: Measures that promote accountability, adequate quality controls, and controls on payments that may change referral patterns.
In addition, since 2005, Congress has authorized, and the Secretary has approved, a number of projects involving gainsharing. For example, the Deficit Reduction Act of 2005
Both government and private insurers have increased efforts to lower costs and improve the quality of care. Better ways of measuring quality and outcomes exist now than in the past. The growth of health information technology, developments in data analytics and quality metrics, and broader use of evidence-based medicine all facilitate such measurements and accountability for performance. For example, the Shared Savings program, as enacted, promotes an evidence-based medicine approach for accountable care organizations participating in the Shared Savings program (ACOs): “[t]he ACO shall define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies.” Section 1899(b)(2)(G) of the Act.
Notwithstanding these and similar developments, the Gainsharing CMP has not been amended by Congress. It prohibits a hospital from knowingly making a payment, directly or indirectly, to a physician as an inducement to reduce or limit services provided to Medicare or Medicaid beneficiaries who are under the direct care of the physician. The statute does not prohibit only payments to reduce medically necessary services; it prohibits payments to reduce or limit “services.” Without a change in the statute, we continue to believe that we cannot read a “medically necessary” element into the prohibition. However, given the changes in the practice of medicine over the years, including collaborative efforts among providers and practitioners and the rise of widely accepted clinical metrics, we are considering a narrower interpretation of the term “reduce or limit services” than we have previously held.
Since issuing the Gainsharing SAB, we have had the opportunity to examine a number of different gainsharing arrangements through our advisory opinion process. In each favorable opinion we issued, we found that the cost-saving measures proposed by the hospitals implicated the statute. For example, in OIG Advisory Opinion No. 05–01, we stated: “the Proposed Arrangement constitutes an inducement to reduce or limit the current medical
The regulatory text we are proposing largely tracks the statute and is similar to the text proposed in 1994. Besides codifying the gainsharing prohibition itself, we propose to add a definition of “hospital” to proposed section 42 CFR 1003.110 (current § 1003.101). This definition would refer to the definitions of “hospital” and “critical access hospital” in the Act. In addition, however, we are considering and solicit comments on whether we should include a definition of the term “reduce or limit services” to address the considerations we express above. If so, we solicit specific proposals and safeguards that we should include in this definition to ensure that the goal of the statute is met: To prevent hospitals from paying physicians to discharge patients too soon or take other action that inappropriately limits a beneficiary's care. We are not proposing text of a definition at this time. We specifically solicit comments on the following areas of concern, but we welcome any other comments relating to the topic:
• We have interpreted the prohibition on payments to reduce or limit
• Should a hospital's decision to standardize certain items (
• Should a hospital's decision to rely on protocols based on objective quality metrics for certain procedures ever be deemed to constitute reducing or limiting care (
• Should a hospital desiring to standardize items or processes as part of a gainsharing program be required to establish certain thresholds based on historical experience or clinical protocols, beyond which participating physicians could not share in cost savings (
• If we define “reduce or limit services,” should the regulation include a requirement that the hospital and/or physician participating in a gainsharing program notify potentially affected patients about the program? Would such a requirement help ensure that gainsharing payments were for legitimate purposes and not for the purpose of reducing or limiting care?
Our proposal to define the term “reduce or limit services” and our solicitation of comments related to that definition reflect our recognition that the delivery of health care, and the potential safeguards to protect patients and promote accountability for outcomes, has been changing. We seek to interpret the statutory prohibition broadly enough to protect beneficiaries and Federal health care programs, but narrowly enough to allow low risk programs that further the goal of delivering high quality health care at a lower cost. We emphasize that this proposed regulation would interpret the Gainsharing CMP. We have no authority to create an exception to the statute.
We have examined the impact of this proposed rule as required by Executive Order 12866, the Regulatory Flexibility Act (RFA) of 1980, the Unfunded Mandates Reform Act of 1995, and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulations are necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects; distributive impacts; and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects,
This proposed rule would implement or codify new and existing CMP authorities and exceptions and implement new or revised anti-kickback statute safe harbors. The vast majority of providers and Federal health care programs would be minimally impacted, if at all, by these proposed revisions.
The changes to the safe harbors and CMP authorities and exceptions would allow providers to enter into certain beneficial arrangements. In doing so, this regulation would impose no requirements on any party. Providers would be allowed to voluntarily seek to comply with these provisions so that they would have assurance that participating in certain agreements would not subject them to liability under the anti-kickback statute and the beneficiary inducement or gainsharing CMPs. These safe harbors and exceptions facilitate providers' ability to provide important health care and related services to communities in need. We believe that the aggregate economic impact of the changes to these regulations would be minimal and
Accordingly, we believe that the likely aggregate economic effect of these regulations would be significantly less than $100 million.
The RFA and the Small Business Regulatory Enforcement and Fairness Act of 1996, which amended the RFA, require agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, non-profit organizations, and government agencies. Most providers are considered small entities by having revenues of $7 million to $35.5 million or less in any one year. For purposes of the RFA, most physicians and suppliers are considered small entities.
The changes to the CMP provisions would be minimal, and the changes to the anti-kickback statute safe harbors would not significantly affect small providers as these would not impose any requirement on any party.
In summary, we have concluded that this proposed rule should not have a significant impact on the operations of a substantial number of small providers and that a regulatory flexibility analysis is not required for this rulemaking.
In addition, section 1102(b) of the Act (42 U.S.C. 1302) requires us to prepare a regulatory impact analysis if a rule under Titles XVIII or XIX or section B of Title XI of the Act may have a significant impact on the operations of a substantial number of small rural hospitals. For the reasons stated above, we do not believe that any provisions or changes proposed here would have a significant impact on the operations of rural hospitals. Thus, an analysis under section 1102(b) is not required for this rulemaking.
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104–4, also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditures in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million, adjusted for inflation. We believe that no significant costs would be associated with these proposed revisions that would impose any mandates on State, local, or tribal governments or the private sector that would result in an expenditure of $141 million (after adjustment for inflation) in any given year.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirements or costs on State and local governments, preempts State law, or otherwise has Federalism implications. In reviewing this rule under the threshold criteria of Executive Order 13132, we have determined that this proposed rule would not significantly affect the rights, roles, and responsibilities of State or local governments.
This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995.
Administrative practice and procedure, Fraud, Grant programs—health, Health facilities, Health professions, Maternal and child health, Medicaid, Medicare.
Fraud, Grant programs—health, Health facilities, Health professions, Medicaid, Reporting and recordkeeping.
For the reasons set forth in the preamble, the Office of Inspector General, Department of Health and Human Services, proposes to amend 42 CFR chapter V as follows:
42 U.S.C. 1302, 1320a–7, 1320a–7b, 1395u(j), 1395u(k), 1395w–104(e)(6), 1395y(d), 1395y(e), 1395cc(b)(2)(D), (E) and (F), and 1395hh; and sec. 2455, Public Law 103–355, 108 Stat. 3327 (31 U.S.C. 6101 note).
(f) * * *
(2) Any payment the participant makes to the referral service is assessed equally against and collected equally from all participants and is based only on the cost of operating the referral service, and not on the volume or value of any referrals to or business otherwise generated by either party for the other party for which payment may be made in whole or in part under Medicare, Medicaid, or ther Federal health care programs.
(k)
(3) If the copayment, coinsurance, or deductible amounts are owed to a pharmacy (including, but not limited to, pharmacies of the Indian Health Service, Indian tribes, tribal organizations, and urban Indian organizations) for cost-sharing imposed under part D of Title XVIII provided that—
(i) The waiver is not offered as part of an advertisement or solicitation and
(ii) Except for waivers or reductions offered to subsidy-eligible individuals (as defined in section 1860D–14(a)(3)) to which only requirement in paragraph (k)(3)(i) of this section applies:
(A) The pharmacy does not routinely waive copayment, coinsurance, or deductible amounts and
(B) The pharmacy waives the copayment, coinsurance, or deductible amounts only after determining in good faith that the individual is in financial need or fails to collect the copayment, coinsurance, or deductible after making reasonable collection efforts.
(4) If the coinsurance or deductible amounts are owed to an ambulance provider or supplier for emergency ambulance services for which Medicare pays under a fee-for-service payment system and all the following conditions are met:
(i) The ambulance provider or supplier is owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe;
(ii) The ambulance provider or supplier is the Medicare Part B provider or supplier of the emergency ambulance services;
(iii) The ambulance provider's or supplier's reduction or waiver of coinsurance or deductible amounts is not considered to be the furnishing of free services paid for directly or indirectly by a government entity;
(iv) The ambulance supplier offers the reduction or waiver on a uniform basis, without regard to patient-specific factors; and
(v) The ambulance provider or supplier must not later claim the amount reduced or waived as a bad debt for payment purposes under Medicare or otherwise shift the burden of the reduction or waiver onto Medicare, a State health care program, other payers, or individuals.
(z) As used in section 1128B of the Act, “remuneration” does not include any remuneration between a federally qualified health center (or an entity controlled by such a health center) and a Medicare Advantage organization pursuant to a written agreement described in section 1853(a)(4) of the Act.
(aa)
(1) The discounted drug meets the definition of “applicable drug” set forth in section 1860D–14A(g) of the Act;
(2) The beneficiary receiving the discount meets the definition of “applicable beneficiary” set forth in section 1860D–14A(g) of the Act; and
(3) The manufacturer of the drug participates in, and is in full compliance with all requirements of, the Medicare Coverage Gap Discount Program.
(bb)
(1) The availability of the free or discounted local transportation services is not determined in a manner related to the past or anticipated volume or value of Federal health care program business;
(2) The free or discounted local transportation services do not take the form of air, luxury, or ambulance-level transportation;
(3) The free or discounted local transportation services are not marketed or advertised, no marketing of health care items and services occurs during the course of the transportation or at any time by drivers who provide the transportation, and drivers or others arranging for the transportation are not paid on a per-beneficiary transported basis;
(4) The Eligible Entity that makes the free or discounted transportation available furnishes the services only:
(i) To the established patient (and, if needed, a person to assist the patient) to obtain medically necessary items or services, and
(ii) Within the local area of the health care provider or supplier to which the patient would be transported;
(5) The Eligible Entity that makes the transportation available bears the costs of the free or discounted local transportation services and does not shift the burden of these costs onto Medicare, a State health care program, other payers, or individuals.
Note to paragraph (bb): For purposes of this paragraph (bb), an “Eligible Entity” is any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items; and if the distance from the patient's location to the provider or supplier to which the patient would be transported is no more than 25 miles, the transportation is deemed to be local.
42 U.S.C. 262a, 1302, 1320–7, 1320a–7a, 1320b–10, 1395u(j), 1395u(k), 1395cc(j), 1395w–141(i)(3), 1395dd(d)(1), 1395mm, 1395nn(g), 1395ss(d), 1396b(m), 11131(c), and 11137(b)(2).
(5) A reduction in the copayment amount for covered OPD services under section 1833(t)(8)(B) of the Act;
(6) [Reserved];
(7) The offer or transfer of items or services for free or less than fair market value by a person if—
(i) The items or services consist of coupons, rebates, or other rewards from a retailer;
(ii) The items or services are offered or transferred on equal terms available to the general public, regardless of health insurance status; and
(iii) The offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by the program under title XVIII or a State health care program (as defined in section 1128(h) of the Act);
(8) The offer or transfer of items or services for free or less than fair market value by a person, if—
(i) The items or services are not offered as part of any advertisement or solicitation;
(ii) The offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by the program under Title XVIII or a State health care program;
(iii) There is a reasonable connection between the items or services and the medical care of the individual; and
(iv) The person provides the items or services after determining in good faith that the individual is in financial need;
(9) Waivers by a sponsor of a Prescription Drug Plan under part D of Title XVIII or a Medicare Advantage organization offering an MA–PD Plan under part C of such title of any copayment for the first fill of a covered Part D drug (as defined in section 1860D–2(e)) that is a generic drug (as defined in 42 CFR 423.4) for individuals enrolled in the Prescription Drug Plan or MA–PD Plan, respectively, as long as such waivers are included in the benefit design package submitted to CMS. This exception is effective for coverage years beginning after publication of the final rule.
OIG may impose a penalty against any person who it determines in accordance with this part—
(a) Is a hospital that knowingly makes a payment, directly or indirectly, overtly or covertly, in cash or in kind, to a physician as an inducement to reduce or limit services provided to an individual who is eligible for Medicare or Medicaid benefits and who is under the direct care of the physician;
(b) Is a physician who knowingly receives a payment described in paragraph (a) of this section.
(a) OIG may impose a penalty against a hospital of not more than $2,000 for each individual for whom payment was made to a physician in violation of § 1003.700.
(b) OIG may impose a penalty against a physician of not more than $2,000 for each individual for whom the physician received payment from a hospital in violation of § 1003.700.
In determining the amount of any penalty or assessment, OIG will consider the factors listed in § 1003.140, as well as the following:
(a) The nature of the payment designed to reduce or limit services and the circumstances under which it was made,
(b) The extent to which the payment encouraged the limiting of medical care or the premature discharge of the patient,
(c) The extent to which the payment caused actual or potential harm to program beneficiaries, and
(d) The financial condition of the hospital (or physician) involved in the offering (or acceptance) of the payment.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS issues a proposed rule that would implement Amendment 107 to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (BSAI FMP). If approved, Amendment 107 would establish seasonal transit areas for vessels designated on Federal Fisheries Permits (FFPs) through Walrus Protection Areas in northern Bristol Bay, AK. This action would allow vessels designated on FFPs to transit through Walrus Protection Areas in the Exclusive Economic Zone (EEZ) near Round Island and Cape Peirce from April 1 through August 15, annually. This action is necessary to restore the access of federally permitted vessels to transit through Walrus Protection Areas that was limited by regulations implementing Amendment 83 to the Fishery Management Plan for Groundfish of the Gulf of Alaska (GOA FMP) and to maintain suitable protection for walruses on Round Island and Cape Peirce. This action would maintain an existing prohibition on deploying fishing gear in Walrus Protection Areas by vessels designated on an FFP. This action is intended to promote the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act, the BSAI FMP, and other applicable law.
Submit comments on or before November 3, 2014.
You may submit comments on this document, identified by NOAA–NMFS–2014–0066, by either of the following methods:
•
•
Electronic copies of the Environmental Assessment/Regulatory Impact Review/Initial Regulatory Flexibility Analysis (Analysis) prepared for this action are available from
Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed action may be submitted to NMFS at the above address and by email to
Anne Marie Eich, 907–586–7172.
NMFS manages groundfish fisheries in the EEZ off Alaska under the GOA FMP and the BSAI FMP. The North Pacific Fishery Management Council (Council) prepared these FMPs under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801,
The following sections of the preamble describe: (1) The Walrus Protection Areas; (2) the effects of disturbance on walruses; (3) the areas and vessels affected by this proposed action; and (4) the proposed action.
Thousands of walruses, primarily adult males, use haulouts in northern Bristol Bay, AK, during spring through fall each year. The State of Alaska (State) and NMFS have implemented a variety of management measures to protect walruses in northern Bristol Bay. In 1960, the State established the Walrus Islands State Game Sanctuary (Walrus Sanctuary) to protect a group of seven small, craggy islands and their adjacent waters in northern Bristol Bay commonly used by walruses. The Walrus Sanctuary includes Round Island, Summit Island, Crooked Island, High Island, Black Rock, and The Twins.
The State maintains the most protective management measures around Round Island, one of the largest and well-established walrus haulouts in northern Bristol Bay. The State permits visitors to Round Island for wildlife viewing or research. The State prohibits all other vessel traffic within Alaska State waters (from 0 to 3 nautical miles (nm) from shore) around Round Island, but the State has no restrictions on vessel traffic in Alaska State waters around the other islands in the Walrus Sanctuary. The State limited vessel traffic around Round Island to reduce the potential for vessel activities that disturb walruses. Walruses are known to be sensitive to disturbance. Walrus calves or adults can be injured or killed by stampeding adults (see Section 3.2.1.6 of the Analysis).
The Council has recommended and NMFS has implemented a series of closure areas, known as Walrus Protection Areas, around important walrus haulout sites in Bristol Bay to reduce potential disturbances to walruses from fishing activities. These management measures apply in a portion of Federal waters in the EEZ (i.e., from 3 nm to 12 nm from shore). Walrus Protection Areas were first implemented in the early 1990s to reduce disturbance from fishing activities based on apparent correlations between fishing activities and observed declines in walrus populations at haulouts in northern Bristol Bay during the 1980s.
In January 1990, NMFS implemented Amendment 13 to the BSAI FMP to prohibit groundfish fishing within 3 to 12 nm from Round Island, The Twins, and Cape Peirce in northern Bristol Bay from April 1 through September 30 (54 FR 50386, December 6, 1989; corrected 55 FR 1036, January 11, 1990; technically amended 56 FR 5775, February 13, 1991). The Council and NMFS intended Amendment 13 to reduce potential disturbance to walruses from groundfish fisheries. Amendment 13 prohibited vessels from fishing for groundfish in the areas around Round Island, Cape Peirce, and The Twins because these areas are known to be important terrestrial haulouts for walruses. Specifically, Round Island and Cape Peirce are the two largest walrus terrestrial haulouts in the United States. Amendment 13 prohibited vessels from fishing for groundfish annually from April 1 through September 30 to reduce disturbance to walruses during periods of peak walrus use (see Section 1.2 of the Analysis for additional information on patterns of use of haulouts by walruses). These regulations were in effect from January 1, 1990 through April 26, 1992.
On April 26, 1992, NMFS implemented Amendment 17 to the BSAI FMP (57 FR 10430, March 26, 1992). Amendment 17 encompassed the same areas and seasonal closure period as those established under Amendment 13. However, Amendment 17 closed Federal waters to all federally permitted vessels in 3 to 12 nm zones around Round Island, the Twins, and Cape Peirce annually from April 1 through September 30. Amendment 17 defined federally permitted vessels as vessels that are designated on an FFP (see regulations at § 679.22(a)(4)). Amendment 17 was more restrictive than Amendment 13. Amendment 13 prohibited fishing for groundfish, but did not prohibit vessels designated on an FFP from entering and transiting through Walrus Protection Areas. Because Amendment 17 prohibited entry and transit by vessels designated on an FFP in these areas, it effectively prohibited groundfish fishing in these areas because a vessel cannot fish for groundfish in Federal waters without being designated on an FFP. The regulations implementing Amendment 17 superseded those implementing Amendment 13.
Since the early 1990s, additional research by the Alaska Department of Fish and Game has improved NMFS' understanding of the potential disturbance to walruses from vessel traffic. The new research indicates that disturbance to walruses from vessel traffic more than 3 nm from haulouts has not been observed in northern Bristol Bay. Specifically, Section 3.2.1.6 of the Analysis notes that recent research at Round Island indicates that walruses were not disturbed (e.g., raised their heads, reoriented, or dispersed) by vessel traffic more than 3 nm from Round Island. In 2011, Sell and Weiss from the Alaska Department of Fish and Game reported that of the 56 observed anthropogenic events (e.g., vessel traffic, aircraft traffic) occurring more than 3 nm from Round Island, only four events resulted in observable disturbance to walruses. All these disturbance events were due to aircraft noise. In 2012, Weiss and Sell reported that they did not observe any disturbance to walruses from anthropogenic events occurring more than 3 nm from Round Island.
Based on these findings, and other research described in Section 3.2.1.6 of the Analysis, the U.S. Fish and Wildlife Service (USFWS) released guidelines for vessels operating near walrus haulouts in Bristol Bay in September, 2012. Under the Marine Mammal Protection Act of 1972 (MMPA), walruses are co-managed by USFWS and the Eskimo Walrus Commission (EWC), with scientific research support from the U.S. Geological Survey and the State. The guidelines released by USFWS are intended to minimize potential disturbance to walruses. These guidelines include descriptions of disturbance behavior and best-practices for mariners to avoid disturbance to walruses. Best-practices include:
• Marine vessels 50 feet in length or less should remain at least 0.5 nm away from hauled out walruses;
• Marine vessels 50–100 feet in length should remain at least 1 nm away from hauled out walruses;
• Marine vessels greater than 100 feet in length should remain at least 3 nm away from hauled out walruses;
• All vessels should refrain from anchoring, or conducting tendering or fishing operations within 3 miles of hauled out walruses;
• All vessels should avoid sudden changes in engine noise, using loud speakers, loud deck equipment or other operations that produce noise when in the vicinity of walrus haulouts;
• All vessels should avoid excessive speed or sudden changes in speed or direction when approaching or departing walrus haulout areas;
• All vessels should reduce speed and maintain a minimum 0.5 nm exclusion zone around feeding walruses;
• All vessels should not operate in such a manner to separate members of a group of walruses from other members of the group; and
• All vessels should adjust speed according to weather conditions to reduce the likelihood of injury to walruses.
During the development of this proposed action, the Council communicated with the USFWS and the Qayassiq Walrus Commission to avoid
This proposed action would apply in the northern Bristol Bay. This proposed action would apply to Federal waters in statistical area 514 of the BSAI, as shown in Figure 1 to 50 CFR part 679. This proposed action would not apply in State waters. The State restricts vessel transit only in State waters around Round Island, but not in State waters elsewhere in the area. All vessels, including vessels designated on an FFP, can transit through State waters around Cape Peirce and The Twins. This proposed action would only affect vessels designated on an FFP. Vessels that are not designated on an FFP are not regulated in the Walrus Protection Areas and can enter and transit through Walrus Protection Areas.
Prior to 2012, vessel owners were able to easily surrender an FFP for a period of time to allow that vessel to transit through Walrus Protection Areas. Some vessel owners surrendered their FFPs during the spring and summer so that these vessels could transit through Walrus Protection Areas around Round Island and Cape Peirce when operating as a tender. A tender is a vessel that is used to transport unprocessed fish or shellfish received from another vessel to an associated processor (see definition at § 679.2). In northern Bristol Bay, many vessels that are active in federally managed fisheries operate as tenders for vessels fishing in State-managed herring and salmon fisheries. These tenders receive catch in Togiak Bay, Kulukak Bay, and other bays in northern Bristol Bay and deliver that catch to processing plants in Dillingham and other communities in Bristol Bay. Prior to 2012, some vessel owners also surrendered their FFPs to allow a vessel to transit through Walrus Protection Areas to deliver processed groundfish from fishing grounds in the Bering Sea to delivery locations in northern Bristol Bay.
Without an FFP, vessels can transit through Walrus Protection Areas and avoid the additional time, operating expenses, increased exposure to weather, and navigational challenges when operating in State waters compared to vessels that are designated on an FFP and are prohibited from entering Walrus Protection Areas. Section 1.3.2 of the Analysis describes the factors affecting vessels that are prohibited from transiting through Walrus Protection Areas. The following paragraphs summarize these factors.
On January 1, 2012, NMFS implemented Amendment 83 to the GOA FMP (76 FR 74670, December 1, 2011; corrected 76 FR 81872, December 29, 2011). Regulations implementing Amendment 83 to the GOA FMP (Amendment 83) limited the ability of vessel owners to easily surrender an FFP. An FFP is issued for 3 years under the FFP application process and is in effect from the effective date through the expiration date, unless it is revoked, suspended, surrendered (see regulations at § 679.4(b)(4)(i)). NMFS will not reissue a surrendered FFP with certain endorsements (see regulations at § 679.4(b)(4)(ii)); therefore, a vessel owner cannot surrender an FFP more than once in a 3-year period to transit the Walrus Protection Areas.
NMFS intended the regulations implementing Amendment 83 to allow the proper tracking and accounting of Federal fishery allocations. NMFS did not intend the regulations to specifically limit the ability of vessel owners to surrender FFPs to transit through Walrus Protection Areas when operating as tenders or delivering processed groundfish. However, the regulations implementing Amendment 83 require vessel owners to either surrender their FFPs to transit through Walrus Protection Areas when operating as tenders or delivering processed groundfish and be prohibited from deploying fishing gear in Federal waters for up to 3 years, or retain their FFPs and be prohibited from transiting through Walrus Protection Areas.
Vessel owners prefer to transit through the Walrus Protection Areas north of Round Island because transiting to the north and outside of Walrus Protection Areas requires vessels to transit through shallower waters in State waters. Transit through shallower waters can be more difficult to navigate and may create additional safety concerns. Transiting to the south of Round Island and outside of the Walrus Protection Areas requires vessels to transit around Round Island and through Hagemeister Strait. This route adds considerable distance and time to each transit, which increases fuel costs and potentially exposes vessels to more adverse weather conditions for a longer period of time. Transit through Hagemeister Strait also puts vessels in close proximity (i.e., within 3 nm) to a walrus haulout on the southern tip of Hagemeister Island. This vessel traffic may disturb walruses using the haulout on Hagemeister Island. An alternative route that would allow vessels designated on FFPs to transit through a portion of the Walrus Protection Areas north of Round Island could reduce vessel transits through Hagemeister Strait and the potential for disturbance to walruses using the haulout on Hagemeister Island.
Currently, vessels can transit through State waters (from 0 to 3 nm from the shore) near Cape Peirce while tendering herring or salmon from fishing locations near Cape Peirce, or when delivering groundfish in northern Bristol Bay. As noted in Section 3.2.7.3 of the Analysis, USFWS has not monitored walruses in the Cape Peirce area for disturbance and the incidence of disturbance at Cape Peirce is not known. However, vessels transiting through State waters (i.e., within 3 nm of Cape Peirce) may be more likely to disturb walruses. An alternative route that would allow vessels designated on FFPs to transit through a portion of the Walrus Protection Areas east of Cape Peirce could reduce vessel transits through State waters near Cape Peirce and the potential for disturbance to walruses using the haulout at Cape Peirce.
This proposed action would allow vessels designated on FFPs to enter and transit through specific areas of the Walrus Protection Areas near Round Island and Cape Peirce. These transit areas are shown in Figure 1 below.
The Council recommended and NMFS proposes these transit areas based on information in Sections 3.7 and 4 of the Analysis indicating that allowing vessels designated on FFPs to transit areas near Round Island and Cape Peirce would: (1) Not increase potential disturbance of walruses on Round Island and Cape Peirce; (2) not be expected to increase vessel traffic through Walrus Protection Areas, particularly when compared to vessel traffic patterns prior to the implementation of Amendment 83; (3) restore the ability for vessels designated on an FFP that historically served as tenders for the northern Bristol Bay herring and salmon fisheries before implementation of Amendment 83 to transit through Walrus Protection Areas; (4) restore the ability of vessels designated on an FFP that delivered processed groundfish to northern Bristol Bay before implementation of Amendment 83 to transit through Walrus Protection Areas; and (5) reduce the potential for disturbance to walruses using haulouts on Hagemeister Island and Cape Peirce. The following sections describe proposed transit areas near Round Island and Cape Peirce and a proposed prohibition to vessels designated on FFPs from deploying fishing gear in Walrus Protection Areas.
This proposed action would add regulations at § 679.22(a)(4)(ii) to establish a transit area through the Walrus Protection Areas near Round Island. This proposed action would establish a transit area in the EEZ near Round Island from April 1 through August 15, annually, north of a line from 58°47.90′ N, 160°21.91′ W to 58°32.94′ N, 159°35.45′ W. (Please see Figure 1 of this preamble.)
This transit area is at least 3 nm from Round Island at its closest point and is more than 9 nm from the haulouts on The Twins at its closest point. As noted in Section 3.2.7.2.1 of the Analysis, there has been no recorded visible disturbance to walruses from vessel traffic more than 3 nm from Round Island, but disturbance from vessel traffic has been documented within 3 nm from Round Island. This proposed action would not allow vessels designated on an FFP to transit within 3 nm of Round Island or The Twins.
The Council recommended and NMFS proposes this transit area to maintain suitable protection for walruses on Round Island and to allow tenders and vessels delivering groundfish access to a transit route north of Round Island. NMFS expects this proposed transit area to reduce the potential for vessels to transit near Hagemeister Island, a known walrus haulout, because vessels would be allowed to transit north of Round Island and to avoid the route near Hagemeister Island. This proposed action would also allow vessels to transit through Federal waters further from shore and thereby reduce transit through shallower State waters that are more difficult to navigate.
The transit area near Round Island would open April 1 because this proposed action is intended to relieve the existing regulations that prohibit entry and transit to vessels designated on an FFP in Walrus Protection Areas on April 1, the start of peak walrus use in the area. This transit area would be closed after August 15 because of the following: (1) The herring and most salmon fisheries are completed by August 15, and tender vessels are no longer active and do not require transit through Walrus Protection Areas after that date; (2) vessels transiting to deliver groundfish in northern Bristol Bay typically have completed their deliveries by August 15 and do not require transit through Walrus
This proposed action would add regulations at § 679.22(a)(4)(ii) to establish transit areas through the Walrus Protection Areas at Cape Peirce. This proposed action would establish a transit area in the EEZ near Cape Peirce that would be open from April 1 through August 15, annually, east of a line from 58°30.00′ N, 161°46.20′ W to 58°21.00′ N, 161°46.20′ W. (Please see Figure 1 of this preamble.) This transit area is at least 3 nm from Cape Peirce at its closest point.
The Council recommended and NMFS proposes the transit area through the Walrus Protection Areas near Cape Peirce to provide an opportunity for vessels with FFPs to travel farther from shore while tendering herring or salmon and avoid transit through State waters near walrus haulouts at Cape Peirce. NMFS expects that the transit area will reduce the likelihood of disturbance to walruses at the Cape Peirce Walrus Protection Areas.
The transit area would be open from April 1 through August 15 consistent with the opening and closing dates established for the Round Island transit area. As noted in the previous section of this preamble, these dates would facilitate vessel transits for tendering and groundfish deliveries. NMFS notes that vessels designated on FFPs would still be prohibited from entering and transiting through the Walrus Protection Areas near Cape Peirce after August 15 through September 30. NMFS expects this prohibition would not adversely affect vessels designated on FFPs because tendering operations and groundfish deliveries in northern Bristol Bay do not occur during the August 16 through September 30 period.
This proposed action would add regulations at § 679.22(a)(4)(ii) to prohibit vessels designated on an FFP from deploying fishing gear in Walrus Protection Areas from April 1 through September 30 annually. As noted throughout this preamble, this proposed action is intended to remove a prohibition that limits vessels from entering and transiting through Walrus Protection Areas. This proposed action is not intended to allow vessels designated on FFPs to fish in Walrus Protection Areas from April 1 through September 30. Section 3.1 of the Analysis notes that this proposed action would not be expected to affect the timing, duration, effort, or harvest levels in the fisheries in northern Bristol Bay because this proposed action would not open Walrus Protection Areas to fishing by vessels designated on an FFP. Because vessels designated on FFPs are already prohibited from deploying fishing gear in Walrus Protection Areas, this proposed prohibition would maintain the status quo prohibition on deploying fishing gear in Walrus Protection Areas. Therefore, this proposed action would not affect any existing fishing operations.
Pursuant to section 304(b) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed action is consistent with the FMPs, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.
This proposed action has been determined to be not significant for the purposes of Executive Order (E.O.) 12866.
An RIR was prepared to assess all costs and benefits of available regulatory alternatives. The RIR considers all quantitative and qualitative measures. A copy of this analysis is available from NMFS (see
An Initial Regulatory Flexibility Analysis (IRFA) was prepared, as required by section 603 of the Regulatory Flexibility Act. The IRFA describes the economic impact this proposed rule, if adopted, would have on small entities. An IRFA is required to include (a) a description of the reasons why action by the agency is being considered; (b) a succinct statement of the objectives of, and legal basis for, the proposed rule; (c) a description of and, where feasible, an estimate of the number of small entities to which the proposed rule will apply; (d) a description of the projected reporting, recordkeeping, and other compliance requirements of the proposed rule; (e) an identification, to the extent practicable, of all relevant Federal rules which may duplicate, overlap or conflict with the proposed rule; and (f) a description of any significant alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities. A description of the action, why it is being considered, and the legal basis for this action are contained at the beginning of this section in the preamble and in the
The entities that could be directly regulated by the proposed action are those businesses that tender herring or salmon from fisheries to delivery locations in northern Bristol Bay, and those businesses that deliver processed groundfish from the Bering Sea to locations in northern Bristol Bay. Vessels tendering herring or salmon are transporting harvested fish. Because tender vessel operators enter into private contracts with herring and salmon fishing vessel operators to transport their catch, revenue information from tenders is not available. Based on information from 2012, the most recent year of complete data, a maximum of 64 vessels were estimated to have operated as tenders in the herring and salmon fisheries in northern Bristol Bay. These vessels could have been designated on an FFP and could be affected by this proposed action. Because no revenue information is available on these vessels each of these vessels were assumed to be a small entity.
Based on information from 2012, the most recent year of complete data, a maximum of 6 vessels were estimated to have delivered processed groundfish to locations in northern Bristol Bay. These vessels could have been designated on FFP and could be affected by this proposed action. All of these vessels were affiliated through common management under cooperative fishing arrangements. These affiliated vessels had ex-vessel annual revenues in 2012 that exceeded the annual revenue limit of $20.5 million used by the Small Business Administration to define a small entity harvesting or processing
None of the alternatives would modify existing reporting, recordkeeping, or other compliance requirements. No duplication, overlap, or conflict between this proposed action and existing Federal rules has been identified.
An IRFA requires a description of any significant alternatives to the proposed alternative that accomplish the stated objectives, are consistent with applicable statutes, and that would minimize any significant economic impact of the proposed action on small entities. The IRFA considered three alternatives. Alternative 1, the no action (status quo) alternative, would maintain the existing closures between 3 and 12 nm around Round Island and Cape Peirce, and would not allow vessels designated on an FFP to transit these areas. Therefore, Alternative 1 represents the most restrictive alternative considered and the alternative with the highest potential cost to regulated small entities.
Alternative 2 would establish a transit area through the existing Walrus Protection Areas near Round Island. Alternative 2 also included three options, Options 1, 2 and 3 to allow the closest point of the transit area to be within 3 nm, 4.5 nm, and 6 nm from Round Island, respectively. Alternative 3 would establish a transit area through Walrus Protection Areas near Cape Peirce.
The alternatives analyzed but not selected are Alternative 1 (status quo, do not allow transit through the protection areas) and Alternative 2, Options 2 and 3. All of these alternatives and options are more restrictive than the proposed action. The proposed action is Alternative 2, Option 1 and Alternative 3. Alternative 2, Option 1 allows vessels to transit closer to Round Island than Alternative 2, Option 2 and Alternative 2, Option 3. Therefore, Alternative 2, Option 1 is the least restrictive of the three options under Alternative 2. Alternative 3 provides a seasonal transit area around Cape Peirce. This proposed action represents the alternatives that minimize the potential cost to directly regulated small entities. The boundaries farther from Round Island (Options 2 and 3) may incrementally reduce the potential for disturbance to walruses on Round Island (see Section 3.2.7 of the Analysis), but are not likely to significantly affect the distances traveled as vessels with FFPs transit the protected area. The differences in transit time or fuel costs are not likely to be significantly different between these options. As noted in Section 3.2.7.2.1 of the Analysis, there has been no recorded visible disturbance to walruses from vessel traffic more than 3 nm from Round Island.
The Council also considered rescinding the protection areas around Round Island and Cape Peirce for all or a portion of the year, eliminating the barriers to transiting the Walrus Protection Areas. Rescission of the protection areas would reduce costs to regulated small entities more than the proposed action. However, these alternatives were not analyzed because they do not meet the purpose and need of the proposed action to maintain protection of walruses in these important haulout sites.
Executive Order (E.O.) 13175 of November 6, 2000 (25 U.S.C. 450 note), the Executive Memorandum of April 29, 1994 (25 U.S.C. 450 note), the American Indian and Alaska Native Policy of the U.S. Department of Commerce (March 30, 1995), and the Department of Commerce Tribal Consultation and Coordination policy (78 FR 33331, June 4, 2013) outline the responsibilities of NMFS for Federal policies that have tribal implications. Section 161 of Public Law 108–199 (188 Stat. 452), as amended by section 518 of Public Law 109–447 (118 Stat. 3267), extends the consultation requirements of E.O. 13175 to Alaska Native corporations. Under the E.O. and agency policies, NMFS must ensure meaningful and timely input by tribal officials and representatives of Alaska Native corporations in the development of regulatory policies that have tribal implications. NMFS will provide a copy of this proposed rule to the federally recognized tribes and Alaska Native corporations in the Bristol Bay area to notify them of the opportunity to comment or request a consultation on this proposed action.
Section 5(b)(2)(B) of E.O. 13175 requires NMFS to prepare a “tribal summary impact statement” for any regulation that has tribal implications, that imposes substantial direct compliance costs on Indian tribal governments, and is not required by statute. The tribal summary impact statement must contain (1) a description of the extent of the agency's prior consultation with tribal officials, (2) a summary of the nature of their concerns, (3) the agency's position supporting the need to issue the regulation, and (4) a statement of the extent to which the concerns of tribal officials have been met. If the Secretary of Commerce approves this proposed action, a tribal impact summary statement that addresses the four questions above will be included in the final rule.
Alaska, Fisheries.
For reasons set out in the preamble, 50 CFR part 679 is proposed to be amended as follows:
16 U.S.C. 773
(a) * * *
(4)
(i) From April 1 through September 30 of each calendar year, vessels designated on a Federal fisheries permit issued under § 679.4 are prohibited from deploying fishing gear in that part of the Bering Sea subarea between 3 and 12 nm seaward of the baseline used to measure the territorial sea around islands named Round Island and The Twins, as shown on National Ocean Survey Chart 16315, and around Cape Peirce (58°33′ N. lat., 161°43′ W. long.).
(ii) From April 1 through September 30 of each calendar year, vessels designated on a Federal fisheries permit issued under § 679.4 are prohibited in that part of the Bering Sea subarea between 3 and 12 nm seaward of the baseline used to measure the territorial sea around islands named Round Island and The Twins, as shown on National Ocean Survey Chart 16315, and around Cape Peirce (58°33′ N. lat., 161°43′ W. long.), except that from April 1 through August 15 of each calendar year vessels designated on a Federal fisheries permit are not prohibited from entering and transiting through waters off:
(A) Round Island, north of a straight line connecting 58°47.90′ N. lat./160°21.91′ W. long., and 58°32.94′ N. lat./159°35.45′ W. long.; and
(B) Cape Peirce, east of a straight line connecting 58°30.00′ N. lat./161°46.20′ W. long., and 58°21.00′ N. lat./161°46.20′ W. long.
Notice.
This notice lists approved candidates who will comprise a standing roster for service on the Agency's 2014 and 2015 SES Performance Review Boards. The Agency will use this roster to select SES board members, and an outside member for the convening SES Performance Review Board each year. The standing roster is as follows:
Marvol Edmonds, 202–712–1781.
Rural Housing Service, Rural Business-Cooperative Service, and Rural Utilities Service, USDA.
Notice, Correction.
On September 25, 2014, Rural Development published a notice concerning the 2014 Farm Bill Implementation Listening Session—Rural Community College Coordinated Strategy. The phone number for the conference was incorrectly stated in one location.
Effective on Thursday, September 25, 2014.
Dexter Pearson, 202–401–9790, Email:
In the
Dial 1–888–469–0566 and enter Conference ID: 3499699.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104–13. Comments regarding (a) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by November 3, 2014 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725—17th Street NW., Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
Bureau of Economic Analysis, Economics and Statistics Administration, Department of Commerce.
Notice of Public Meeting.
Pursuant to the Federal Advisory Committee Act (Pub. L. 92–463 as amended by Pub. L. 94–409, Pub. L. 96–523, Pub. L. 97–375 and Pub. L. 105–153), we are announcing a meeting of the Bureau of Economic Analysis Advisory Committee. The meeting will address ways in which the national economic accounts can be presented more effectively for current economic analysis and recent statistical developments in national accounting.
Friday, November 14, the meeting will begin at 9:00 a.m. and adjourn at 3:30 p.m.
The meeting will take place at the Bureau of Economic Analysis at 1441 L St. NW., Washington, DC.
Gianna Marrone, Program Analyst, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20230; telephone number: (202) 606–9633.
The Committee was established September 2, 1999. The Committee advises the Director of BEA on matters related to the development and improvement of BEA's national, regional, industry, and international economic accounts, especially in areas of new and rapidly growing economic activities arising from innovative and advancing technologies, and provides recommendations from the perspectives of the economics profession, business, and government. This will be the Committee's twenty-seventh meeting.
On August 7, 2014, the Executive Secretary of the Foreign-Trade Zones (FTZ) Board docketed an application submitted by the Greater Mississippi Foreign-Trade Zone, Inc., grantee of FTZ 158, requesting subzone status subject to the existing activation limit of FTZ 158 on behalf of Southern Motion, Inc., in Pontotoc and Baldwyn, Mississippi.
The application was processed in accordance with the FTZ Act and Regulations, including notice in the
Pursuant to the authority delegated to the FTZ Board's Executive Secretary (15 CFR 400.36(f)), the application to establish Subzone 158G is approved, subject to the FTZ Act and the Board's regulations, including Section 400.13, and further subject to FTZ 158's 2,000-acre activation limit.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Emily Halle at (202) 482–0176 (India); Victoria Cho at (202) 482–5075 or Deborah Scott at (202) 482–2657 (Korea); Thomas Schauer at (202) 482–0410 (Taiwan); Catherine Cartsos at (202) 482–1757 (Turkey); or Fred Baker at (202) 482–2924 or Davina Friedmann at (202) 482–0698 (Vietnam), AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.
On September 10, 2014, the Department of Commerce (the Department) published the antidumping duty orders on certain oil country tubular goods (OCTG) from India, the Republic of Korea (Korea), Taiwan, the Republic of Turkey (Turkey), and the Socialist Republic of Vietnam (Vietnam).
This notice serves as a correction and is published in accordance with section 777(i) of the Tariff Act of 1930 as amended.
National Institute of Standards and Technology, 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 December 2, 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 Jeremy Lawson, Civil Rights and Diversity Office, NIST, 100 Bureau Dr., Mail Stop 1080, Gaithersburg, MD 20899–1080; 301–975–5481;
The Summer High School Intern Program (SHIP) is a NIST-wide 8-week summer intern program for students who will have finished their junior or senior year of high school by the start of the program, are U.S. citizens, and are interested in scientific research. Students selected for this competitive volunteer program will participate in cutting-edge research at NIST, and will work closely with NIST staff scientists and engineers on a specific research problem.
The first round of the application process is completed via an on-line application through the Student Information System which collects basic biographical information about the student. This information is reviewed and finalists are invited to submit secondary materials via email to
The initial application is via NIST's on-line Student Information System. The finalist application is via email to
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, National Oceanic and
Notice of public meeting.
The Pacific Fishery Management Council's (Council) Salmon Subcommittee of the Scientific and Statistical Committee (SSC) will hold a joint methodology review meeting with the Salmon Technical Team (STT) and Model Evaluation Workgroup (MEW), followed by a single-day meeting of the STT, all of which will be open to the public.
The joint methodology review meeting will be held Tuesday, October 21, from 1 p.m. to 5 p.m., Wednesday, October 22, 2014, from 9 a.m. to 5 p.m., and Thursday, October 23, 2014, from 9 a.m. to noon, or until business is completed. The STT will continue with a one-day meeting on Friday, October 24, 2014, from 9 a.m. to 5 p.m.
Both meetings will be held at the Sheraton Portland Airport Hotel, 8235 NE Airport Way, Portland OR 97220; telephone: (503) 281–2500. The methodology review meeting will be in the St. Helens D Room and the STT meeting will be in the Garden C Room.
Mr. Mike Burner, Pacific Council; telephone: (503) 820–2414.
The purpose of the methodology review meeting is to discuss and review proposed changes to analytical methods used in salmon management. Recommendations from the methodology review meeting will be presented at the November 14–19, 2014 Council meeting in Costa Mesa, CA where the Council is scheduled to take final action on the proposals. Final methodology review topics were adopted by the Council at their September 12–17, 2014 meeting in Spokane, WA and are posted on the Pacific Council's Web page (
Although non-emergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during these meetings. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
The meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt at (503) 820–2425 at least 5 days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The New England Fishery Management Council's (Council) Scientific and Statistical Committee (SSC) will meet to consider actions affecting New England fisheries in the exclusive economic zone (EEZ).
The meeting will be held on Monday, October 20, 2014 at 8:30 a.m.
The meeting will be held at the DoubleTree by Hilton, 50 Ferncroft Road, Danvers, MA 01923; telephone: (978) 777–2500; fax: (978) 750–7991.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465–0492.
The New England Fishery Management Council's SSC will meet to: Review stock assessment information, consider information provided by the Groundfish PDT and continue to develop acceptable biological catch (ABC) recommendations and other scientific advice for Gulf of Maine cod for fishing years 2015–17; review stock assessment information, consider information provided by the Groundfish PDT and develop overfishing levels (OFLs) and ABC recommendations for Georges Bank winter flounder, Gulf of Maine winter flounder and pollock for fishing years 2015–17. The committee may not complete all the ABC recommendations for these stocks at this meeting. They will also discuss the format of operational stock assessment reports. The committee will address other business as necessary.
Although non-emergency issues not contained in this agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically identified in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management 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 (see
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meetings and hearings.
The Western Pacific Fishery Management Council (Council) will hold meetings of its 117th Scientific and Statistical Committee (SSC) and its 161st Council meeting to take actions on
The meetings will be held Monday, October 13, 2014 through Thursday, October 23, 2014. For specific dates, times and agendas, see
The Education Steering Committee, 117th SSC, the Fishery Data Collection and Research Committee and Standing Committee meetings will be held at the Council office, 1164 Bishop Street, Suite 1400, Honolulu, HI 96813; telephone: (808) 522–8220. The 161st Council meeting will be held at the Laniakea YWCA-Fuller Hall, 1040 Richards Street, Honolulu, HI 96813; telephone: (808) 538–7061.
The Fishers Forum will be held at the Harbor View Center, Pier 38, 1129 North Nimitz Highway, Honolulu, HI 96817; telephone: (808) 983–1200.
Background documents will be available from, and written comments should be sent to, Mr. Edwin Ebisui, Acting Chair, Western Pacific Fishery Management Council, 1164 Bishop Street, Suite 1400, Honolulu, HI 96813, telephone: (808) 522–8220 or fax: (808) 522–8226.
Kitty M. Simonds, Executive Director; telephone: (808) 522–8220.
The Education Steering Committee will meet on October 13, 2014, between 3 p.m. and 5 p.m.; 117th SSC meeting on October 14–16, 2014, between 8:30 a.m. and 5 p.m.; Fishery Data Collection and Research Committee October 20, 2014, between 10 a.m. and 12 noon; the Council's Pelagics and International Standing Committee on October 20, 2014, between 1 p.m. and 3 p.m. and Executive and Budget Standing Committee October 20, between 3 p.m. and 5 p.m.; the 161st Council meeting will be held between 8:30 a.m. and 5 p.m. on October 21–23, 2014. In addition, the Council will host a Fishers Forum on October 21, 2014, between 6 p.m. and 9 p.m.
In addition to the agenda items listed here, the SSC and Council will hear recommendations from Council advisory groups. Public comment periods will be provided throughout the agendas. The order in which agenda items are addressed may change. The meetings will run as late as necessary to complete scheduled business.
Non-Emergency issues not contained in this agenda may come before the Council for discussion and formal Council action during its 161st meeting. However, Council action on regulatory issues will be restricted to those issues specifically listed in this document and any regulatory issue arising after publication of this document that requires emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take action to address the emergency.
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Kitty M. Simonds, (808) 522–8220 (voice) or (808) 522–8226 (fax), at least 5 days prior to the meeting date.
16 U.S.C 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Gulf of Mexico Fishery Management Council (Council) will hold meetings of the: Joint Law Enforcement Committee, Gulf Council's Law Enforcement Advisory Panel Committee, and Gulf States Law Enforcement Committee, Red Drum Management Committee, Joint Administrative Policy and Budget/Personnel Committees, Data Collection Management Committee, Gulf SEDAR Committee, Reef Fish Committee, Mackerel Committee, and Shrimp Management Committee; in conjunction with a meeting of the Full Council. The Council will also hold a formal public comment session.
The Council meeting will convene 8:30 a.m. on Monday, October 20 until 5:30 p.m. on Thursday, October 23, 2014.
Mr. Douglas Gregory, Executive Director, Gulf of Mexico Fishery Management Council; telephone: (813) 348–1630; fax: (813) 348–1711; email:
The items of discussion for each individual management committee agenda are as follows:
• Usefulness of Charter-for-hire Decals
• Review of Draft Definition of Charter Fishing
• Port Eads, Louisiana Marina Access
• Overview of Office of Law Enforcement (OLE) Gulf Restructuring
• Review of 2015–2016 Cooperative Enforcement Operations Plan
• State Report Highlights
• Scoping Document for Recreational Red Drum Management and Update From Special Red Drum Working Group
– Recess –
• Review of 2010–2014 Expenditures and Budget Carryover to 2015
• Review and Discussion of Potential Contractual Projects
• Update on Advisory Panels (AP) and Scientific and Statistical Committees (SSC) Appointment Process and Structure
• Discussion of SSC Conflict of Interest Policy
• Continued Review of Draft Statement of Organization Practices and Procedures (SOPPs) Revisions
• Calibration Workshop Summary Report
• Discussion of South Atlantic Council Recommendations for Electronic Charter Boat Reporting
• Discussion of Species Reporting Requirements Under the Joint Electronic Dealer Reporting Amendment
• Discussion of Strategies to Improve Private Recreational Data Collection and Management
• SEDAR 38—Gulf of Mexico and South Atlantic King Mackerel
• SEDAR Steering Committee Update
• SEDAR Schedule Review
• Updated List of Fishery Research and Socio-economic Priorities for 2015–2019
– Recess –
• Estimates of Red Snapper Abundance on Alabama's Offshore Reefs
• Amendment 39—Red Snapper Regional Management
• Final Action—Amendment 40—Recreational Red Snapper Sector Separation
• Individual Fishing Quota (IFQ) Program Review
• Gag Overfishing Limit (OFL) and Acceptable Biological Catch (ABC)
• Final Action—Red Grouper Bag Limit and Accountability Measures Framework Action
• Hogfish Benchmark Assessment Overfishing Limit (OFL) and Acceptable Biological Catch (ABC)
• Greater Amberjack Annual Catch Limit (ACL)/Annual Catch Target (ACT) Options Paper
• Amendment 28—Red Snapper Allocation
• Southeast Fisheries Science Center (SEFSC) Comments on
– Recess –
• Final Action—Framework Amendment 2 to the Coastal Migratory Pelagics Fishery Management Plan (FMP) for Atlantic Migratory Group Spanish Mackerel Trip Limits
• Other Business—King Mackerel Gill Net Concerns
• Final Action—Shrimp Amendment 15—Status Determination Criteria for Penaeid Shrimp and Adjustments to the Shrimp Framework Procedure
• Final Action—Shrimp Amendment 16—Adjustments to the Annual Catch Limit and Accountability Measures for Royal Red Shrimp
• Shrimp Amendment 17—Scoping Document of the Shrimp Permit Moratorium
• 2013 Shrimp Effort and Shrimp Electronic Logbook (ELB) Program Update
11 a.m.–11:10 a.m.: Call to Order and Introductions, Adoption of Agenda, and Approval of Minutes
11:10 a.m.–11:15 a.m.: Approval of 2015 Committee Appointments
11:15 a.m.–2:30 p.m.: The Council will receive presentations on the Proposed Rule Update for the Aquaculture Fishery Management Plan (FMP), Evaluation of the Status of Kemp's Ridley Sea Turtle Following the 2010 Deepwater Horizon Spill using a Revised Assessment Model, Update on Red Snapper Federal Violations.
2:30 p.m.–5 p.m.: The Council will receive public testimony on Final Action on Reef Fish Amendment 40—Sector Separation, Final Action on Shrimp Amendment 15—Status Determination Criteria for Penaeid Shrimp and Adjustments to the Shrimp Framework Procedure, Final Action on Shrimp Amendment 16—Adjustments to the Annual Catch Limit and Accountability Measures for Royal Red Shrimp, Final Action on Framework Action to Modify Recreational Red Grouper Bag Limits and Accountability Measures, Final Action on Framework Amendment 2 to the Coastal Migratory Pelagics Fishery Management Plans (FMP)—Atlantic Migratory Group Spanish Mackerel Trip Limits, and open testimony on any other fishery issues or concerns. People wishing to speak before the Council should complete a public comment card prior to the comment period.
– Recess –
5:30 p.m.–7:30 p.m.: The Council will continue to receive public testimony.
– Recess –
8:30 a.m.–4:30 p.m.: The Council will continue to receive committee reports from the following: Reef Fish Management Committee (8:30 a.m.–11:30 a.m.), Shrimp Management Committee (1 p.m.–1:30 p.m.), Red Drum Management Committee (1:30 p.m.–1:45 p.m.), Gulf SEDAR Management Committee (1:45 p.m.–2 p.m.), Joint Law Enforcement Committees (2 p.m.–3 p.m.), Mackerel Management Committee (3 p.m.–3:30 p.m.), Data Collection Administrative Committee (3:30 p.m.–4 p.m.), and the Joint Administrative Policy and Budget/Personnel Committee (4 p.m.–4:30 p.m.)
4:30 p.m.–5:15 p.m.: The Council will receive a summary report on the Pacific Fishery Management Council Meeting and an update on the RESTORE Act Science Program.
5:15 p.m.–5:30 p.m.: Other Business—Status of Biscayne National Park Implementation of Fishing Regulations
–Adjourn –
The Agenda is subject to change, and the latest version will be posted on the Council's file server, which can be accessed by going to the Council Web site at
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 these meetings. Action will be restricted to those issues specifically identified in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Kathy Pereira at the Council Office (see
The times and sequence specified in this agenda are subject to change.
16 U.S.C. 1801
National Telecommunications and Information Administration, U.S. Department of Commerce.
Notice of Inquiry.
Consistent with the
Comments must be received no later than November 3, 2014.
Comments may be submitted by email to
Helen Shaw, National Telecommunications and Information Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Room 4874, Washington, DC 20230; telephone: (202) 482–1157; email
On May 10, 2013, President Obama issued the
The White House issued the
The
The
NTIA and its Federal partners will leverage information currently available from government, commercial, non-profit, and academic entities. For example, NTIA's State Broadband Initiative funded a comprehensive assessment of broadband infrastructure across Alaska, which resulted in an August 2013 report entitled
Effective communications services are critical to accommodate the increase in commercial, residential, governmental, and other critical economic and social activities across Arctic Alaskan
This Notice offers an opportunity for all interested parties to provide information regarding existing and potential communications technologies, services and applications for the Arctic region. We invite input from communication service providers that currently serve, or plan to serve, Arctic Alaska and the pan-Arctic region. We also seek comment from subject matter experts on the questions below. We further invite feedback from all user segments (
For purposes of this Notice, the Arctic Region of Alaska is defined as the geographic region north of the Arctic Circle, which is at 66° 33′ 39″ North latitude. The area includes offshore areas such as the Chukchi Sea and the Beaufort Sea. However, parties may submit information and data outside of this geographic area if its inclusion is relevant to the questions that follow.
The
•
•
•
We seek information about the location and the adequacy of existent networks owned and managed by commercial service providers, government entities, non-profits, research and education entities, or any other ownership and management models. Many of these networks and services target terrestrial-based users (
To help guide commenters, we seek information about the availability and adequacy of telecommunications services in the following Arctic Alaskan communities and key geographic locations: Alatna, Allakaket, Ambler, Anaktuvuk Pass, Arctic Village, Atqasuk, Barrow (including Point Barrow), Beaufort Sea area, Beechey Point, Bettles, Cape Blossom, Cape Lisburne, Chalkyitsik, Chandalar, Chuckchi Sea area, Coldfoot, Deadhorse, Evansville, Fort Yukon, Kaktovik, Kiana, Kivalina, Kobuk, Kotzebue, New Allakaket, Noatak, Northstar Island, Noorvik, Nuiqsut, Point Hope, Point Lay, Prudhoe Bay/Prudhoe Bay Oil Field, Red Dog Mine, Selawik, Sheshalik, Shungnak, Umiat, Venetie, Wainwright, and Wiseman. This list should not be considered all-inclusive, and absence from the list should not preclude responses on other Arctic locations.
We encourage a broad response in order to assist our efforts to develop a comprehensive assessment that considers all service providers, user segments, stakeholders, and other interested parties. We welcome responses and comments covering the following areas: (a) Available networks and services; (b) potential networks and services; (c) recommendations to foster the deployment of advanced communication networks and services; and (d) adoption barriers. Please send links to relevant documents, such as studies and reports.
(1) Existing and Potential Networks and Services in Arctic Alaska: Which Arctic Alaskan communities have access to, or lack access to, the network technologies and communications services that enable local residents, businesses, community institutions, local authorities, and other user groups to effectively meet their communications requirements? What network technologies and services are being planned to address both current and emerging user needs?
(2) Wireline-Based Broadband Services: Which Arctic Alaskan communities have access to fixed wireline services that offer a minimum broadband speed of 4 Mbps download and 1 Mbps upload?
(3) Fixed Wireless Broadband Services: Which Arctic Alaskan communities have access to fixed wireless broadband with minimum broadband speeds of 4 Mbps download and 1 Mbps upload? What are the key advantages and limitations of these networks? What best practices and lessons can be applied to expand fixed wireless solutions to other underserved Arctic Alaskan communities?
(4) Mobile Wireless: Which Arctic Alaskan communities have access to mobile wireless broadband services that
(5) Public Safety Services: Which Arctic Alaskan communities have access to, or lack access to, wire and wireless public safety communications systems used by law enforcement, fire emergency, and emergency medical first responders? Are there plans to extend the Alaska Land Mobile Radio network (ALMR) and the State of Alaska Telecommunications System (SATS) to any Arctic Alaskan communities? What are the benefits and limitations of extending the ALMR and SATS networks to these communities and first responders and what key barriers may limit this extension? Which other network technologies and services are used by public safety professionals (
(6) Emergency Communications and Search and Rescue: What are the emergency wired and wireless communications services available within the listed Arctic Alaska communities, and other communities and locations, and near and far offshore areas? How would these communities connect into the overall Alaskan communications backbone network in case of a major emergency? To what extent are there areas without any emergency communications services? What communications services are used for search and rescue operations and what is their availability and reliability? Are the existing communications services used for search and rescue operations adequate or are additional services necessary?
(7) Satellite Communications Services: What specific satellite-based services are widely used by Arctic Alaskan communities and users across the pan-Arctic region? What are the strengths and limitations of using satellites generally and for specific communications services? What key dependencies and factors impact the likelihood of these planned systems being launched in a timely manner? Which specific user segments are being targeted and what services will be offered? Do existing and planned satellite systems target the broader pan-Arctic footprint and provide 24/7 availability? For areas where satellites constitute the only form of communications, what ensures reasonable pricing and service quality? In regard to older satellites that were formerly in the geostationary orbit and are now operating in an inclined orbit, how many hours of operation and what quality of service do they offer in the Arctic Alaskan and in the pan-Arctic area?
(8) Broadcasting and Broadcasting-Satellite Services: What methods are used to receive radio and television broadcast signals in Arctic Alaskan areas? What improvements can be made if such signals are not readily available? Does the Alaska Rural Communications System (ARCS) provide adequate broadcasting coverage in the Arctic Alaskan communities? To what extent do the broadband speeds of other terrestrial and satellite networks enable the delivery of high-quality video?
(9) Submarine Cable Networks: How do existing submarine cable networks currently support the delivery of communications services in Arctic Alaskan communities and the pan-Arctic region? What are the advantages and limitations of these networks? How will new submarine cable facilities being planned for this region contribute to the performance, economics, and overall network access for the previously mentioned services? What is the timetable for building and operating these planned facilities and what key risks could impact their timing, scale, availability, and overall sustainability?
(10) Aeronautical and Maritime Communications: What communications systems and technologies support aircraft and maritime voice and data communications? What are the key strengths and limitations of these networks? What new systems are being planned to address aviation and maritime user needs?
(11) Aeronautical and Maritime Radionavigation: What radionavigation systems are currently used by commercial ships and aircrafts in the Arctic region? What are the key strengths and limitations of these systems, especially with regard to location reliability? What new satellite-based navigation systems are being planned, and what are their comparative advantages relative to current systems? What key dependencies and factors impact the likelihood of these systems being launched in a timely manner?
(12) Weather and Other Information Services: How effectively do broadcast and other networks support the delivery of weather monitoring alerts (including warnings, watches, and forecasts) and non-weather hazard alerts across Arctic Alaska and the pan-Arctic region, especially with regard to speed of delivery and service reliability? How do Arctic broadcasts and other information reports for weather monitoring compare to those services in other parts of Alaska? What initiatives are underway, or can be recommended, to improve the delivery and receipt of weather information and other critical alerts, including system upgrades and/or new infrastructure deployments? What innovations across satellite imaging and other technology developments offer the greatest potential?
(13) High Frequency Radio Communications (3–30 MHz): How do high frequency (HF) radio systems serve Arctic Alaskan end-users and to what degree are they used especially for emergency and search and rescue communications? What are the comparative advantages and limitations of HF radio relative to other technologies, especially with regard to reliability, privacy, and degree of availability after considering seasonal and temporal variances? Which frequencies are currently used and which ones offer the highest quality of service? What improvements have been made, or are planned, on HF radios to improve communications?
(14) Very High Frequency Radio Communications (30–300 MHz): How do Arctic Alaskan residents use VHF radios to communicate?
(15) Unlicensed (License-Exempt) Systems: What applications and services utilizing unlicensed spectrum bands are used across the Arctic region and to what extent? To what extent is unlicensed spectrum used for providing broadband for residential and business users? What speeds are available to these users? To what extent do power limits and other technical restrictions in unlicensed spectrum bands impede the
(16) Existing and Potential Networks and Services Across the Pan-Arctic Region: Which pan-Arctic regions have access to, or lack access to, network technologies and communications services critical to the safety and security of the pan-Arctic region, and the increasing activity across commercial, maritime, research, tourism, and other growing sectors? What network technologies and services are being planned across the pan-Arctic region to address both current and emerging user needs?
(17) Fostering the Deployment of Advanced Communications Networks and Services in Arctic Alaskan Communities: What strategies are recommended to facilitate the deployment of additional communications capabilities across Arctic Alaska? These recommendations may involve commercial or public investment, new business models, policy and regulatory changes (federal, state, or local), public-private partnerships, research and innovation developments, or other suggestions. Please comment on best practices in other Alaskan communities and other rural and remote areas.
(18) Fostering the Deployment of Advanced Communication Networks and Services in the Pan-Arctic Region: What would facilitate the deployment of advanced networks to ensure the safety, security, and the commercial interests of the United States and other international users in the pan-Arctic region? These recommendations may involve commercial or public investment, new business models, policy and regulatory changes (federal or international), international agreements, public-private partnerships, research and innovation developments, or other suggestions. We seek comment on best practices from other pan-Arctic locations, and other rural and remote areas.
(19) Adoption Barriers: What key barriers limit the adoption of existing services for users across both Arctic Alaska and the broader pan-Arctic region? How can these adoption barriers be addressed?
Committee for Purchase From People Who Are Blind or Severely Disabled.
Proposed additions to and deletions from the Procurement List.
The Committee is proposing to add products and services to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities and, deletes a service previously provided by such agency.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 10800, Arlington, Virginia, 22202–4149.
Barry S. Lineback, Telephone: (703) 603–7740, Fax: (703) 603–0655, or email
This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51–2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
If the Committee approves the proposed additions, the entities of the Federal Government identified in this notice will be required to procure the products and services listed below from nonprofit agencies employing persons who are blind or have other severe disabilities.
The following products and services are proposed for addition to the Procurement List for production by the nonprofit agencies listed:
The following service is proposed for deletion from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Deletions from the Procurement List.
This action deletes a product and service from the Procurement List previously furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 10800, Arlington, Virginia 22202–4149.
Barry S. Lineback, Telephone: (703) 603–7740, Fax: (703) 603–0655, or email
On 8/29/2014 (79 FR 51561), the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed deletions from the Procurement List.
After consideration of the relevant matter presented, the Committee has determined that the product and service listed below are no longer suitable for procurement by the Federal Government under 41 U.S.C. 8501–8506 and 41 CFR 51–2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in additional reporting, recordkeeping or other compliance requirements for small entities.
2. The action may result in authorizing small entities to furnish the product and service to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501–8506) in connection with the product and service deleted from the Procurement List.
Accordingly, the following product and service are deleted from the Procurement List:
Defense Information Systems Agency, DoD.
Notice.
In compliance with the
Consideration will be given to all comments received by December 2, 2014.
You may submit comments, identified by docket number and title, by any of the following methods:
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To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Office of Public Affairs, Defense Information Systems Agency, 6910 Cooper Rd, Ft. Meade Maryland 20755. Contact 301–225–8100 or
Respondents are DoD contractors who are registered users of DCO as part of their official duties. The completed web-based satisfaction survey responses are aggregated and reported to DISA as part of the Quality Assurance Surveillance Plan. Additionally, users who voluntarily provide their contact information receive a follow-up call from the DCO service provider to discuss any concerns or issues they have with DCO performance.
Defense Security Cooperation Agency, Department of Defense.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104–164 dated July 21, 1996.
Ms. B. English, DSCA/DBO/CFM, (703) 601–3740.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittals 14–27 with attached transmittal and policy justification.
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The Government of Thailand has requested a possible sale of 9 UH–72A Lakota Helicopters, warranty, spare and repair parts, support equipment, communication equipment, publications and technical documentation, Aviation Mission Planning Station, personnel training and training equipment, U.S. Government and contractor technical and logistics support services, and other related elements of logistics support. The estimated cost is $89 million.
This proposed sale will contribute to the foreign policy and national security of the United States, by helping to improve the security of a major non-NATO ally.
This proposed sale will contribute to Thailand's goal of upgrading and modernizing its military forces with a new light utility helicopter capable of meeting requirements for rotary-wing transportation, while further enhancing interoperability between Thailand the U.S., and among other allies. Thailand will have no difficulty absorbing these helicopters into its armed forces.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The principal contractor will be EADS North America in Herndon, Virginia. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will require ten contractor representatives to travel to Thailand for a period of five weeks for equipment deprocessing/fielding and system checkout.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
Defense Security Cooperation Agency, Department of Defense.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104–164 dated July 21, 1996.
Ms. B. English, DSCA/DBO/CFM, (703) 601–3740.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittals 14–49 with attached transmittal and policy justification.
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The Government of Canada has requested a possible sale of 12 MK–48 Mod 7 Advanced Technology Torpedo Conversion Kits with containers, spare and repair parts, weapon system support and integration, publications and technical documentation, personnel training and training equipment, U.S. Government and contractor engineering and technical, and logistics support services, and other related elements of logistics support. These kits will upgrade 12 of Canada's existing inventory of MK–48 torpedoes from Mod 4 to Mod 7. The estimated cost is $41 million.
This proposed sale will contribute to the foreign policy and national security of the United States by helping to improve the security of a NATO ally that has been, and continues to be, a key democratic partner of the United States in ensuring peace and stability.
The sale of this equipment and support will not alter the basic military balance in the region.
Canada intends to use the MK 48 Mod 7AT Torpedoes on its Royal Canadian Navy's Victoria (formerly Upholder) Class submarines. Canada has significant relevant infrastructure and experience with modern torpedoes, including MK–48 Mod 4/4M and MK–46 Mod 5A (SW) torpedoes. Canada will have no difficulty absorbing these additional conversion kits.
The principal contractor will be Lockheed Martin Sippican, Inc. in Marion, Massachusetts. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will not require the assignment of any additional U.S. Government or contractor representatives to Canada.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
Defense Security Cooperation Agency, Department of Defense.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104–164 dated July 21, 1996.
Ms. B. English, DSCA/DBO/CFM, (703) 601–3740.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittals 14–26 with attached transmittal, policy justification, and Sensitivity of Technology.
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The Government of the United Arab Emirates (UAE) has requested a possible sale for the refurbishment and modification of 4,569 Mine Resistant Ambush Protected (MRAP) Vehicles (that include 29 MaxxPro Long Wheel Base (LWB), 1,085 MaxxPro LWB chassis, 264 MaxxPro Base/MRAP Expedient Armor Program (MEAP) capsules without armor, 729 MaxxPro Bases, 283 MaxxPro MEAP without armor, 970 MaxxPro Plus, 15 MRAP Recovery Vehicles, 1,150 Caiman Multi-Terrain Vehicles without armor, and 44 MRAP All-Terrain Vehicles) being sold separately from U.S. Army stock pursuant to section 21 of the Arms Export Control Act, as amended, as Excess Defense Articles (EDA). Also included are Underbody Improvement Kits, spare and repair parts, support equipment, personnel training and training equipment, publications and technical documentation, Field Service Representatives' support, U.S. Government and contractor logistics and technical support services, and other related elements of logistics and program support. Notification for the sale from stock of the MRAP vehicles referenced above has been provided separately, pursuant to the requirements of section 7016 of the Consolidated Appropriations Act, 2014 and section 516 of the Foreign Assistance Act of 1961, as amended. The estimated cost is $2.5 billion
This proposed sale will contribute to the foreign policy and national security of the U.S. by helping to improve the security of a friendly country that has been and continues to be an important force for political stability and economic progress in the Middle East.
The UAE intends to utilize the EDA MRAP vehicles to increase force protection, to conduct humanitarian assistance operations, and to protect vital international commercial trade routes and critical infrastructure. Additionally, these MRAPs will enhance UAE's burden sharing capacity and defensive capabilities.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The principal contractors will be Navistar Defense in Lisle, Illinois; BAE Systems in Sealy, Texas; and Oshkosh Defense in Oshkosh, Wisconsin. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will require multiple trips to the UAE involving many U.S. Government and contractor representatives for approximately three or more years to provide program support and training.
There will be no adverse impact on the U.S. defense readiness as a result of this proposed sale.
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1. The Mine Resistant Ambush Protected (MRAP) vehicle is an armored, multi-purpose combat vehicle intended to support mounted urban operations to include convoy security support and dismounted patrols. It is designed to increase crew survivability. The vehicle has a blast-resistant underbody designed to protect the crew from mine blasts, fragmentation, and direct fire weapons.
2. All MRAP vehicle information needed to operate, train, and maintain the vehicles are Unclassified; some design and test data, design performance parameters, armoring methodology, vulnerabilities, armor types and configuration can be classified up to Secret.
3. If a technologically advanced adversary were to obtain knowledge of the design performance and functional characteristics of specific hardware and software elements, the information could be used to develop countermeasures which might reduce weapon system effectiveness or be used in the development of a system with similar or advanced capabilities.
4. A determination has been made that the recipient country can provide the same degree of protection for the sensitive technology being released as the U.S. Government. This sale is necessary in furtherance of the U.S. foreign policy and national security objectives outlined in the Policy Justification.
5. All defense articles and services listed in this transmittal have been authorized for release and export to the Government of the United Arab Emirates.
DoD.
Meeting notice.
The Department of Defense is publishing this notice to announce the following Federal Advisory Committee meeting of the Defense Business Board. This meeting is open to the public.
The public meeting of the Defense Business Board (hereafter referred to as “the Board”) will be held on Thursday, October 23, 2014. The meeting will begin at 9:30 a.m. and end at 10:30 a.m. (Escort required; see guidance in the
Room 3D557 in the Pentagon, Washington, DC (Escort required; see guidance in the
This meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the
Purpose of the Meeting: At this meeting, the Board will receive updates from the “Guiding Principles to Optimize DoD's Research and Development Investments” Task Group Study and the “Transformational Change for the Department of Defense Business Systems” Task Group Study. The mission of the Board is to examine and advise the Secretary of Defense on overall DoD management and governance. The Board provides independent advice which reflects an outside private sector perspective on proven and effective best business practices that can be applied to DoD.
Availability of Materials for the Meeting: A copy of the agenda and the terms of reference for the Task Group studies may be obtained from the Board's Web site at
Meeting Agenda:
Public's Accessibility to the Meeting: Pursuant to 5 U.S.C. 552b and 41 CFR 102–3.140 through 102–3.165, and the availability of space, this meeting is open to the public. Seating is limited and is on a first-come basis. All members of the public who wish to attend the public meeting must contact Ms. Debora Duffy at the number listed in the
Special Accommodations: Individuals requiring special accommodations to access the public meeting should contact Ms. Duffy at least five (5) business days prior to the meeting so that appropriate arrangements can be made.
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, the public or interested organizations may submit written comments to the Board about its mission and topics pertaining to this public meeting.
Written comments pertaining to this meeting should be received by the DFO at least five (5) business days prior to the meeting date so that the comments may be made available to the Board for their consideration prior to the meeting. Written comments should be submitted via email to the address for the DFO given in the
The public will be offered an opportunity for oral comments during the public session as time permits.
Please note that since the Board operates under the provisions of the Federal Advisory Committee Act, as amended, all submitted comments and public presentations will be treated as public documents and will be made available for public inspection, including, but not limited to, being posted on the Board's Web site.
Department of the Army, U.S. Army Corps of Engineers, DoD.
Notice of availability.
The United States Department of the Army Corps of Engineers (USACE) is issuing this notice to advise the public that a Draft Supplemental Environmental Impact Statement (SEIS) has been prepared jointly with the Federal Highway Administration (FHWA) and in cooperation with the Virginia Department of Transportation (VDOT) for the Route 460 Location Study. The study area extends from I–295 in Prince George County on the western end to Route 58 in the City of Suffolk on the eastern end. (USACE Project Number NAO–2008–03470; FHWA Project Number STP–0005(276); VDOT Project Number 0460–969–101,P101; UPC 100432).
Written comments on the Draft SEIS will be received until the close of the 45-day public review on November 17, 2014, and can be sent to USACE and/or FHWA (see
William T. Walker, Chief Regulatory Branch, Corps of Engineers, 803 Front Street, Norfolk, VA 23510; Ed Sundra, Director of Program Development, Federal Highway Administration, 400 North 8th St., Suite 750, Richmond, VA 23219.
Questions about the SEIS can be directed to Alice Allen-Grimes, U.S. Army Corps of Engineers, Regulatory Branch, 803 Front Street, Norfolk, VA 23510; email
This SEIS has been prepared pursuant to 23 CFR 771.130 and 40 CFR 1502.9(c), because of new information and circumstances relevant to environmental concerns of the federal action that may result in significant environmental impacts not evaluated in the FHWA approved Final Environmental Impact Statement (FEIS).
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US Route 460 (Route 460) is a primary east-west arterial highway that traverses the Commonwealth of Virginia. From Interstate 295 (I–295) in Prince George County to US Route 58 (Route 58) in the City of Suffolk, Route 460 is a four lane, undivided arterial roadway with posted speeds of 35 to 55 miles per hour (mph). This eastern segment of the road was built in the mid-1930s as a two-lane roadway. In the mid-1950s, two lanes were added, widening Route 460 to four undivided travel lanes. In the study area Route 460 is approximately 55 miles in length and passes through portions of the Counties of Prince George, Surry,
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Some of the Alternatives considered in the SEIS are different than the alternatives in the original EIS. Transportation Systems Management and Improvements to the Existing Alignment with a two-way left turn lane were evaluated in the EIS, but were eliminated in the SEIS, along with Mass Transit, which was considered for both the EIS and the SEIS but not retained in either. Alternatives retained from the EIS include the No Build; Alternative 1 (a limited-access tolled facility on new location south of the existing Route 460; the Preferred Alternative in the 2008 FEIS); Alternative 2 (improvements to the existing Route 460 with six limited access bypasses around the built-up areas; the four lane typical section between the towns is not the same as in the original EIS); and Alternative 3 (a limited-access tolled facility on new location north of the existing Route 460). In addition, two alternatives not previously evaluated were developed as part of the SEIS and carried forward: Alternative 4 (improvements of existing Route 460 to meet current design standards, through the towns with no bypasses); and Alternative 5 (8-lanes—4 limited-access tolled lanes with 2 bi-directional service lanes on each side between the towns—on the same general location as Alternative 2 along the existing roadway with bypasses).
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a. Potential impacts to wetlands ranging from 90 to 613 acres.
b. Potential impacts to streams ranging from 4 to 13 linear miles.
c. Potential displacements to residences of 78 to 167.
d. Potential displacements to businesses of 12 to 54.
e. Potential impacts to historic architectural resources.
f. Potential impacts to wildlife habitat, including riparian corridors.
g. Disruption of communities.
h. Potential impacts to designated conservation areas.
i. Cost and tolling.
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Department of Education.
Correction Notice.
On September 10, 2014 the U.S. Department of Education published a 30-day comment period notice in the
The Acting Director, Information Collection Clearance Division, Privacy, Information and Records Management Services, Office of Management, hereby issues a correction notice as required by the Paperwork Reduction Act of 1995.
Department of Education (ED), Federal Student Aid (FSA).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before November 3, 2014.
Comments submitted in response to this notice should be submitted electronically through the Federal eRulemaking Portal at
For specific questions related to collection activities, please contact Beth Grebeldinger.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Institute of Education Sciences, National Center for Education Statistics (IES–NCES), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before November 3, 2014.
Comments submitted in response to this notice should be submitted electronically through the Federal eRulemaking Portal at
For specific questions related to collection activities, please contact Kashka Kubdzela, 202–502–7411.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information
The Progress in International Reading Literacy Study (PIRLS) 2016 is coordinated by the International Association for the Evaluation of Educational Achievement (IEA) and in the U.S. administered by the National Center for Education Statistics (NCES). Since its inception in 2001, PIRLS has continued to assess students every five years (2001, 2006, 2011, 2016). It is typically administered in more than 40 countries and provides data for internationally benchmarking U.S. performance in fourth-grade reading. PIRLS also collects background information on students, parents, teachers, schools, curricula, and official education policies. Each successive round of participation in PIRLS provides trend information about U.S. 4th-grade students' knowledge and abilities in reading relative to other countries, and about the cultural environments, teaching practices, curriculum goals, and institutional arrangements that are associated with student achievement, and how these change over time in different countries. This submission describes the overarching plan for all phases of the data collection, including the field test and the main study. The field test will take place in March–April, 2015, and the main study in the spring of 2016. The purpose of the PIRLS field test is to evaluate new assessment items and background questions to ensure that classroom and student sampling procedures proposed for the main study are successful. This submission requests approval for recruiting for the 2015 field test and 2016 main study; conducting the 2015 field test data collection; and a description of the overarching plan for all of the phases of the data collection, including the 2016 main study.
National Advisory Council on Indian Education (NACIE or Council), Department of Education.
Announcement of an Open Public Hearing.
This notice sets forth the schedule of an upcoming public hearing conducted by a subcommittee comprised of NACIE members. The purpose of this public hearing is to receive public comments and/or recommendations and/or suggestions to the Council on the improvement of Federal education programs that include Indian children or adults as participants or that may benefit Indian children or adults, and recommendations concerning the funding of any such program.
The NACIE public hearings will be held on:
The public hearing meeting location in Anchorage, Alaska is: Hotel Captain Cook, Voyager Room, 939 W 5th Ave, Anchorage, AK 99501, Phone: (907) 276–6000 or (800)-843–1950, Fax: (907) 343–2298.
U.S. Department of Education, Office of Elementary and Secondary Education, 400 Maryland Ave. SW., Room 3E205, Washington, DC 20202.
Jenelle Leonard, Designated Federal Official, Office of Elementary and Secondary Education, U.S. Department of Education, 400 Maryland Avenue SW., Washington, DC 20202. Telephone: 202–205–2161. Fax: 202–205–5870.
NACIE's Statutory Authority and Function: The National Advisory Council on Indian Education is authorized by § 7141 of the Elementary and Secondary Education Act. The Council is established within the Department of Education to advise the Secretary of Education on the funding and administration (including the development of regulations, and administrative policies and practices) of any program over which the Secretary has jurisdiction and includes Indian children or adults as participants or programs that may benefit Indian children or adults, including any program established under Title VII, Part A of the Elementary and Secondary Education Act. The Council submits to the Congress, not later than June 30 of each year, a report on the activities of the Council that includes recommendations the Council considers appropriate for the improvement of Federal education programs that include Indian children or adults as participants or that may benefit Indian children or adults, and recommendations concerning the funding of any such program.
One of the Council's responsibilities is to develop and provide recommendations to the Secretary of Education on the funding and administration (including the development of regulations, and administrative policies and practices) of any program over which the Secretary has jurisdiction that can benefit Indian children or adults participating in any
To sign up to provide comments and RSVP, access the NACIE Web site at
Individuals who will need accommodations for a disability in order to attend the meeting (
Speakers will be allowed to provide comments for no more than five (5) minutes. Comments should pertain to the work of NACIE and/or the Office of Indian Education.
You may also access documents of the Department published in the
U.S. Department of Energy.
Notice of availability and request for comments.
The Loan Programs Office (LPO) of the Department of Energy (DOE) announces availability of a draft of a potential future solicitation for Federal Loan Guarantees for Advanced Nuclear Energy Projects. LPO invites comments regarding the draft of the potential future solicitation.
Comments regarding the draft of the potential future solicitation must be received on or before November 3, 2014.
Written comments may be sent to Peter W. Davidson, Executive Director, Loan Programs Office, U.S. Department of Energy, 1000 Independence Avenue SW., Washington, DC 20585. The draft solicitation is available on LPO's Web site at
Peter W. Davidson,
DOE is considering a potential future solicitation for Federal Loan Guarantees for Advanced Nuclear Energy Projects. Should DOE choose to proceed with such a solicitation, applicants would be invited to apply for loan guarantees from DOE to finance projects and facilities located in the United States that employ innovative advanced nuclear energy (“Advanced Nuclear Energy Projects”). DOE may make up to Twelve Billion Six Hundred Million Dollars ($12,600,000,000) in loan guarantee authority available under the proposed solicitation for Advanced Nuclear Energy Projects. Of that amount, $2,000,000,000 is available exclusively for advanced nuclear facilities for the “front-end” of the nuclear fuel cycle. The remaining $10,600,000,000 is available for nuclear power facilities.
LPO is announcing a draft of a potential future solicitation for Federal Loan Guarantees for Advanced Nuclear Energy Projects. LPO invites comments regarding the draft of the potential future solicitation.
Title XVII of the Energy Policy Act of 2005 (42 U.S.C. 16511 et seq.).
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j. Lyndonville filed its request to use the Traditional Licensing Process on May 27, 2014. Lyndonville provided public notice of its request on June 10, 2014. In a letter dated September 23, 2014, the Director of the Division of Hydropower Licensing approved Lyndonville's request to use the Traditional Licensing Process.
k. With this notice, we are initiating informal consultation with the U.S. Fish and Wildlife Service and/or NOAA Fisheries under section 7 of the Endangered Species Act and the joint agency regulations thereunder at 50 CFR, Part 402. We are also initiating consultation with the Vermont State Historic Preservation Officer, as required by section 106, National Historic Preservation Act, and the implementing regulations of the Advisory Council on Historic Preservation at 36 CFR 800.2.
l. With this notice, we are designating Lyndonville as the Commission's non-federal representative for carrying out informal consultation pursuant to section 7 of the Endangered Species Act and consultation pursuant to section 106 of the National Historic Preservation Act.
m. Lyndonville filed a Pre-Application Document (PAD; including a proposed process plan and schedule) with the Commission, pursuant to 18 CFR 5.6 of the Commission's regulations.
n. A copy of the PAD is available for electronic review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site (
o. The licensee states its unequivocal intent to submit an application for a new license for Project No. 2839. Pursuant to 18 CFR 16.8, 16.9, and 16.10 each application for a new license and any competing license applications must be filed with the Commission at least 24 months prior to the expiration of the existing license. All applications for license for this project must be filed by May 31, 2017.
p. Register online at
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
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j. Deadline for filing comments, motions to intervene, protests, and recommendations is 30 days from the issuance date of this notice by the Commission (October 29, 2014). The Commission strongly encourages electronic filing. Please file motions to intervene, protests, comments, or recommendations using the Commission's eFiling system at
k. Description of Request: The licensee requests a temporary variance of the minimum flow requirement in the East Branch Russian River. The licensee states that it is planning to conduct repairs to project works, including: Replacing the penstock shutoff valves, replacing the standpipe connection, and installing penstock protection. In order to complete the work, the licensee is requesting a temporary variance of its Dry year minimum flow requirement of 35 cubic feet per second (cfs) between November 1, 2014 and March 15, 2015. During this time, the licensee proposes to release flows through a conduit into a seasonal creek that is a tributary to the East Branch Russian River immediately downstream of the project powerhouse. The licensee states that during the repair period, it would release a minimum flow of 20 cfs from the conduit into the East Branch Russian River, which would include the release of up to 5 cfs for the Potter Valley Irrigation District. As the project is currently operating according to the Dry year criteria, the licensee states that if
l. Locations of the Application: A copy of the application is available for inspection and reproduction at the Commission's Public Reference Room, located at 888 First Street NE., Room 2A, Washington, DC 20426, or by calling (202) 502–8371. This filing may also be viewed on the Commission's Web site at
m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
n. Comments, Protests, or Motions to Intervene: Anyone may submit comments, a protest, or a motion to intervene in accordance with the requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211, .214. In determining the appropriate action to take, the Commission will consider all protests or other comments filed, but only those who file a motion to intervene in accordance with the Commission's Rules may become a party to the proceeding. Any comments, protests, or motions to intervene must be received on or before the specified comment date for the particular application.
o. Filing and Service of Responsive Documents: Any filing must (1) bear in all capital letters the title “COMMENTS”, “PROTEST”, or “MOTION TO INTERVENE” as applicable; (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, motions to intervene, or protests must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). All comments, motions to intervene, or protests should relate to project works which are the subject of the license surrender. 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. If an intervener files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency. 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.
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
284.123(g) Protests Due:
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
Any person desiring to protest in any of the above proceedings must file in accordance with Rule 211 of the Commission's Regulations (18 CFR § 385.211) on or before 5:00 p.m. Eastern time on the specified comment date.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings
Environmental Protection Agency.
Notice of adequacy.
In this notice, the Environmental Protection Agency (EPA) is notifying the public that the Agency has found the following adequate for transportation conformity purposes: The “Revised PM
This finding is effective on October 20, 2014.
Tim Russ, Air Program, Mailcode 8P–AR, Environmental Protection Agency, Region 8, 1595 Wynkoop Street, Denver, Colorado 80202–1129, telephone number (303) 312–6479, fax number (303) 312–6064, or email
Throughout this document, whenever “we,” “us,” or “our,” are used, we mean EPA. Whenever “State” is used, we mean the State of Colorado.
Transportation conformity is required by section 176(c) of the Clean Air Act (CAA). The conformity rule provisions at 40 CFR 93 require that transportation plans, programs, and projects conform to a State Implementation Plan (SIP) and establish the criteria and procedures for determining whether or not they do. Conformity to a SIP means that transportation activities will not produce new air quality violations, worsen existing violations, or delay timely attainment of the National Ambient Air Quality Standard (NAAQS).
The criteria by which we determine whether a SIP revision's motor vehicle emissions budget (MVEB) is adequate for conformity purposes are outlined in 40 CFR 93.118(e)(4), which was promulgated August 15, 1997 (62 FR 43780). We described our process for determining the adequacy of submitted SIP MVEBs in our July 1, 2004 Transportation Conformity Rule Amendments (69 FR 40004). We used these resources in making our adequacy determinations announced in this notice.
This notice is simply an announcement of findings that we have already made and are as described below:
For the Lamar PM
Please note that our adequacy review described above is separate from our rulemaking action on the two maintenance plans discussed above and should not be used to prejudge our ultimate approval or disapproval of each of the SIP revisions. Even if we find a maintenance plan and its MVEB adequate for transportation conformity purposes now, we may later find it necessary to disapprove the SIP revision. Should this situation arise, we would then revisit our adequacy finding.
42 U.S.C. 7401 et seq.
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
Environmental Protection Agency.
Notice of availability.
This notice announces the availability of
The document will be available October 3, 2014.
The
Dr. Michael Broder, Office of the Science Advisor, Mail Code 8105R, U.S. Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number (202) 564–3393; fax number (202) 564–2070; or email:
Historically, EPA has employed default uncertainty factors in its computation of toxicity values (e.g., reference concentrations [RfC] and reference doses [RfD]) to compensate for an absence of data. Default uncertainty factors have historically been based on policy or regulatory positions rather than on empirical data applicable to the chemical of interest. Among the uncertainty factors used in EPA assessments are those compensating for a lack of information on how well animal models used in toxicity studies mimic humans (interspecies) and differences in response between the majority of the population (central tendency) compared with the sensitive individual (intraspecies). With the publication of
In 2011 EPA published
The DDEF Guidance lays out a computational process for using chemical-specific data on toxicokinetics (adsorption, metabolism, distribution and excretion) and toxicodynamics (response of the tissue to the active form of the agent).
It should be noted that the DDEF Guidance is the first EPA product to provide a method both for quantitative determination of relative sensitivity of the pharmacodynamic response in an assessment and for empirical determination of intraspecies sensitivity. As such, this method provides a valuable tool for identifying and quantifying sensitive populations and lifestages.
Federal Communications Commission.
Notice.
In this document, the Commission, via the Consumer and Governmental Affairs Bureau (CGB), seeks comment on whether certain docketed Commission proceedings should be terminated as dormant. The Commission's procedural rules, which were revised to streamline and improve the agency's docket management practices, delegate authority to the Chief, CGB to periodically review all open dockets and, in consultation with the responsible Bureaus or Offices, to identify those dockets that appear to be candidates for termination.
Comments are due on or before November 3, 2014, and reply comments are due on or before November 17, 2014.
Interested parties may submit comments, identified by [CG Docket No. 14–157], by any of the following methods:
All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th Street, SW., Room TW–A325, Washington, DC 20554. The filing hours are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service Express mail and Priority mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington DC 20554.
Gayle Radley Teicher, Consumer and Governmental Affairs Bureau at (202) 418–1515 or by email at
This is a synopsis of the Commission's Public Notice,
The full text of document DA 14–1354 and copies of any subsequently filed documents in this matter will be available for public inspection and copying via ECFS, and during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY–A257, Washington, DC 20554. Copies may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY–B402, Washington, DC 20554, telephone (800) 378–3160, fax: (202) 488–5563, or Internet:
Pursuant to 47 CFR 1.415 and 1.419, interested parties may file comments and reply comments on or before the respective dates indicated in the
Pursuant to 47 CFR 1.1200
To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to
The revised rules, in part, delegate authority to the Chief, CGB to periodically review all open dockets and, in consultation with the responsible Bureaus or Offices, to identify those dockets that appear to be candidates for termination. These candidates include dockets in which no further action is required or contemplated, as well as those in which no pleadings or other documents have been filed for several years. However, the Commission specified that proceedings in which petitions addressing the merits are pending should not be terminated absent the
Prior to the termination of any particular proceeding, the Commission was directed to issue a Public Notice identifying the dockets under consideration for termination and affording interested parties an opportunity to comment. Thus, CGB has identified the dockets for possible termination in document DA 14–1354, available at
Federal Communications Commission.
Notice.
In this document, the Commission released a public notice announcing panelist names and other information for a series of roundtables. The intended effect of this document is to make the public aware of the event and the agenda for the roundtables.
Tuesday, October 7, 2014, 9:00 a.m.–12:30 p.m.
Federal Communications Commission, Commission Meeting Room (TW–C305), 445 12th Street SW., Washington, DC 20554.
Andrew Erber, Office of General Counsel at (202) 418–0678 or by email at
This is a summary of the Commission's document in GN Docket No. 14–28, DA 14–1410 released September 29, 2014. The complete text in this document is available for public inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY–A257, Washington, DC 20554. The document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street SW., Room CY–B402, Washington, DC 20554, telephone (800) 378–3160 or (202) 863–2893, facsimile (202) 863–2898, or via the Internet at
The roundtable will be free and open to the public, and the FCC also will stream them live at
The FCC encourages members of the public to submit suggested questions in advance and during the roundtables by email to
Reasonable accommodations for people with disabilities are available upon request. The request should include a detailed description of the accommodation needed and contact information. We ask that requests for accommodations be made as soon as possible in order to allow the agency to satisfy such requests whenever possible. Send an email to
The Office of General Counsel of the Federal Communications Commission (FCC) provides panelist names and other information about the final event in the Open Internet roundtable series: “Internet Openness and the Law,” which will take place on October 7, 2014. This roundtable was previously announced in a Public Notice. At that time, it was unclear whether the roundtable would be a “meeting” of the Commission. As such, that Notice was not published in the
This roundtable will discuss the sources of authority on which the Commission could ground Open Internet rules, including a range of approaches relying on section 706, Title II, and other possible sources of authority.
This roundtable will consider additional legal issues, including constitutional considerations, the nature of common-carriage regulation, and approaches to agency rulemaking and adjudication using tools like prescriptive rules, legal standards, prohibitions, and presumptions to protect and promote Internet openness.
Federal Trade Commission (“FTC” or “Commission”).
Notice.
The information collection requirements described below will be submitted to the Office of Management and Budget (“OMB”) for review, as required by the Paperwork Reduction Act (“PRA”). The FTC is seeking public comments on its proposal to extend for an additional three years its OMB clearance for the information collection requirements contained in its Trade Regulation Rule on Disclosure Requirements and Prohibitions Concerning Franchising (“Franchise Rule” or “Rule”). That clearance expires on December 31, 2014.
Comments must be submitted by November 3, 2014.
Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the
Requests for additional information should be addressed to Craig Tregillus, Attorney, Division of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW., Mailstop CC–8528, Washington, DC 20580, (202) 326–2970.
Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential . . . , ” as provided in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).
Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online, or to send them to the Commission by courier or overnight service. To make sure that the Commission considers your online comment, you must file it at
If you file your comment on paper, write “Franchise Rule, PRA Comment, FTC File No. P094400” on your comment and on the envelope, and mail it to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex J), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex J), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service.
Visit the Commission Web site at
Comments on the information collection requirements subject to review under the PRA should additionally be submitted to OMB. If sent by U.S. mail, they should be addressed to Office of Information and Regulatory Affairs, Office of
Office of the Assistant Secretary for Health, Office of the Secretary, Department of Health and Human Services.
Notice.
Pursuant to Section 10(a) of the Federal Advisory Committee Act, U.S.C. Appendix 2, notice is hereby given that the Secretary's Advisory Committee on Human Research Protections (SACHRP) will hold a meeting that will be open to the public. Information about SACHRP and the full meeting agenda will be posted on the SACHRP Web site at:
The meeting will be held on Wednesday, October 29, 2014, from 8:30 a.m. until 5:00 p.m. and Thursday, October 30, 2014, from 8:30 a.m. until 4:00 p.m.
Fishers Lane Conference Center, Terrace Level, 5635 Fishers Lane, Rockville, Maryland 20852.
Jerry Menikoff, M.D., J.D., Director, Office for Human Research Protections (OHRP), or Julia Gorey, J.D., Executive Director, SACHRP; U.S. Department of Health and Human Services, 1101 Wootton Parkway, Suite 200, Rockville, Maryland 20852; 240–453–8141; fax: 240–453–6909; email address:
Under the authority of 42 U.S.C. 217a, Section 222 of the Public Health Service Act, as amended, SACHRP was established to provide expert advice and recommendations to the Secretary of Health and Human Services and the Assistant Secretary for Health on issues and topics pertaining to or associated with the protection of human research subjects.
The meeting will open to the public at 8:30 a.m., Wednesday, October 29. Following opening remarks from Dr. Jerry Menikoff, Executive Secretary of SACHRP and OHRP Director, and Dr. Jeffrey Botkin, SACHRP Chair, new members will be introduced. The Subpart A Subcommittee (SAS) will then give their report on the new SAS initiative examining informed consent. SAS is charged with developing recommendations for consideration by SACHRP regarding the application of subpart A of 45 CFR part 46 in the current research environment. SAS was established by SACHRP in October 2006. Following this report, an OHRP staff member will present and discuss OHRP data addressing incidental findings and corrective action plans.
On October 30, the Subcommittee on Harmonization (SOH) will discuss their work on the topic of the intersection of the HHS and FDA regulations and “big data”; this will be followed by a presentation of SOH work on the topic of return of general results. SOH was established by SACHRP at its July 2009 meeting. SOH is charged with identifying and prioritizing areas in which regulations and/or guidelines for human subjects research adopted by various agencies or offices within HHS would benefit from harmonization, consistency, clarity, simplification and/or coordination.
Public attendance at the meeting is limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the SACHRP at the address/phone number listed above at least one week prior to the meeting. Pre-registration is required for participation in the on-site public comment session; individuals may pre-register the day of the meeting. Individuals who would like to submit written statements should email or fax their comments to SACHRP at
Centers for Medicare & Medicaid Services.
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (the PRA), federal agencies are required to publish notice in the
Comments must be received by December 2, 2014:
When commenting, please reference the document identifier or OMB control number (OCN). To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
1.
2.
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following:
1. Access CMS' Web site address at
2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to
3. Call the Reports Clearance Office at (410) 786–1326.
Reports Clearance Office at (410) 786–1326.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the PRA (44 U.S.C. 3501–3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires federal agencies to publish a 60-day notice in the
1.
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), federal agencies are required to publish notice in the
Comments on the collection(s) of information must be received by the OMB desk officer by November 3, 2014.
When commenting on the proposed information collections, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be received by the OMB desk officer via one of the following transmissions: OMB, Office of Information and Regulatory Affairs, Attention: CMS Desk Officer, Fax Number: (202) 395–5806 or Email:
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following:
1. Access CMS' Web site address at
2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to
3. Call the Reports Clearance Office at (410) 786–1326.
Reports Clearance Office at (410) 786–1326.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501–3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires federal agencies to publish a 30-day notice in the
1.
2.
•
•
•
•
•
•
3.
The proposed information collection requests information to be utilized by ORR for determining the suitability of a sponsor/respondent for the release of a minor from ORR custody. The proposed instruments are the Family Reunification Application, the Family Reunification Checklist for Sponsors, and the Authorization for Release of Information.
Estimated Total Annual Burden Hours: 69,000.
ORR has requested emergency processing for this information collection for a period of 90 days from the October 31, 2014 expiration date of these instruments.
In compliance with the requirements of Section 506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Administration for Children and Families is soliciting public comment on the specific aspects of the information collection described above. Copies of the proposed collection of information can be obtained and comments may be forwarded by writing to the Administration for Children and Families, Office of Planning, Research and Evaluation, 370 L'Enfant Promenade SW., Washington, DC 20447, Attn: ACF Reports Clearance Officer. Email address:
The Department specifically requests comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) 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. Consideration will be given to comments and suggestions submitted within 60 days of this publication.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Fax written comments on the collection of information by November 3, 2014.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, FAX: 202–395–7285, or emailed to
FDA PRA Staff, Office of Operations, Food and Drug Administration, 8455 Colesville Rd., COLE–14526, Silver Spring, MD 20993–0002,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
FDA regulations in part 11 (21 CFR part 11) provide criteria for acceptance of electronic records, electronic signatures, and handwritten signatures executed to electronic records as equivalent to paper records. Under these regulations, records and reports may be submitted to FDA electronically provided the Agency has stated its ability to accept the records electronically in an Agency-established public docket and that the other requirements of part 11 are met.
The recordkeeping provisions in part 11 (§§ 11.10, 11.30, 11.50, and 11.300) require the following standard operating procedures to assure appropriate use of, and precautions for, systems using electronic records and signatures: (1) § 11.10 specifies procedures and controls for persons who use closed systems to create, modify, maintain, or transmit electronic records; (2) § 11.30 specifies procedures and controls for persons who use open systems to create, modify, maintain, or transmit electronic records; (3) § 11.50 specifies procedures and controls for persons who use electronic signatures; and (4) § 11.300 specifies controls to ensure the security and integrity of electronic signatures based upon use of identification codes in combination with passwords. The reporting provision (§ 11.100) requires persons to certify in writing to FDA that they will regard electronic signatures used in their systems as the legally binding equivalent of traditional handwritten signatures.
The burden created by the information collection provision of this regulation is a one-time burden associated with the creation of standard operating procedures, validation, and certification. The Agency anticipates the use of electronic media will substantially reduce the paperwork
In the
FDA estimates the burden of this collection of information as follows:
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of the draft guidance entitled “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs).” This document describes a risk-based framework for addressing the regulatory oversight of a subset of in vitro diagnostic devices (IVDs) referred to as laboratory developed tests (LDTs), which are intended for clinical use and designed, manufactured and used within a single laboratory. This document describes FDA's priorities for enforcing pre- and post-market requirements for LDTs, and the process by which FDA intends to phase in enforcement of FDA regulatory requirements for LDTs over time. This draft guidance is not final, nor is it in effect at this time.
Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by February 2, 2015.
An electronic copy of the guidance document is available for download from the Internet. See the
Submit electronic comments on the draft guidance to
In 1976, Congress enacted the Medical Device Amendments (MDA), which amended the Federal Food, Drug, and Cosmetic Act (the FD&C Act) to create a comprehensive system for the regulation of medical devices intended for use in humans. At that time, the definition of a device was amended to make explicit that it encompassed in vitro diagnostic devices (IVDs): “The term ‘device’. . . means an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or
Since the implementation of the MDA of 1976, FDA has exercised enforcement discretion so that the Agency has generally not enforced applicable provisions under the FD&C Act and FDA regulations with respect to laboratory developed tests (LDTs), a subset of in vitro diagnostic devices that are intended for clinical use and designed, manufactured, and used within a single laboratory.
In 1976, LDTs were mostly manufactured in small volumes by local laboratories. Many laboratories manufactured LDTs that were similar to well-characterized, standard diagnostic devices, as well as other LDTs that were intended for use in diagnosing rare diseases or for other uses to meet the needs of a local patient population. LDTs at the time tended to rely on the manual techniques used by laboratory personnel. LDTs were typically used and interpreted directly by physicians and pathologists working within a single institution that was responsible for the patient. In addition, historically, LDTs were manufactured using components that were legally marketed for clinical use (i.e., general purpose reagents, immunohistochemical stains, and other components marketed in compliance with FDA regulatory requirements).
Although some laboratories today still manufacture LDTs in this “traditional” manner, the landscape for laboratory testing in general, and LDTs along with it, has changed dramatically since 1976. Today, LDTs are often used in laboratories that are independent of the healthcare delivery entity. Additionally, LDTs are frequently manufactured with components and instruments that are not legally marketed for clinical use and also rely more heavily on complex, high-tech instrumentation and software to generate results and clinical interpretations. Moreover, technological advances have increased the use of diagnostic devices in guiding critical clinical management decisions for high-risk diseases and conditions, particularly in the context of personalized medicine.
Business models for laboratories have also changed since 1976. With the advent of overnight shipping and electronic delivery of information (e.g., device results), a single laboratory can now easily provide device results nationally and internationally. Today, many new LDT manufacturers are large corporations that nationally market a limited number of complex, high-risk devices, in contrast to 1976 when hospital or public health laboratories used a wide range of devices that were generally either well characterized and similar to standard devices; used to diagnose rare diseases; or designed specifically to meet the needs of their local patients. Together, these changes have resulted in a significant shift in the types of LDTs developed, the business model for developing them, and the potential risks they pose to patients.
Because of changes in the complexity and use of LDTs and the associated increased risks, as described earlier, FDA believes the policy of general enforcement discretion towards LDTs is no longer appropriate. To initiate this step toward greater oversight, FDA held a two-day public meeting on July 19 and 20, 2010, to provide a forum for stakeholders to discuss issues and concerns surrounding greater oversight of LDTs. Comments submitted to the public docket for the July public meeting have been addressed, as appropriate, in the draft guidance document.
Once finalized and implemented, this guidance document is intended to provide a risk-based oversight framework that will assure that devices used in the provision of health care, whether developed by a laboratory or a conventional IVD manufacturer, comply with the appropriate levels of regulatory controls needed to assure that they are safe and effective. Under the framework outlined in this guidance document, FDA intends to continue to exercise enforcement discretion for all applicable regulatory requirements for LDTs used solely for forensic (law enforcement) purposes as well as certain LDTs for transplantation when used in certified, high-complexity histocompatibility laboratories. Additionally, FDA intends to exercise enforcement discretion for applicable premarket review requirements and quality systems requirements, but enforce other applicable regulatory requirements, including registration and listing (with the option to provide notification instead) and adverse event reporting, for low risk LDTs (class I devices), LDTs for rare diseases, Traditional LDTs and LDTs for Unmet Needs, as described in the draft guidance document. For other high and moderate risk LDTs, FDA intends to enforce applicable regulatory requirements, including registration and listing (with the option to provide notification instead) and adverse event reporting, and phase in enforcement of premarket and quality system requirements in a risk-based manner.
On July 31, 2014, as required by Section 1143 of the Food and Drug Administration Safety and Innovation Act, FDA provided notification to Congress of its intent to issue this draft guidance and the accompanying draft guidance entitled “FDA Notification and Medical Device Reporting for Laboratory Developed Test (LDTs)” (the availability of the accompanying draft guidance is announced elsewhere in this issue of the
Although FDA was not accepting formal comments on its notification to Congress, the Agency has received informal comments and questions regarding the anticipated details of this draft guidance provided in the notification to Congress. To give everyone an opportunity to provide formal comments on the anticipated details as part of the administrative record, the details of the draft guidance are identical to that which were included in FDA's July 31, 2014, notification to Congress with the exception of the following technical amendments: The definition of companion diagnostic has been updated for consistency with the final guidance on “In Vitro Companion Diagnostic Devices” issued on August 6, 2014, and the “Traditional LDT” factor regarding whether the LDT is comprised only of components and instruments that are legally marketed has been clarified to more accurately reflect FDA's intent of considering whether the LDT is comprised of only components and instruments that are legally marketed for clinical use.
To provide greater transparency on certain questions and issues that have been raised and to allow for broad public input, in addition to welcoming comments on all aspects of this draft guidance, FDA seeks feedback on the following specific issues:
• Traditional LDTs: In Section D.5.(a) of the draft guidance, FDA has proposed continued enforcement discretion for premarket review and quality system requirements for a category of LDTs called “Traditional LDTs” based on whether the device is: (1) an LDT (designed, manufactured and used within a single laboratory); (2) manufactured and used by a health care facility laboratory (such as one located in a hospital or clinic) for a patient that is being diagnosed and/or treated at that same health care facility or within the facility's healthcare system; (3)
• LDTs Used for Rare Diseases: In Section D.5.(a) of the draft guidance, FDA has proposed continued enforcement discretion for premarket review and quality system requirements for LDTs used for rare diseases, which are those tests that meet the definition of LDT in the guidance (designed, manufactured and used within a single laboratory) and meet the definition of a Humanitarian Use Device (HUD) under 21 CFR 814.102(a)(5). With these factors, FDA has attempted to balance the need to mitigate the risks associated with these tests with their potential benefit for patients. FDA invites stakeholders to provide feedback on the suitability of these factors for LDTs for rare diseases. Further, FDA is seeking feedback on whether a factor other than the HUD definition should be considered, such as a factor based on the number of tests for a rare disease or condition that would likely (based on the prevalence of the condition) be conducted annually in the United States, and if so what the annual number of tests should be for the purpose of defining an LDT as an LDT for a rare disease. FDA also seeks feedback on whether enforcement discretion should be limited to tests that are designed, manufactured and used within a single laboratory.
• Healthcare System: In Section D.5. of the draft guidance, for the categories of tests called “Traditional LDTs” and “LDTs for Unmet Needs,” FDA has identified factors it intends to consider in continuing to exercise enforcement discretion for premarket review and quality system requirements. One such factor is whether the LDT is both manufactured and used by a healthcare facility laboratory (such as one located in a hospital or clinic) for a patient that is being diagnosed and/or treated at that same healthcare facility or within that facility's healthcare system. To further clarify this factor, the guidance document explains that “healthcare system” refers to a collection of hospitals that are owned and operated by the same entity and that share access to patient care information for their patients, such as, but not limited to, drug order information, treatment and diagnosis information, and patient outcomes. While FDA invites feedback on all factors described in Section D.5. of the draft guidance, FDA specifically requests feedback on whether enforcement discretion should be limited, as proposed, to those LDTs that are both manufactured and used by a healthcare facility laboratory. FDA also invites the public to provide feedback to the Agency on which types of facilities would or would not be considered within a healthcare system, or to offer an alternative description of healthcare system for Agency consideration.
• Quality System (QS) Phase-in: In Section D.6. of the draft guidance, FDA has proposed to continue to exercise enforcement discretion with respect to QS regulation requirements, codified in 21 CFR Part 820, until a manufacturer of a given LDT submits a Premarket Approval (PMA) or FDA issues a 510(k) clearance order for the LDT. Under this enforcement policy, the clinical laboratory manufacturing and using the LDT will be responsible for having a quality system in place that meets the minimum requirements codified in 21 CFR Part 820, either at the time of PMA submission (the facility that makes the device must pass an inspection as a condition of PMA approval as a matter of law (21 CFR 814.45(a)(3)), or prior to market launch for cleared devices, as applicable. FDA invites feedback on the timeframe for phase-in enforcement of QS regulation requirements. Specifically, FDA is considering whether those LDTs in the highest-risk category of devices (described in section D.5.(c) of the draft guidance), which FDA intends to generally enforce premarket review requirements 12 months following publication of the final Framework guidance, should remain under enforcement discretion for the design control requirements (21 CFR 820.30(a-h) and (j)) of the QS regulation for up to 24 months after publication of the final guidance.
• Notification: FDA notes that some laboratory networks (i.e., more than one laboratory under the control of the same parent entity) offer the same test in multiple laboratories throughout their network. Although devices in this scenario do not meet FDA's definition of an LDT (i.e., they are not designed, manufactured and used within a single laboratory), FDA would like feedback on whether a single notification from the laboratory network for that test is sufficient, provided that the laboratory network indicates in the notification to FDA that the test is offered at multiple sites. In addition, FDA seeks comment on whether there are certain types of LDTs for which the Agency should neither enforce requirements for registration and listing nor request notification in lieu of registration and listing.
• FDA understands that members of the public may want more clarity around specific issues; such as how laboratory sponsors could interpret what elements make up a medical device, what might constitute the label or labeling for their device, whether or not unique device identifier requirements apply to LDTs, and how laboratory-physician communication about a test and its result would be viewed by FDA, among others. We invite public comment on these issues and any other issues or questions that should be addressed in the guidance, including how that issue or question should be addressed.
Additionally, FDA intends to hold a public webinar in late October, 2014 to summarize the proposed oversight framework and answer clarification questions from stakeholders. The webinar will not require registration and will be announced at least one week in advance on FDA's Web site. It will be recorded and made available on FDA's Web site shortly thereafter.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the Agency's current thinking on oversight of laboratory developed tests. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An
Persons interested in obtaining a copy of the draft guidance may do so by downloading an electronic copy from the Internet. A search capability for all CDRH guidance documents is available at
Persons unable to download an electronic copy of “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)” may send an email request to
This draft guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in 21 CFR part 807 Subpart E have been approved under OMB control number 0910–0120; the collections of information in 21 CFR part 807 Subpart B and C have been approved under OMB control number 0910–0625; the collections of information in 21 CFR part 601 have been approved under OMB control number 0910–0338; the collections of information in 21 CFR part 814, subparts B and E, have been approved under OMB control number 0910–0231; the collections of information in 21 CFR part 814, subpart H, have been approved under OMB control number 0910–0332; the collections of information in 21 CFR part 820 have been approved under OMB control number 0910–0073; the collections of information in 21 CFR part 812 have been approved under OMB control number 0910–0078; the collections of information in 21 CFR part 806 have been approved under OMB control number 0910–0359; the collections of information in 21 CFR 801 and 21 CFR 809.10 have been approved under OMB control number 0910–0485; and the collections of information in 21 CFR part 803 have been approved under OMB control numbers 0910–0291 and 0910–0437.
Interested persons may submit either electronic comments regarding this document to
Comments will also be accepted at a public meeting, which will be held prior to finalizing this draft guidance. A 2-day meeting is tentatively scheduled for early January, 2015 and will be announced separately in the
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of the draft guidance entitled “FDA Notification and Medical Device Reporting for Laboratory Developed Tests (LDTs).” This draft guidance document is intended to describe the process for clinical laboratories to notify FDA of the laboratory developed tests (LDTs) they manufacture as well as to describe the Medical Device Reporting (MDR) requirements for clinical laboratories manufacturing LDTs. LDTs are those in vitro diagnostic devices that are intended for clinical use and designed, manufactured, and used within a single laboratory. This draft guidance is not final nor is it in effect at this time.
Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by February 2, 2015.
An electronic copy of the guidance document is available for download from the Internet. See the
Submit electronic comments on the draft guidance to
In 1976, Congress enacted the Medical Device Amendments (MDA) (Public Law 94–295), which amended the
However, since the implementation of the MDA of 1976, FDA has generally exercised enforcement discretion so that the Agency has generally not enforced applicable provisions under the FD&C Act and FDA regulations with respect to LDTs, a subset of IVDs that are intended for clinical use and designed, manufactured, and used within a single laboratory. Given a changing landscape in terms of the volume, technology, and business model of IVDs offered as LDTs since 1976, in combination with the increasingly important role of diagnostic devices, including LDTs, in critical clinical treatment decisions, the FDA does not believe that generally exercising enforcement discretion with respect to the regulatory requirements for these devices remains appropriate.
Consistent with the draft guidance entitled “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)” that is being distributed for comment contemporaneously with this document, FDA intends to enforce certain medical device regulatory requirements for LDTs and device-manufacturer requirements for laboratories that manufacture, prepare, propagate, compound, assemble, or process LDTs. FDA intends to collect information regarding LDTs currently being used by laboratories through a notification process. In addition, FDA intends to enforce the requirements under part 803 (21 CFR part 803) for reporting safety issues related to LDTs, to provide a mechanism for collecting information on any known or suspected adverse events related to the use of an LDT. FDA believes that this is the appropriate regulatory oversight approach to adopt initially in achieving the desired public health goal of assuring that these IVDs used in the provision of health care, regardless of the manufacturer, provide reasonable assurance of safety and effectiveness.
FDA welcomes comments on all aspects of this guidance, as well as on the following specific issue: FDA notes that some laboratory networks (i.e., more than one laboratory under the control of the same parent entity) offer the same test in multiple laboratories throughout their network. Although devices in this scenario do not meet FDA's definition of an LDT (i.e., they are not designed, manufactured and used within a single laboratory), FDA would like feedback on whether a single notification from the laboratory network for that test is sufficient, provided that the laboratory network indicates in the notification to FDA that the test is offered at multiple sites. Elsewhere in this issue of the
Additionally, FDA intends to hold a public webinar in late October 2014 to summarize the proposed oversight framework and answer clarification questions from stakeholders. The webinar will not require registration and will be announced at least 1 week in advance on FDA's Web site. It will be recorded and made available on FDA's Web site shortly thereafter.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the Agency's current thinking on FDA notification and medical device reporting requirements for LDTs. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statute and regulations.
Persons interested in obtaining a copy of the draft guidance may do so by downloading an electronic copy from the Internet. A search capability for all CDRH guidance documents is available at
Persons unable to download an electronic copy of “FDA Notification and Medical Device Reporting for Laboratory Developed Tests (LDTs)” may send an email request to
Under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501–3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on the following topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
FDA intends to collect information from laboratories regarding their current LDTs and new LDTs through a notification process. This information collection is needed to classify LDTs and to prioritize enforcement of premarket review requirements for categories of LDTs based on risk using a public process. Specifically, FDA plans to use advisory panels to provide recommendations to the Agency on LDT risks, classification and prioritization of enforcement of applicable regulatory requirements on certain categories of LDTs, as appropriate. Additionally, the notification information will be made
To facilitate future FDA regulatory activity for LDTs, clinical laboratories should notify FDA of all of the LDTs manufactured, prepared, propagated, compounded, assembled, or processed by their laboratories. To appropriately notify FDA of all LDTs manufactured at an establishment, the owner/operator should provide information on the data elements identified in the following paragraph for each LDT manufactured at their establishment. Laboratory owner/operators with LDTs currently being used in their laboratories should begin to report this information no later than 6 months after publication, in final form, of the “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)” guidance document referred to in section I. Background. Starting 6 months after publication of the final version of the “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)” guidance, laboratories that intend to offer new LDTs should provide notification prior to offering the LDT for clinical use. It should be noted that when laboratories make a significant change to the marketed intended use of an LDT for which they have previously provided notification, the LDT will be considered by the FDA to be a new LDT and, therefore, a new notification should be provided prior to offering that LDT for clinical use.
• Laboratory
• Laboratory Contact Email Address
• Test Name
• Monthly Test Volume
• Intended Use
• Clinical Use of Test
• What is measured or detected (i.e. analyte, measurand, etc.)
• Disease/Condition for which the diagnostic device is indicated
• Patient Population
• Does the patient population include pediatric patients? (<21 years old)
• Sample Type
• Test Method
• Is the test a modification of an FDA cleared/approved test?
• If the test is a modification of an FDA cleared/approved test, what modifications were made?
Respondents to this collection of information are manufacturers of LDTs. FDA estimates the burden of this collection as follows.
Upon publication of a final guidance based on this draft guidance, FDA expects approximately 650 manufacturers to provide notification information regarding approximately 17 LDTs each. The number of respondents and total number of responses are based on information provided by New York State. Specifically, in July 2014, New York State indicated that it has reviewed 9,800 submissions from 565 labs. While these numbers represent the best estimates available for the number of LDTs currently on the market, FDA acknowledges that additional LDTs may be offered to patients in the United States that are not currently offered in New York State, and therefore, have not undergone review. To take into account the possibility that the number of LDTs and number of labs in New York State understate the totals for the United States, FDA assumes that the nationwide totals are 10 percent higher and, therefore, estimates that there are approximately 11,000 LDTs manufactured in 650 labs. To corroborate our estimate of the total number of responses, i.e., the total number of LDTs currently being offered, we looked at National Institutes of Health Genetic Test Registry data. In June 2014, the registry included approximately 7,600 genetic tests that are not FDA-approved or cleared, but are currently offered. If we assume that genetic tests represent roughly 70 to 80 percent of all LDTs, this supports our estimate of 11,050 LDTs (total annual responses in the first year).
FDA estimates an average of 17 LDTs offered per laboratory based upon the ratio of labs offering LDTs to the number of LDT submissions received by New York State. We therefore estimate that there will be 650 respondents (manufacturers of LDTs) and 17 responses per respondent (LDT notifications) in the first year. This results in 11,050 total annual responses in the first year.
FDA acknowledges that according to the CLIA (Clinical Laboratory Improvement Amendments) program at CMS (August 2014), there are approximately 11,000 CLIA-certified high complexity labs that have the appropriate certifications to manufacture LDTs. However, FDA is not aware of information describing the exact number of certified high complexity laboratories currently offering LDTs. Therefore, FDA has relied upon the information provided by New York State when creating these estimates. FDA acknowledges that, without firm data on the number of labs offering LDTs or the number of tests offered per lab, the estimate of the number of respondents is necessarily uncertain.
After the initial notification, respondents will only notify FDA of new tests or modifications that affect performance or intended use. We estimate the number of tests in subsequent years to be approximately 5 percent of the estimated number of initial notifications.
FDA bases its estimate of the average burden per response on Agency creation of a mock notification. We would expect labs to take up to an hour for their first notification and only 30 minutes for subsequent notifications, due to familiarity with the system.
Therefore, we estimate the total reporting burden to respondents to be 5,850 hours for the first year and 325 hours for subsequent years.
This draft guidance also refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in 21 CFR part 803 (medical device reporting) have been approved under OMB control numbers 0910–0291 and 0910–0437; the collections of information in 21 CFR part 806 (reports of corrections and removals) have been approved under OMB control number 0910–0359; and the collections of information in 21 CFR part 807, subparts B and C (registration and listing) have been approved under OMB control number 0910–0625.
Interested persons may submit either electronic comments regarding this document to
Comments will also be accepted at a public meeting, which will be held prior to finalizing this draft guidance. A 2-day meeting is tentatively scheduled for early January 2015 and will be announced separately in the
Food and Drug Administration, HHS.
Notice.
This notice announces a forthcoming meeting of a public advisory committee of the Food and Drug Administration (FDA). The meeting will be open to the public.
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its Web site prior to the meeting, the background material will be made publicly available at the location of the advisory committee meeting, and the background material will be posted on FDA's Web site after the meeting. Background material is available at
Persons attending FDA's advisory committee meetings are advised that the Agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with physical disabilities or special needs. If you require special accommodations due to a disability, please contact Cindy Hong at least 7 days in advance of the meeting.
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our Web site at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Food and Drug Administration, HHS.
Notice.
This notice announces a forthcoming meeting of a public advisory committee of the Food and Drug Administration (FDA). The meeting will be open to the public.
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its Web site prior to the meeting, the background material will be made publicly available at the location of the advisory committee meeting, and the background material will be posted on FDA's Web site after the meeting. Background material is available at
Persons attending FDA's advisory committee meetings are advised that the Agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with physical disabilities or special needs. If you require special accommodations due to a disability, please contact Stephanie L. Begansky at least 7 days in advance of the meeting.
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our Web site at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Coast Guard, DHS.
Notice of recertification.
The purpose of this notice is to inform the public that the Coast Guard has recertified the Cook Inlet Regional Citizens' Advisory Council (CIRCAC) as an alternative voluntary advisory group for Cook Inlet, Alaska. This certification allows the CIRCAC to monitor the activities of terminal facilities and crude oil tankers under the Cook Inlet Program established by statute.
This recertification is effective for the period from September 1st, 2014 through August 31, 2015.
LT Thomas Pauser Seventeenth Coast Guard District (dpi); Telephone (907)463–2812, email
As part of the Oil Pollution Act of 1990, Congress passed the Oil Terminal and Oil Tanker Environmental Oversight and Monitoring Act of 1990 (the Act), 33 U.S.C. 2732, to foster a long-term partnership among industry, government, and local communities in overseeing compliance with environmental concerns in the operation of crude oil terminals and oil tankers.
On October 18, 1991, the President delegated his authority under 33 U.S.C 2732 (o) to the Secretary of Transportation in Executive Order 12777, section 8(g) (see 56 FR 54757; October 22, 1991) for purposes of certifying advisory councils, or groups, subject to the Act. On March 3, 1992, the Secretary redelegated that authority to the Commandant of the USCG (see 57 FR 8582; March 11, 1992). The Commandant redelegated that authority to the Chief, Office of Marine Safety, Security and Environmental Protection (G–M) on March 19, 1992 (letter #5402).
On July 7, 1993, the USCG published a policy statement, 58 FR 36504, to clarify the factors that shall be considered in making the determination as to whether advisory councils, or groups, should be certified in accordance with the Act.
The Assistant Commandant for Marine Safety and Environmental Protection (CG–5), redelegated recertification authority for advisory councils, or groups, to the Commander, Seventeenth Coast Guard District on February 26, 1999 (letter #16450).
On September 16, 2002, the USCG published a policy statement, 67 FR 58440, that changed the recertification procedures such that applicants are required to provide the USCG with comprehensive information every three years (triennially). For each of the two years between the triennial application procedure, applicants submit a letter requesting recertification that includes a description of any substantive changes to the information provided at the previous triennial recertification. Further, public comment is not solicited prior to recertification during streamlined years, only during the triennial comprehensive review.
On May 23, 2014 the USCG published a Notice of Availability; request for comments for recertification of Cook Inlet Regional Citizens' Advisory Council in the
By letter dated August 27, 2014, the Commander, Seventeenth Coast Guard certified that the CIRCAC qualifies as an alternative voluntary advisory group under 33 U.S.C. 2732(o). This recertification terminates on August 31, 2015.
Office of the Assistant Secretary for Community Planning and Development, HUD.
Notice.
This Notice identifies unutilized, underutilized, excess, and surplus Federal property reviewed by HUD for suitability for use to assist the homeless.
Juanita Perry, Department of Housing and Urban Development, 451 Seventh Street SW., Room 7266, Washington, DC 20410; telephone (202) 402–3970; TTY number for the hearing- and speech-impaired (202) 708–2565 (these telephone numbers are not toll-free), or call the toll-free Title V information line at 800–927–7588.
In accordance with 24 CFR part 581 and section 501 of the Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11411), as amended, HUD is publishing this Notice to identify Federal buildings and other real property that HUD has reviewed for suitability for use to assist the homeless. The properties were reviewed using information provided to HUD by Federal landholding agencies regarding unutilized and underutilized buildings and real property controlled by such agencies or by GSA regarding its inventory of excess or surplus Federal property. This Notice is also published in order to comply with the December 12, 1988 Court Order in
Properties reviewed are listed in this Notice according to the following categories: Suitable/available, suitable/unavailable, and suitable/to be excess, and unsuitable. The properties listed in the three suitable categories have been reviewed by the landholding agencies, and each agency has transmitted to HUD: (1) Its intention to make the property available for use to assist the homeless, (2) its intention to declare the property excess to the agency's needs, or (3) a statement of the reasons that the property cannot be declared excess or made available for use as facilities to assist the homeless.
Properties listed as suitable/available will be available exclusively for homeless use for a period of 60 days from the date of this Notice. Where
For properties listed as suitable/to be excess, that property may, if subsequently accepted as excess by GSA, be made available for use by the homeless in accordance with applicable law, subject to screening for other Federal use. At the appropriate time, HUD will publish the property in a Notice showing it as either suitable/available or suitable/unavailable.
For properties listed as suitable/unavailable, the landholding agency has decided that the property cannot be declared excess or made available for use to assist the homeless, and the property will not be available.
Properties listed as unsuitable will not be made available for any other purpose for 20 days from the date of this Notice. Homeless assistance providers interested in a review by HUD of the determination of unsuitability should call the toll free information line at 1–800–927–7588 for detailed instructions or write a letter to Ann Marie Oliva at the address listed at the beginning of this Notice. Included in the request for review should be the property address (including zip code), the date of publication in the
For more information regarding particular properties identified in this Notice (i.e., acreage, floor plan, existing sanitary facilities, exact street address), providers should contact the appropriate landholding agencies at the following addresses:
Office of the Assistant Secretary for Policy Development and Research, HUD.
Notice of Final Fiscal Year (FY) 2015 Fair Market Rents (FMRs).
Section 8(c)(1) of the United States Housing Act of 1937 (USHA) requires the Secretary to publish FMRs periodically, but not less than annually, adjusted to be effective on October 1 of each year. This notice publishes the final FY 2015 FMRs for programs operating under Section 8 of the United States Housing Act of 1937 (The Act) or directed to use FMRs as calculated under Section 8 of the act. Currently the programs operating under Section 8 of the act are the Housing Choice Voucher, the Moderate Rehabilitation, and the project-based voucher programs. Additionally, based on Section 210 of Division L, Title II of the Consolidated Appropriations Act, 2014, Public Housing Authorities administering Public Housing must use these FMRs in calculating Flat Rents for public housing. Today's notice provides final FY 2015 FMRs for all areas that reflect the estimated 40th and 50th percentile rent levels trended to April 1, 2015. The FY 2015 FMRs are based on 5-year, 2008–2012 standard quality rents collected by the American Community Survey (ACS). These 5-year rents are updated by one-year recent-mover 2012 ACS rents. HUD uses the Consumer Price Index (CPI) rent and utility indexes to further update the data from 2012 to the end of 2013. HUD continues to use ACS data in different ways according to the statistical reliability of rent estimates for areas of different population sizes and counts of rental units.
The final FY 2015 FMRs in this notice have no methodology changes. HUD continues to use the Puerto Rico Community Survey (PRCS) data (the PRCS is a part of the ACS program) and the Consumer Price Index data calculated specifically for Puerto Rico, as it first did for the FY 2014 FMRs. HUD also continues to adjust the FMRs for Puerto Rico based on validated information related to utility rates, which have not shown up in the gross rent or CPI data. The trend factor, applied to all FMR areas, is the average annual change in national gross rents between 2007 and 2012.
The final FY 2015 FMR areas use the Office of Management and Budget (OMB) metropolitan area definitions as updated through December 1, 2009 and include HUD modifications that were first used in the determination of FY 2006 FMR areas. The February 28, 2013 update to the OMB metropolitan area definitions are not been incorporated in the FY 2015 FMRs process due to the timing of the release and the availability of ACS data. HUD will work toward incorporating these new area definitions into the Proposed FY 2016 FMRs. The Department hopes to provide more implementation details in an anticipated publication in January 2015.
The January 2015 notice will also discuss and solicit comments on several topics related to the calculation of FMRs, including the implementation of the February 28, 2013 OMB Metropolitan Area Definitions and
The final FY 2015 notice updates the FMRs for Bennington, Windham, and Windsor counties in Vermont to incorporate the results of surveys received after publication of the proposed FY 2015 FMRs. These surveys result in increases for all three nonmetropolitan counties.
For technical information on the methodology used to develop FMRs or a listing of all FMRs, please call the HUD USER information line at 800–245–2691 or access the information on the HUD USER Web site
Questions related to use of FMRs or voucher payment standards should be directed to the respective local HUD program staff. For flat rent questions, please contact Todd Thomas, Acting Director of the Public Housing Management and Occupancy Division of the Public Housing Office at 202–708– 5849. Questions on how to conduct FMR surveys or concerning further methodological explanations may be addressed to Marie L. Lihn or Peter B. Kahn, Economic and Market Analysis Division, Office of Economic Affairs, Office of Policy Development and Research, telephone 202–402–2409. Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800–877–8339. (Other than the HUD USER information line and TDD numbers, telephone numbers are not toll-free.)
Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing assistance to aid lower-income families in renting safe and decent housing. Housing assistance payments are limited by FMRs established by HUD for different geographic areas. In the HCV program, the FMR is the basis for determining the “payment standard amount” used to calculate the maximum monthly subsidy for an assisted family (see 24 CFR 982.503). In general, the FMR for an area is the amount that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities. In addition, all rents subsidized under the HCV program must meet reasonable rent standards. HUD's regulations at 24 CFR 888.113 require it to establish 50th percentile FMRs for certain areas.
Section 8(c)(1) of the USHA requires the Secretary of HUD to publish FMRs periodically, but not less frequently than annually. Section 8(c)(1) states, in part, as follows:
Proposed fair market rentals for an area shall be published in the
HUD's regulations at 24 CFR part 888 provide that HUD will develop proposed FMRs, publish them for public comment, provide a public comment period of at least 30 days, analyze the comments, and publish final FMRs. (See 24 CFR 888.115.) For FY 2015 FMRs, HUD has considered all comments submitted in response to its August 15, 2014 (78 FR 47339) proposed FY 2015 FMRs but its responses are posted on its Web site because of the time required to publish this notice.
In addition, HUD's regulations at 24 CFR 888.113 set out procedures for HUD to assess whether areas are eligible for FMRs at the 50th percentile. Minimally qualified areas
In FY 2014 there were 19 areas using 50th-percentile FMRs. Of these 19 areas, 13 areas were eligible for evaluation. Only four of the 13 areas will continue as 50th percentile FMR areas; those nine areas that do not continue as 50th percentile areas did not show measurable deconcentration and will not be evaluated for an additional three-year period, as required by the regulation. An additional six areas that failed to deconcentrate as of FY 2012 will once again become 50th percentile FMR areas.
In summary, there will be 16 50th-percentile FMR areas in FY 2015. In Schedule B, where all FMRs are listed by state and area, an asterisk designates the 50th percentile FMR areas. The following table lists the FMR areas along with the year of their next evaluation.
On August 15, 2014 (79 FR 48178), HUD published proposed FY 2015 FMRs with a comment period that ended September 15, 2014. HUD has considered all public comments received and HUD provides responses to these comments on the FMR Web site
This section provides a brief overview of the calculation steps for the FY 2015 FMRs. For complete information on how FMR areas are determined by each specific FMR area, see the online documentation
The FY 2015 FMRs use OMB metropolitan area definitions and standards that were first used in the FY 2006 FMRs. OMB changes to the metropolitan area definitions through December 2009 are incorporated. HUD has not incorporated the February 28, 2013 OMB metropolitan area definition changes because the Census Bureau did not incorporate these definitions into the 2012 ACS tabulations; therefore, the FY 2015 area definitions are the same as those used in FY 2014. HUD anticipates that the new OMB area definitions (based on the 2010 decennial Census) will replace those based on the 2000 Census (first incorporated into the FMRs with the FY 2006 publication that replaced those based on the 1990 Census) with the FY 2016 proposed FMRs.
HUD used special tabulations of 5-year ACS data collected between 2008 through 2012. For FY 2015 FMRs, HUD updated the base rents set in FY 2014 using the 2007–2011 5-year data with the 2008–2012 5-year ACS data.
HUD historically based FMRs on gross rents for recent movers (those who have moved into their current residence in the last 24 months). However, due to the nature of the 5-year ACS data, HUD developed a new methodology for calculating recent-mover FMRs in FY 2012. As in FY 2012, HUD assigns all areas a base rent which is the estimated two-bedroom standard quality 5-year gross rent from the ACS.
Following the assignment of the standard quality two-bedroom rent described above, HUD applies a recent mover factor to these rents. The calculation of the recent mover factor for FY 2015 is similar to the methodology used in FY 2014, with the only difference being the use of updated ACS data. The following describes the process for determining the appropriate recent mover factor.
In general, HUD uses the 1 year ACS-based two-bedroom recent mover gross rent estimate from the smallest geographic area encompassing the FMR area for which the estimate is statistically reliable to calculate the recent mover factor.
HUD does not use the ACS as the base rent or recent mover factor for 16 areas where the FY 2015 FMR was adjusted based on survey data collected in late 2012, 2013, or 2014. PHAs conducted surveys for the following areas: Bennington County, VT, Hood River County, OR, Oakland, CA, Santa Barbara, CA, Stamford, CT, Windham County, VT, and Windsor County, VT, while HUD conducted surveys for Burlington, VT, Cheyenne, WY, Danbury, CT, Flagstaff, AZ, Mountrail County, ND, Odessa, TX, Rochester, MN, Ward County, ND, and Williams County, ND. HUD has no funds to conduct surveys of FMR areas, and so all future surveys must be paid for by the PHAs.
HUD updates the ACS-based “as of” 2012 rent through the end of 2013 using the annual change in CPI from 2012 to 2013. As in previous years, HUD uses Local CPI data coupled with Consumer Expenditure Survey (CEX) data for FMR areas with at least 75 percent of their population within Class A metropolitan areas covered by local CPI data. HUD uses Census region CPI data for FMR areas in Class B and C size metropolitan areas and nonmetropolitan areas without local CPI update factors. Additionally, HUD is using CPI data collected locally in Puerto Rico as the basis for CPI adjustments from 2012 to 2013 for all Puerto Rico FMR areas. Following the application of the appropriate CPI update factor, HUD converts the “as of” 2013 CPI adjusted rents to “as of” December 2013 rents by multiplying each rent by the national December 2013 CPI divided by the national annual 2013 CPI value.
As in FY 2014, HUD continues to calculate the trend factor as the annualized change in median gross rents as measured across the most recent 5 years of available 1-year ACS data. The national median gross rent in 2007 was $789 and $884 in 2012. The overall change between 2007 and 2012 is 12.04 percent and the annualized change is 2.30 percent. Over a 15-month time period, the effective trend factor is 2.883 percent. HUD applies this trend factor to the “as of” December 2013 rents to produce FMRs that correspond to the middle of the 2015 fiscal year.
The gross rent data from the 2008 to 2012 Puerto Rico Community Survey (PRCS) does not include the utility rate increases from Commonwealth-owned utility companies from last year that were submitted as part of the comments from Puerto Rico housing agencies. HUD included additional utility values in the final FY 2014 FMRs to account for these changes in Puerto Rico and these utility adjustments are continued for all areas of Puerto Rico in the FY 2015 FMRs.
The table below shows the fixed amounts that are added to the Puerto Rico FMRs by bedroom count.
HUD calculates the primary FMR estimates for two-bedroom units. This is generally the most common sized rental unit and, therefore, the most reliable to survey and analyze. Formerly, after each decennial Census, HUD calculated rent relationships between two-bedroom units and other unit sizes and used them to set FMRs for other units. HUD did this because it is much easier to update two-bedroom estimates annually and to use pre-established cost relationships with other unit bedroom counts than it is to develop independent FMR estimates for each unit bedroom count. When calculating FY 2013 FMRs, HUD updated the bedroom ratio adjustment factors using 2006–2010 5-year ACS data using similar methodology to what was implemented when calculating bedroom ratios using 2000 Census data to establish rent ratios. The bedroom ratios used in the calculation of FY 2015 FMRs remain the 2006–2010 based ratios applied to the two-bedroom FMR computed from the 2012 ACS data.
HUD established bedroom interval ranges based on an analysis of the range of such intervals for all areas with large enough samples to permit accurate bedroom ratio determinations. These ranges are: Efficiency (zero-bedroom) FMRs are constrained to fall between 0.59 and 0.81 of the two-bedroom FMR; one-bedroom FMRs must be between 0.74 and 0.84 of the two-bedroom FMR; three-bedroom FMRs must be between 1.15 and 1.36 of the two-bedroom FMR; and four-bedroom FMRs must be between 1.24 and 1.64 of the two-bedroom FMR. (The maximums for the three-bedroom and four-bedroom FMRs are irrespective of the adjustments discussed in the next paragraph.) HUD adjusts bedroom rents for a given FMR area if the differentials between unit bedroom-count FMRs were inconsistent with normally observed patterns (i.e., efficiency rents are not allowed to be higher than one-bedroom rents and four-bedroom rents are not allowed to be lower than three-bedroom rents). The bedroom ratios for Puerto Rico follow these constraints.
HUD further adjusts the rents for three-bedroom and larger units to reflect HUD's policy to set higher rents for these units than would result from using unadjusted market rents. This adjustment is intended to increase the likelihood that the largest families, who have the most difficulty in leasing units, will be successful in finding eligible program units. The adjustment adds 8.7 percent to the unadjusted three-bedroom FMR estimates and adds 7.7 percent to the unadjusted four-bedroom
For low-population, nonmetropolitan counties with small or statistically insignificant 2006–2010 5-year ACS recent-mover rents, HUD uses state non-metropolitan data to determine bedroom ratios for each unit bedroom count. HUD made this adjustment to protect against unrealistically high or low FMRs due to insufficient sample sizes.
The FMR used to establish payment standard amounts for the rental of manufactured home spaces (pad rentals including utilities) in the HCV program is 40 percent of the FMR for a two-bedroom unit. HUD will consider modification of the manufactured home space FMRs where public comments present statistically valid survey data showing the 40th-percentile manufactured home space rent (including the cost of utilities) for the entire FMR area.
All approved exceptions to these rents based on survey data that were in effect in FY 2014 were updated to FY 2015 using the same data used to estimate the HCV program FMRs. If the result of this computation was higher than 40 percent of the new two-bedroom rent, the exception remains and is listed in Schedule D. The FMR area definitions used for the rental of manufactured home spaces are the same as the area definitions used for the other FMRs. No additional exception requests were received in the comments to the FY 2015 Proposed FMRs.
Small Area Fair Market Rents (SAFMRs) are used as part of a court settlement by all public housing authorities (PHAs) in the Dallas, TX HMFA. They are also used as part of HUD's demonstration program for five PHAs the Housing Authority of the County of Cook (IL), the City of Long Beach (CA) Housing Authority, the Chattanooga (TN) Housing Authority, the Town of Mamaroneck (NY) Housing Authority, and the Laredo (TX) Housing Authority. These FMRs are listed in the Schedule B addendum.
SAFMRs are calculated using a rent ratio determined by dividing the median gross rent across all bedrooms for the small area (a ZIP code) by the similar median gross rent for the metropolitan area of the ZIP code. This rent ratio is multiplied by the current two-bedroom rent for the entire metropolitan area containing the small area to generate the current year two-bedroom rent for the small area. In small areas where the median gross rent is not statistically reliable, HUD substitutes the median gross rent for the county containing the ZIP code in the numerator of the rent ratio calculation. For FY 2015 SAFMRs, HUD continues to use the rent ratios developed in conjunction with the calculation of FY 2013 FMRs based on 2006–2010 5-year ACS data.
A total of 64 comments were received and posted on the regulations.gov site (
A significant proportion of the comments opposed the use of FMRs in the calculation of public housing flat rents. While FMRs are used in other HUD programs, the methodology used in determining FMRs and the publication of FMRs for comment is primarily in support of the Section 8 Housing Choice Voucher program. Other HUD programs must rely on the current FMR methodology. The adjustment of flat rents by FMRs is an issue for the program staff in the Division of Housing Management and Occupancy of PIH.
Decreases of any level in the FMR were opposed especially for certain HUD programs and other programs that use FMRs but do not allow flexibility in applying FMRs, such as the Continuum of Care program and the Low-Income Housing Tax Credit program (LIHTC). Several comments requested that HUD hold the FY 2015 FMRs harmless, that is they wanted the FMR to remain at the FY 2014 level, or some earlier level if it would otherwise be lower. In addition to, or instead of, implementing a hold harmless policy, several comments asked HUD to limit annual increases and decreases of FMRs to five percent, or at the very least impose a hard floor of five percent on decreases. This inability to hold FMRs harmless at some previously higher level is especially difficult for LIHTC landlords and developers to understand because no such legal prohibition exists for the calculation of HUD's income limits which are also used in the rent calculation for these units. HUD has been able to use such measures in constraining income limit increases and decreases, but HUD is specifically precluded from incorporating these changes into the FMR methodology by the statutory language governing FMRs requiring the use of the most recent available data. As stated in previous FMR notices, HUD's Housing Choice Voucher program counsel reviewed the statutory language governing the calculation of FMRs to determine if the Department has the authority to institute caps and floors on the amount the FMRs could change annually. Based on this review, HUD's program counsel issued a legal opinion that HUD CANNOT impose floors or caps in changes in FMRs because this would violate the portion of the statute that directs HUD to use the most current data available. The legal opinion is that the statute needs to be changed in order for HUD to implement these types of caps and floors. No statutory changes regarding the use of the most recent available data have since been enacted; consequently, HUD does not have the authority to use a hold harmless policy or other policy which would permit HUD to impose caps and floors on FMR changes. HUD is required to use the most recent available data and FMRs must increase or decrease based on this data. Ignoring decreases or phasing decreases or increases in over several years would not fully implement FMRs based on the most recent available data.
Comments were received that oppose the current methodology used to define FMR areas. HUD has not incorporated
Several PHAs with lower proposed FY 2015 FMRs relative to FY 2014 or earlier FMRs requested that HUD conduct a survey of rents for their FMR areas. As stated in the proposed FY 2015 FMR Notice, HUD anticipates it will have no funds to conduct surveys in FY 2015. While one area provided data, this data could not be accepted as the basis for changing FMRs because it did not meet the threshold for representativeness and/or statistical reliability established for rental survey data to be used in FMR determinations. HUD may not use data from newspaper ads because these do not represent actual contracted rents, or rent reasonableness studies as these typically do not sample units randomly. Other data provided may be acceptable, but the sources and method of collection must be identified. Data must be collected randomly and cover the entire rental stock including single-family units, not just large apartment projects. Single family units and smaller apartment buildings are an important part of the rental market and cannot be ignored. HUD did receive notification that one PHA in a nonmetropolitan area is conducting its own survey and has sought guidance from HUD on the survey methodology. Any other PHAs interested in surveys to support changes in FMRs should review section VIII of this notice for further information regarding acceptable survey methodology.
For areas that are considering conducting their own surveys, HUD would caution them to explore all no-cost options as a means of alleviating problems they are having with low FMRs. HUD has experience conducting surveys in areas with low or no vacancy rates and this experience has shown that it is extremely difficult to capture accurate gross rent levels in tight markets. For that reason, HUD provides emergency exception payment standards up to 135 percent of the FMR for the Section 8 voucher program in areas impacted by natural resource exploration or in presidentially declared disaster areas. PHAs interested in applying for these emergency payment standards should contact their local HUD field office. Other programs that use FMRs will have to pursue similar strategies such as exception payment standards or hold harmless provisions within the statutory and regulatory framework governing those programs.
In 2011, HUD solicited bidders to study the methodology used to conduct local area surveys of gross rents to determine if the Random Digit Dialing (RDD) methodology could be improved upon. The Department undertook this study due to the increasing costs and declining response rates associated with telephone surveys. Furthermore, the advent of the 1-year ACS limits the need for surveys in large metropolitan areas. Based on this research, the Department decided that its survey methodology should be changed with mail surveys being the preferred method for conducting surveys, because of the lower cost and greater likelihood of survey responses. These surveys, however, take almost twice as long to conduct as prior survey methods took, and when response times are most critical, the Department may choose to conduct random digit dialing surveys as well, as the budget permits. Unfortunately, the anticipated budget does not permit HUD to conduct any surveys in FY 2015. The methodology for both types of surveys along with the survey instruments is posted on the HUD USER Web site, at the bottom of the FMR page in a section labeled Fair Market Rent Surveys at:
Other survey methodologies are acceptable in providing data to support comments if the survey methodology can provide statistically reliable, unbiased estimates of the gross rent. Survey samples should preferably be randomly drawn from a complete list of rental units for the FMR area. If this is not feasible, the selected sample must be drawn to be statistically representative of the entire rental housing stock of the FMR area. Surveys must include units at all rent levels and be representative of structure type (including single-family, duplex, and other small rental properties), age of housing unit, and geographic location. The 2008–2012 5-year ACS data should be used as a means of verifying if a sample is representative of the FMR area's rental housing stock.
Most surveys cover only one- and two-bedroom units, which has statistical advantages because these are generally the most abundant rental units in an area. However in nonmetropolitan areas and some metrolitan areas, three-bedroom units are also surveyed because there are significant rental units at this size in the FMR area. If the survey is statistically acceptable, HUD will estimate FMRs for other bedroom sizes using ratios based on the 2006–2010 5-year ACS data. A PHA or contractor that cannot obtain the recommended number of sample responses after reasonable efforts should consult with HUD before abandoning its survey; in such situations, HUD may find it appropriate to relax normal sample size requirements.
HUD will consider increasing manufactured home space FMRs where public comment demonstrates that 40 percent of the two-bedroom FMR is not adequate. In order to be accepted as a basis for revising the manufactured home space FMRs, comments must include a pad rental survey of the mobile home parks in the area, identify the utilities included in each park's rental fee, and provide a copy of the applicable public housing authority's utility schedule.
As stated earlier in this Notice, HUD is required to use the most recent data available when calculating FMRs. Therefore, in order to re-evaluate an area's FMR, HUD requires more current rental market data than the 2012 ACS.
This Notice involves the establishment of fair market rent schedules, which do not constitute a development decision affecting the physical condition of specific project areas or building sites. Accordingly, under 24 CFR 50.19(c)(6), this Notice is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).
Accordingly, the Fair Market Rent Schedules, which will not be codified in 24 CFR part 888, are proposed to be amended as shown in the Appendix to this notice:
a.
b.
Metropolitan area CBSAs (referred to as MSAs) may be modified to allow for subarea FMRs within MSAs based on the boundaries of old FMR areas (OFAs) within the boundaries of new MSAs. (OFAs are the FMR areas defined for the FY 2005 FMRs. Collectively they include 1999-definition MSAs/Primary Metropolitan Statistical Areas (PMSAs), metro counties deleted from 1999-definition MSAs/PMSAs by HUD for FMR purposes, and counties and county parts outside of 1999-definition MSAs/PMSAs referred to as nonmetropolitan counties.) Subareas of MSAs are assigned their own FMRs when the subarea 2000 Census Base Rent differs by at least 5 percent from (i.e., is at most 95 percent or at least 105 percent of) the MSA 2000 Census Base Rent, or when the 2000 Census Median Family Income for the subarea differs by at least 5 percent from the MSA 2000 Census Median Family Income. MSA subareas, and the remaining portions of MSAs after subareas have been determined, are referred to as HUD Metro FMR Areas (HMFAs) to distinguish these areas from OMB's official definition of MSAs.
The specific counties and New England towns and cities within each state in MSAs and HMFAs are listed in Schedule B.
Schedule B shows the FMRs for zero-bedroom through four-bedroom units. The Schedule B addendum shows Small Area FMRs for all PHAs operating using Small Area FMRs. The FMRs for unit sizes larger than four bedrooms are calculated by adding 15 percent to the four-bedroom FMR for each extra bedroom. For example, the FMR for a five-bedroom unit is 1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is 1.30 times the four-bedroom FMR. FMRs for single-room-occupancy (SRO) units are 0.75 times the zero-bedroom FMR.
a. The FMR areas in Schedule B are listed alphabetically by metropolitan FMR area and by nonmetropolitan county within each state. The exception FMRs for manufactured home spaces in Schedule D are listed alphabetically by state.
b. The constituent counties (and New England towns and cities) included in each metropolitan FMR area are listed immediately following the listings of the FMR dollar amounts. All constituent parts of a metropolitan FMR area that are in more than one state can be identified by consulting the listings for each applicable state.
c. Two nonmetropolitan counties are listed alphabetically on each line of the non-metropolitan county listings.
d. The New England towns and cities included in a nonmetropolitan county are listed immediately following the county name.
Office of the Assistant Secretary for Policy Development and Research, HUD.
Notice.
This document designates “Difficult Development Areas” (DDAs) and “Qualified Census Tracts” (QCTs) for purposes of the Low-Income Housing Tax Credit (LIHTC) under Internal Revenue Code (IRC) Section 42 (26 U.S.C. 42). The United States Department of Housing and Urban Development (HUD) makes new DDA designations annually and is making new designation of QCTs at this time to incorporate more recent income and poverty measures. As previously announced, the 2015 metropolitan DDA designations will be the last designated for entire metropolitan areas. Beginning with the 2016 DDA designations, metropolitan DDAs will use Small Area Fair Market Rents (FMRs), rather than metropolitan-area FMRs, for designating metropolitan DDAs.
For questions on how areas are designated and on geographic definitions, contact Michael K. Hollar, Senior Economist, Economic Development and Public Finance Division, Office of Policy Development and Research, Department of Housing and Urban Development, 451 Seventh Street SW., Room 8234, Washington, DC 20410–6000; telephone number (202) 402–5878, or send an email to
This notice designates DDAs for each of the 50 states, the District of Columbia, Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands. The designations of DDAs in this notice are based on final Fiscal Year (FY) 2014 Fair Market Rents (FMRs), FY2014 income limits, and 2010 Census population counts, as explained below.
This notice also re-designates QCTs based on new income and poverty data released in the American Community Survey (ACS). HUD is establishing a new method which incorporates several years of ACS estimates to ensure that anomalous estimates, due to sampling anomalies, do not affect the QCT eligibility of tracts.
Data from the 2010 Census on total population of metropolitan areas and nonmetropolitan areas are used in the designation of DDAs. The Office of Management and Budget (OMB) first published new metropolitan area definitions incorporating 2000 Census data in OMB Bulletin No. 03–04 on June 6, 2003, and updated them periodically through OMB Bulletin No. 10–02 on December 1, 2009. FY2014 FMRs and FY2014 income limits used to designate DDAs are based on these metropolitan statistical area (MSA) definitions, with modifications to account for substantial differences in rental housing markets (and, in some cases, median income levels) within MSAs.
Data from the 2010 Census on total population of census tracts, metropolitan areas, and the nonmetropolitan parts of states are used in the designation of QCTs. The FY2012, FY2013 and FY2014 income limits used to designate QCTs are based on these metropolitan statistical area
Because the 2010 Decennial Census did not include questions on respondent household income, HUD uses ACS data to designate QCTs. The ACS tabulates data collected over 5 years to provide estimates of socioeconomic variables for small areas containing fewer than 20,000 persons, like Census Tracts. Although the previous QCT designations relied on one set of estimates, based on 2006–2010 ACS tabulations, HUD noticed anomalies in some estimates when compared to 2007–2011 and 2008–2012 estimates. For this reason, HUD is implementing a new QCT designation method which incorporates several years of ACS data to ensure that anomalous estimates do not affect QCT eligibility.
The U.S. Department of the Treasury (Treasury) and its Internal Revenue Service (IRS) are authorized to interpret and enforce the provisions of the LIHTC found at IRC Section 42. The Secretary of HUD is required to designate DDAs and QCTs by IRC Section 42(d)(5)(B). In order to assist in understanding HUD's mandated designation of DDAs and QCTs for use in administering IRC Section 42, a summary of the section is provided. The following summary does not purport to bind Treasury or the IRS in any way, nor does it purport to bind HUD, since HUD has authority to interpret or administer the IRC only in instances where it receives explicit statutory delegation.
The LIHTC is a tax incentive intended to increase the availability of low-income housing. IRC Section 42 provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental housing projects. The dollar amount of the LIHTC available for allocation by each state (credit ceiling) is limited by population. Each state is allowed a credit ceiling based on a statutory formula indicated at IRC Section 42(h)(3). States may carry forward unallocated credits derived from the credit ceiling for one year; however, to the extent such unallocated credits are not used by then, the credits go into a national pool to be redistributed to states as additional credit. State and local housing agencies allocate the state's credit ceiling among low-income housing buildings whose owners have applied for the credit. Besides IRC Section 42 credits derived from the credit ceiling, states may also provide IRC Section 42 credits to owners of buildings based on the percentage of certain building costs financed by tax-exempt bond proceeds. Credits provided under the tax-exempt bond “volume cap” do not reduce the credits available from the credit ceiling.
The credits allocated to a building are based on the cost of units placed in service as low-income units under particular minimum occupancy and maximum rent criteria. In general, a building must meet one of two thresholds to be eligible for the LIHTC; either: (1) 20 percent of the units must be rent-restricted and occupied by tenants with incomes no higher than 50 percent of the Area Median Gross Income (AMGI), or (2) 40 percent of the units must be rent-restricted and occupied by tenants with incomes no higher than 60 percent of AMGI. A unit is “rent-restricted” if the gross rent, including an allowance for tenant-paid utilities, does not exceed 30 percent of the imputed income limitation (i.e., 50 percent or 60 percent of AMGI) applicable to that unit. The rent and occupancy thresholds remain in effect for at least 15 years, and building owners are required to enter into agreements to maintain the low-income character of the building for at least an additional 15 years.
The LIHTC reduces income tax liability dollar-for-dollar. It is taken annually for a term of 10 years and is intended to yield a present value of either: (1) 70 percent of the “qualified basis” for new construction or substantial rehabilitation expenditures that are not federally subsidized (as defined in IRC Section 42(i)(2)), or (2) 30 percent of the qualified basis for the cost of acquiring certain existing buildings or projects that are federally subsidized. The actual credit rates are adjusted monthly for projects placed in service after 1987 under procedures specified in IRC Section 42. Individuals can use the credits up to a deduction equivalent of $25,000 (the actual maximum amount of credit that an individual can claim depends on the individual's marginal tax rate). For buildings placed in service after December 31, 2007, individuals can use the credits against the alternative minimum tax. Corporations, other than S or personal service corporations, can use the credits against ordinary income tax, and, for buildings placed in service after December 31, 2007, against the alternative minimum tax. These corporations also can deduct losses from the project.
The qualified basis represents the product of the building's “applicable fraction” and its “eligible basis.” The applicable fraction is based on the number of low-income units in the building as a percentage of the total number of units, or based on the floor space of low-income units as a percentage of the total floor space of residential units in the building. The eligible basis is the adjusted basis attributable to acquisition, rehabilitation, or new construction costs (depending on the type of LIHTC involved). These costs include amounts chargeable to a capital account that are incurred prior to the end of the first taxable year in which the qualified low-income building is placed in service or, at the election of the taxpayer, the end of the succeeding taxable year. In the case of buildings located in designated DDAs or designated QCTs, eligible basis can be increased up to 130 percent from what it would otherwise be. This means that the available credits also can be increased by up to 30 percent. For example, if a 70 percent credit is available, it effectively could be increased to as much as 91 percent.
IRC Section 42 defines a DDA as an area designated by the Secretary of HUD that has high construction, land, and utility costs relative to the AMGI. All designated DDAs in metropolitan areas (taken together) may not contain more than 20 percent of the aggregate population of all metropolitan areas, and all designated areas not in metropolitan areas may not contain more than 20 percent of the aggregate population of all nonmetropolitan areas.
IRC Section 42(d)(5)(B)(v) allows states to award an increase in basis up to 30 percent to buildings located outside of federally designated DDAs and QCTs if the increase is necessary to make the building financially feasible. This state discretion applies only to buildings allocated credits under the state housing credit ceiling and is not permitted for buildings receiving credits in connection with tax-exempt bonds. Rules for such designations shall be set forth in the LIHTC-allocating agencies' qualified allocation plans (QAPs).
In developing the list of DDAs, HUD compared housing costs with incomes. HUD used 2010 Census population for metropolitan and nonmetropolitan areas, and the MSA definitions, as published in OMB Bulletin No. 10–02 on December 1, 2009, with modifications, as described below. In keeping with past practice of basing the coming year's DDA designations on data from the preceding year, the basis for these comparisons is the FY2014 HUD income limits for very low-income households (very low-income limits, or VLILs), which are based on 50 percent of AMGI, and metropolitan FMRs based on the Final FY2014 FMRs used for the Housing Choice Voucher (HCV) program.
In formulating the FY2014 FMRs and VLILs, HUD modified the current OMB definitions of MSAs to account for substantial differences in rents among areas within each current MSA that were in different FMR areas under definitions used in prior years. HUD formed these “HUD Metro FMR Areas” (HMFAs) in cases where one or more of the parts of newly defined MSAs that previously were in separate FMR areas had 2000 Census based 40th-percentile recent-mover rents that differed, by 5 percent or more, from the same statistic calculated at the MSA level. In addition, a few HMFAs were formed on the basis of very large differences in AMGIs among the MSA parts. All HMFAs are contained entirely within MSAs. All nonmetropolitan counties are outside of MSAs and are not broken up by HUD for purposes of setting FMRs and VLILs. (Complete details on HUD's process for determining FY2014 FMR areas and FMRs are available at
HUD's unit of analysis for designating metropolitan DDAs consists of: entire MSAs, in cases where these were not broken up into HMFAs for purposes of computing FMRs and VLILs; and HMFAs within the MSAs that were broken up for such purposes. Hereafter in this notice, the unit of analysis for designating metropolitan DDAs will be called the HMFA, and the unit of analysis for nonmetropolitan DDAs will be the nonmetropolitan county or county equivalent area. The procedure used in making the DDA calculations follows:
1. For each metropolitan HMFA and each nonmetropolitan county, HUD calculated a ratio. HUD used the final FY2014 two-bedroom FMR and the FY2014 four-person VLIL for this calculation.
a. The numerator of the ratio, representing the development cost of housing, was the area's final FY2014 FMR. In general, the FMR is based on the 40th-percentile gross rent paid by recent movers to live in a two-bedroom apartment. In metropolitan areas granted a FMR based on the 50th-percentile rent for purposes of improving the administration of HUD's HCV program (see 78 FR 61668), HUD used the 40th-percentile rent to ensure nationwide consistency of comparisons.
b. The denominator of the ratio, representing the maximum income of eligible tenants, was the monthly LIHTC income-based rent limit, which was calculated as 1/12 of 30 percent of 120 percent of the area's VLIL (where the VLIL was rounded to the nearest $50 and not allowed to exceed 80 percent of the AMGI in areas where the VLIL is adjusted upward from its 50 percent-of-AMGI base).
2. The ratios of the FMR to the LIHTC income-based rent limit were arrayed in descending order, separately, for HMFAs and for nonmetropolitan counties.
3. The DDAs are those with the highest ratios cumulative to 20 percent of the 2010 population of all metropolitan areas and all nonmetropolitan areas.
In identifying DDAs, HUD applied caps, or limitations, as noted above. The cumulative population of metropolitan DDAs cannot exceed 20 percent of the cumulative population of all metropolitan areas, and the cumulative population of nonmetropolitan DDAs cannot exceed 20 percent of the cumulative population of all nonmetropolitan areas.
In applying these caps, HUD established procedures to deal with how to treat small overruns of the caps. The remainder of this section explains those procedures. In general, HUD stops selecting areas when it is impossible to choose another area without exceeding the applicable cap. The only exceptions to this policy are when the next eligible excluded area contains either a large absolute population or a large percentage of the total population, or the next excluded area's ranking ratio, as described above, was identical (to four decimal places) to the last area selected, and its inclusion resulted in only a minor overrun of the cap. Thus, for both the designated metropolitan and nonmetropolitan DDAs, there may be minimal overruns of the cap. HUD believes the designation of additional areas in the above examples of minimal overruns is consistent with the intent of the IRC. As long as the apparent excess is small due to measurement errors, some latitude is justifiable, because it is impossible to determine whether the 20 percent cap has been exceeded. Despite the care and effort involved in a Decennial Census, the Census Bureau and all users of the data recognize that the population counts for a given area and for the entire country are not precise. Therefore, the extent of the measurement error is unknown. There can be errors in both the numerator and denominator of the ratio of populations used in applying a 20 percent cap. In circumstances where a strict application of a 20 percent cap results in an anomalous situation, recognition of the unavoidable imprecision in the census data justifies accepting small variances above the 20 percent limit.
In developing this list of QCTs, HUD used 2010 Census 100-percent count data on total population, total households, and population in households; the median household income and poverty rate as estimated in the 2006–2010, 2007–2011 and 2008–2012 ACS tabulations; the FY2012, FY2013 and FY2014 Very Low-Income Limits (VLILs) computed at the HUD Metropolitan FMR Area (HMFA) level
HUD uses the HMFA-level AMGIs to determine QCT eligibility because the statute, specifically IRC Section 42(d)(5)(B)(iv)(II), refers to the same section of the IRC that defines income for purposes of tenant eligibility and unit maximum rent, specifically IRC Section 42(g)(4). By rule, the IRS sets these income limits according to HUD's VLILs, which, starting in FY2006 and thereafter, are established at the HMFA level. Similarly, HUD uses the entire MSA to determine how many eligible tracts can be designated under the 20 percent population cap as required by the statute (IRC Section 42(d)(5)(B)(ii)(III)), which states that MSAs should be treated as singular areas. The QCTs were determined as follows:
1. To be eligible to be designated a QCT, a census tract must have 50 percent of its households with incomes below 60 percent of the AMGI or have a poverty rate of 25 percent or more. Due to potential statistical anomalies in the ACS 5-year estimates, one of these conditions must be met in at least 2 of the 3 evaluation years for a tract to be considered eligible for QCT designation. HUD calculates 60 percent of AMGI by multiplying by a factor of 1.2 the HMFA or nonmetropolitan county VLIL adjusted for inflation to match the ACS estimates. For example, the FY2012 VLILs were adjusted for inflation to 2010 dollars. The FY2013 VLILs were adjusted for inflation to 2011 dollars. The FY2014 VLILs were adjusted for inflation to 2012 dollars.
2. For each census tract, whether or not 50 percent of households have incomes below the 60 percent income standard (income criterion) was determined by: (a) Calculating the average household size of the census tract, (b) applying the income standard after adjusting it to match the average household size, and (c) comparing the average-household-size-adjusted income standard to the median household income for the tract reported in each of the three years of ACS tabulations
3. For each census tract, the poverty rate was determined in each of the three years of ACS tabulations (2006–2010, 2007–2011 and 2008–2012) by dividing the population with incomes below the poverty line by the population for whom poverty status has been determined
4. QCTs are those census tracts in which 50 percent or more of the households meet the income criterion in at least two of the three years evaluated, or 25 percent or more of the population is in poverty in at least two of the three years evaluated, such that the population of all census tracts that satisfy either one or both of these criteria does not exceed 20 percent of the total population of the respective area.
5. In areas where more than 20 percent of the population resides in eligible census tracts, census tracts are designated as QCTs in accordance with the following procedure:
a. The income and poverty criteria are each averaged over the three years of data (2006–2010, 2007–2011 and 2008–2012) if the values exceed the threshold
b. Eligible tracts are placed in one of two groups based on the averaged values of the income and poverty criteria. The first group includes tracts that satisfy both the income and poverty criteria for QCTs in the same year for at least two of the three evaluation years. The second group includes tracts that satisfy either the income criterion or the poverty criterion in at least two of three years, but not both. A tract must qualify for at least one of the criteria in at least two of the three evaluation years to be eligible, although it does not need to be the same criterion.
c. Tracts in the first group are ranked from highest to lowest by the average of the ratios of the tract average-household-size-adjusted income limit to the median household income. Then, tracts in the first group are ranked from highest to lowest by the average of the poverty rates. The two ranks are averaged to yield a combined rank. The tracts are then sorted on the combined rank, with the census tract with the highest combined rank being placed at the top of the sorted list. In the event of a tie, more populous tracts are ranked above less populous ones.
d. Tracts in the second group are ranked from highest to lowest by the average of the ratios of the tract average-household-size-adjusted income limit to the median household income. Then, tracts in the second group are ranked from highest to lowest by the average of the poverty rates. The two ranks are then averaged to yield a combined rank. The tracts are then sorted on the combined rank, with the census tract with the highest combined rank being placed at the top of the sorted list. In the event of a tie, more populous tracts are ranked above less populous ones.
e. The ranked first group is stacked on top of the ranked second group to yield a single, concatenated, ranked list of eligible census tracts.
f. Working down the single, concatenated, ranked list of eligible tracts, census tracts are identified as designated until the designation of an additional tract would cause the 20 percent limit to be exceeded. If a census tract is not designated because doing so would raise the percentage above 20 percent, subsequent census tracts are then considered to determine if one or more census tract(s) with smaller population(s) could be designated without exceeding the 20 percent limit.
As stated in OMB Bulletin 10–02, defining metropolitan areas:
“OMB establishes and maintains the definitions of Metropolitan . . . Statistical Areas, . . . solely for statistical purposes. . . . OMB does not take into account or attempt to anticipate any non-statistical uses that may be made of the definitions[.] In cases where . . . an agency elects to use the Metropolitan . . . Area definitions in nonstatistical programs, it is the sponsoring agency's responsibility to ensure that the definitions are appropriate for such use. An agency using the statistical definitions in a nonstatistical program may modify the definitions, but only for the purposes of that program. In such cases, any modifications should be clearly identified as deviations from the OMB statistical area definitions in order to avoid confusion with OMB's official definitions of Metropolitan . . . Statistical Areas.”
Following OMB guidance, the estimation procedure for the FY2014 FMRs and income limits incorporates the current OMB definitions of metropolitan areas based on the Core-Based Statistical Area (CBSA) standards,
The geographic baseline for the FMR and income limit estimation procedure is the CBSA Metropolitan Areas (referred to as Metropolitan Statistical Areas or MSAs) and CBSA Non-Metropolitan Counties (nonmetropolitan counties include the county components of Micropolitan CBSAs where the counties are generally assigned separate FMRs). The HUD-modified CBSA definitions allow for subarea FMRs within MSAs based on the boundaries of “Old FMR Areas” (OFAs) within the boundaries of new MSAs. (OFAs are the FMR areas defined for the FY2005 FMRs. Collectively, they include the June 30, 1999, OMB definitions of MSAs and Primary MSAs (old definition MSAs/PMSAs), metropolitan counties deleted from old definition MSAs/PMSAs by HUD for FMR-setting purposes, and counties and county parts outside of old definition MSAs/PMSAs referred to as nonmetropolitan counties). Subareas of MSAs are assigned their own FMRs and Income Limits when the subarea 2000 Census Base FMR differs significantly from the MSA 2000 Census Base FMR (or, in some cases, where the 2000 Census base AMGI differs significantly from the MSA 2000 Census Base AMGI). MSA subareas, and the remaining portions of MSAs after subareas have been determined, are referred to as “HUD Metro FMR Areas (HMFAs),” to distinguish such areas from OMB's official definition of MSAs.
In the New England states (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont), HMFAs are defined according to county subdivisions or minor civil divisions (MCDs), rather than county boundaries. However, since no part of an HMFA is outside an OMB-defined, county-based MSA, all New England nonmetropolitan counties are kept intact for purposes of designating Nonmetropolitan DDAs.
For the convenience of readers of this notice, the geographical definitions of designated Metropolitan DDAs are included in the list of DDAs.
DDAs are designated annually as updated income and FMR data are made public. As previously announced, beginning with the 2016 metropolitan area designations, HUD will use “Small Area FMRs” (SAFMRs) defined at the ZIP Code level within metropolitan areas as the measure of “construction, land, and utility costs relative to area median gross income” rather than FMRs established for HUD Metropolitan FMR Areas. In general, HUD estimates SAFMRs by multiplying the ratio of ZIP–Code area to metropolitan-area median gross rent by the metropolitan-area FMRs (a complete description of how SAFMRs are estimated is available at:
QCTs are designated periodically as new data become available, or as metropolitan area definitions change. QCTs are being updated at this time to incorporate two additional releases of data since the 2013 QCT designations, which were based on 2006–2010 ACS estimates, were announced. The two subsequent releases of the ACS, the 2007–2011 estimates released in December of 2012, and the 2008–2012 estimates released in December 2013, indicate that the 2006–2010 poverty rate estimates for certain tracts were anomalous and not an accurate reflection of the true poverty rate in the tract. In order to avoid basing QCT designations on a single estimate which may be an anomaly due to sampling error rather than an accurate reflection of local conditions, HUD is adopting the method described in this notice incorporating three years of estimates.
The 2015 lists of DDAs are effective:
(1) For allocations of credit after December 31, 2014; or
(2) for purposes of IRC Section 42(h)(4), if the bonds are issued and the building is placed in service after December 31, 2014.
If an area is not on a subsequent list of DDAs, the 2015 lists are effective for the area if:
(1) The allocation of credit to an applicant is made no later than the end of the 365-day period after the applicant submits a complete application to the LIHTC-allocating agency, and the submission is made before the effective date of the subsequent lists; or
(2) for purposes of IRC Section 42(h)(4), if:
(a) The bonds are issued or the building is placed in service no later than the end of the 365-day period after the applicant submits a complete application to the bond-issuing agency, and
(b) the submission is made before the effective date of the subsequent lists, provided that both the issuance of the bonds and the placement in service of the building occur after the application is submitted.
An application is deemed to be submitted on the date it is filed if the application is determined to be complete by the credit-allocating or bond-issuing agency. A “complete application” means that no more than de minimis clarification of the application is required for the agency to make a decision about the allocation of tax credits or issuance of bonds requested in the application.
In the case of a “multiphase project,” the DDA or QCT status of the site of the project that applies for all phases of the project is that which applied when the project received its first allocation of LIHTC. For purposes of IRC Section 42(h)(4), the DDA or QCT status of the site of the project that applies for all phases of the project is that which applied when the first of the following occurred: (a) The building(s) in the first phase were placed in service, or (b) the bonds were issued.
For purposes of this notice, a “multiphase project” is defined as a set of buildings to be constructed or rehabilitated under the rules of the LIHTC and meeting the following criteria:
(1) The multiphase composition of the project (i.e., total number of buildings and phases in project, with a description of how many buildings are to be built in each phase and when each phase is to be completed, and any other information required by the agency) is made known by the applicant in the first application of credit for any building in the project, and that applicant identifies the buildings in the project for which credit is (or will be) sought;
(2) The aggregate amount of LIHTC applied for on behalf of, or that would eventually be allocated to, the buildings on the site exceeds the one-year limitation on credits per applicant, as defined in the Qualified Allocation Plan (QAP) of the LIHTC-allocating agency, or the annual per-capita credit authority of the LIHTC allocating agency, and is the reason the applicant must request multiple allocations over 2 or more years; and
(3) All applications for LIHTC for buildings on the site are made in immediately consecutive years.
Members of the public are hereby reminded that the Secretary of Housing
For the convenience of readers of this notice, interpretive examples are provided below to illustrate the consequences of the effective date in areas that gain or lose DDA status. The examples covering DDAs are equally applicable to QCT designations.
(Case A) Project A is located in a 2015 DDA that is NOT a designated DDA in 2016. A complete application for tax credits for Project A is filed with the allocating agency on November 15, 2015. Credits are allocated to Project A on October 30, 2016. Project A is eligible for the increase in basis accorded a project in a 2015 DDA because the application was filed BEFORE January 1, 2016 (the assumed effective date for the 2016 DDA lists), and because tax credits were allocated no later than the end of the 365-day period after the filing of the complete application for an allocation of tax credits.
(Case B) Project B is located in a 2015 DDA that is NOT a designated DDA in 2016 or 2017. A complete application for tax credits for Project B is filed with the allocating agency on December 1, 2015. Credits are allocated to Project B on March 30, 2017. Project B is NOT eligible for the increase in basis accorded a project in a 2015 DDA because, although the application for an allocation of tax credits was filed BEFORE January 1, 2016 (the assumed effective date of the 2016 DDA lists), the tax credits were allocated later than the end of the 365-day period after the filing of the complete application.
(Case C) Project C is located in a 2015 DDA that was not a DDA in 2014. Project C was placed in service on November 15, 2014. A complete application for tax-exempt bond financing for Project C is filed with the bond-issuing agency on January 15, 2015. The bonds that will support the permanent financing of Project C are issued on September 30, 2015. Project C is NOT eligible for the increase in basis otherwise accorded a project in a 2015 DDA, because the project was placed in service BEFORE January 1, 2015.
(Case D) Project D is located in an area that is a DDA in 2015, but is NOT a DDA in 2016. A complete application for tax-exempt bond financing for Project D is filed with the bond-issuing agency on October 30, 2015. Bonds are issued for Project D on April 30, 2016, but Project D is not placed in service until January 30, 2017. Project D is eligible for the increase in basis available to projects located in 2015 DDAs because: (1) One of the two events necessary for triggering the effective date for buildings described in Section 42(h)(4)(B) of the IRC (the two events being bonds issued and buildings placed in service) took place on April 30, 2016, within the 365-day period after a complete application for tax-exempt bond financing was filed, (2) the application was filed during a time when the location of Project D was in a DDA, and (3) both the issuance of the bonds and placement in service of Project D occurred after the application was submitted.
(Case E) Project E is a multiphase project located in a 2015 DDA that is not a designated DDA in 2016. The first phase of Project E received an allocation of credits in 2015, pursuant to an application filed March 15, 2015, which describes the multiphase composition of the project. An application for tax credits for the second phase Project E is filed with the allocating agency by the same entity on March 15, 2016. The second phase of Project E is located on a contiguous site. Credits are allocated to the second phase of Project E on October 30, 2016. The aggregate amount of credits allocated to the two phases of Project E exceeds the amount of credits that may be allocated to an applicant in one year under the allocating agency's QAP and is the reason that applications were made in multiple phases. The second phase of Project E is, therefore, eligible for the increase in basis accorded a project in a 2015 DDA, because it meets all of the conditions to be a part of a multiphase project.
(Case F) Project F is a multiphase project located in a 2015 DDA that is NOT a designated DDA in 2016. The first phase of Project F received an allocation of credits in 2015, pursuant to an application filed March 15, 2015, which does not describe the multiphase composition of the project. An application for tax credits for the second phase of Project F is filed with the allocating agency by the same entity on March 15, 2017. Credits are allocated to the second phase of Project F on October 30, 2017. The aggregate amount of credits allocated to the two phases of Project F exceeds the amount of credits that may be allocated to an applicant in one year under the allocating agency's QAP. The second phase of Project F is, therefore, not eligible for the increase in basis accorded a project in a 2015 DDA, since it does not meet all of the conditions for a multiphase project, as defined in this notice. The original application for credits for the first phase did not describe the multiphase composition of the project. Also, the application for credits for the second phase of Project F was not made in the year immediately following the first phase application year.
This notice involves the establishment of fiscal requirements or procedures that are related to rate and cost determinations and do not constitute a development decision affecting the physical condition of specific project areas or building sites. Accordingly, under 40 CFR 1508.4 of the regulations of the Council on Environmental Quality and 24 CFR 50.19(c)(6) of HUD's regulations, this notice is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).
Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any policy document that has federalism implications if the document either imposes substantial direct compliance costs on state and local governments and is not required by statute, or the document preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the executive order. This notice merely designates DDAs as required under IRC Section 42, as amended, for the use by political subdivisions of the states in allocating the LIHTC. This notice also details the technical method used in making such designations. As a result, this notice is not subject to review under the order.
Fish and Wildlife Service, Interior.
Notice of availability; request for comments.
We, the U.S. Fish and Wildlife Service, invite the public to comment on the following applications for recovery permits to conduct activities with the purpose of enhancing the survival of endangered species. The Endangered Species Act of 1973, as amended (Act), prohibits certain activities with endangered species unless a Federal permit allows such activity. The Act also requires that we invite public comment before issuing such permits.
To ensure consideration, please send your written comments by November 3, 2014.
Program Manager for Restoration and Endangered Species Classification, Ecological Services, U.S. Fish and Wildlife Service, Pacific Regional Office, 911 NE. 11th Avenue, Portland, OR 97232–4181. Please refer to the permit number for the application when submitting comments.
Colleen Henson, Fish and Wildlife Biologist, at the above address, or by telephone (503–231–6131) or fax (503–231–6243).
The Act (16 U.S.C. 1531
A permit granted by us under section 10(a)(1)(A) of the Act authorizes the permittee to conduct activities (including take or interstate commerce) with respect to U.S. endangered or threatened species for scientific purposes or enhancement of propagation or survival. Our regulations implementing section 10(a)(1)(A) of the Act for these permits are found at 50 CFR 17.22 for endangered wildlife species, 50 CFR 17.32 for threatened wildlife species, 50 CFR 17.62 for endangered plant species, and 50 CFR 17.72 for threatened plant species.
We invite local, State, and Federal agencies and the public to comment on the following applications. Please refer to the permit number for the application when submitting comments.
Documents and other information submitted with these applications are available for review by request from the Program Manager for Restoration and Endangered Species Classification at the address listed in the
The applicant requests a new permit to take (collect eggs, captive propagate, and release) the Kauai akialoa (
The applicant requests a permit renewal to take (capture, collect, measure, mark, attach radio or sonic transmitters, collect biological samples, captive propagate, and release) the Kootenai River population of the white sturgeon (
All comments and materials we receive in response to this request will be available for public inspection, by appointment, during normal business hours at the address listed in the
Before including your address, phone 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 can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
We provide this notice under section 10 of the Act (16 U.S.C. 1531
Bureau of Land Management, Interior.
Notice.
The Bureau of Land Management (BLM) Alaska State Office will hold an oil and gas lease sale bid opening for tracts in the National Petroleum Reserve-Alaska. The United States reserves the right to withdraw any tract from this sale prior to issuance of a written acceptance of a bid.
The oil and gas lease sale bid opening will be held at 1 p.m. on Wednesday, November 19, 2014. Sealed
The oil and gas lease sale bids will be opened at the Anchorage Federal Building, Denali Room (fourth floor), 222 W. 7th Ave., Anchorage, AK. Sealed bids must be sent to Carol Taylor (AK932), BLM-Alaska State Office; 222 West 7th Avenue, #13; Anchorage, AK 99513–7504.
Wayne Svejnoha, 907–271–4407.
Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 to contact the above individual during normal business hours. The FIRS is available 24 hours a day, 7 days a week, to leave a message or question with the above individual. You will receive a reply during normal business hours.
All bids must be submitted by sealed bid in accordance with the provisions identified in the Detailed Statement of Sale. The Detailed Statement of Sale for the National Petroleum Reserve-Alaska Oil and Gas Lease Sale 2014 will be available to the public immediately after publication of this Notice in the
43 CFR 3131.4–1.
National Park Service, Interior.
Cancellation of Meeting.
In accordance with the Federal Advisory Committee Act (5 U.S.C. Appendix 1–16), notice is hereby given that the October 7, 2014, meeting of the Big Cypress National Preserve Off-Road Vehicle Advisory Committee previously announced in the
Pedro Ramos, Superintendent, Big Cypress National Preserve, 33100 Tamiami Trail East, Ochopee, Florida 34141–1000, (239) 695–1103.
The Committee was established (
United States International Trade Commission.
October 9, 2014 at 11:00 a.m.
Room 101, 500 E Street SW., Washington, DC 20436, Telephone: (202) 205–2000.
Open to the public.
In accordance with Commission policy, subject matter listed above, not disposed of at the scheduled meeting, may be carried over to the agenda of the following meeting.
By order of the Commission.
United States International Trade Commission
October 10, 2014 at 11:00 a.m.
Room 101, 500 E Street SW., Washington, DC 20436, Telephone: (202) 205–2000.
Open to the public
In accordance with Commission policy, subject matter listed above, not disposed of at the scheduled meeting, may be carried over to the agenda of the following meeting.
By order of the Commission.
Joint Board for the Enrollment of Actuaries.
Request for applications.
The Joint Board for the Enrollment of Actuaries (Joint Board), established under the Employee Retirement Income Security Act of 1974 (ERISA), is responsible for the
Applications for membership on the Advisory Committee must be received by the Executive Director of the Joint Board, by no later than December 5, 2014.
Mail or deliver applications to: Patrick W. McDonough; Executive Director, Joint Board for the Enrollment of Actuaries; Return Preparer Office SE:RPO; Internal Revenue Service; 1111 Constitution Avenue NW.; REFM, Park 4, Floor 4; Washington, DC 20224. Send applications electronically to:
See
Patrick W. McDonough, Executive Director, at (703) 414–2173.
To qualify for enrollment to perform actuarial services under ERISA, an applicant must satisfy certain experience and knowledge requirements, which are set forth in the Joint Board's regulations. An applicant may satisfy the knowledge requirement by successful completion of Joint Board examinations in basic actuarial mathematics and methodology and in actuarial mathematics and methodology relating to pension plans qualifying under ERISA.
The Joint Board, the Society of Actuaries, and the American Society of Pension Professionals & Actuaries jointly offer examinations acceptable to the Joint Board for enrollment purposes and acceptable to the other two actuarial organizations as part of their respective examination programs
The Advisory Committee plays an integral role in the examination program by assisting the Joint Board in offering examinations that enable examination candidates to demonstrate the knowledge necessary to qualify for enrollment. The Advisory Committee's duties, which are strictly advisory, include (1) recommending topics for inclusion on the Joint Board examinations, (2) reviewing and drafting examination questions, (3) recommending examinations, (4) reviewing examination results and recommending passing scores, and (5) providing other recommendations and advice relative to the examinations, as requested by the Joint Board.
Members are appointed for a 2-year term. The upcoming term will begin on March 1, 2015, and end on February 28, 2017. Members may seek reappointment for additional consecutive terms.
Members are expected to attend approximately 4 meetings each calendar year and are reimbursed for travel expenses in accordance with applicable government regulations. In general, members are expected to devote 125 to 175 hours, including meeting time, to the work of the Advisory Committee over the course of a year.
The Joint Board seeks to appoint an Advisory Committee that is fairly balanced in terms of points of view represented and functions to be performed. Every effort is made to ensure that most points of view extant in the enrolled actuary profession are represented on the Advisory Committee. To that end, the Joint Board seeks to appoint several members from each of the main practice areas of the enrolled actuary profession, including small employer plans, large employer plans, and multiemployer plans. In addition, to ensure diversity of points of view, the Joint Board limits the number of members affiliated with any one actuarial organization or employed with any one firm.
Membership normally will be limited to actuaries currently enrolled by the Joint Board. However, individuals having academic or other special qualifications of particular value for the Advisory Committee's work also will be considered for membership. Federally-registered lobbyists and individuals affiliated with Joint Board enrollment examination preparation courses are not eligible to serve on the Advisory Committee.
Advisory Committee members are appointed as Special Government Employees (SGEs). As such, members are subject to certain ethical standards applicable to SGEs. Upon appointment, each member will be required to provide written confirmation that he/she does not have a financial interest in a Joint Board examination preparation course. In addition, each member will be required to attend annual ethics training.
To receive consideration, an individual interested in serving on the Advisory Committee must submit (1) a signed, cover letter expressing interest in serving on the Advisory Committee and describing his/her professional qualifications, and (2) a resume and/or curriculum vitae. Applications may be submitted by regular mail, overnight and express delivery services, and email. In all cases, the cover letter must contain an original signature. Applications must be received by December 5, 2014.
Occupational Safety and Health Administration, Labor.
Notice.
In this notice, OSHA announces the application of TÜV SÜD America, Inc. for expansion of its recognition as a Nationally Recognized Testing Laboratory (NRTL) and presents the Agency's preliminary finding to grant the application.
Submit comments, information, and documents in response to this notice, or requests for an extension of time to make a submission, on or before October 20, 2014.
Submit comments by any of the following methods:
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Information regarding this notice is available from the following sources:
The Occupational Safety and Health Administration is providing notice that TÜV SÜD America, Inc. (TUVAM), is applying for expansion of its current recognition as an NRTL. TUVAM requests the addition of one test standard to its NRTL scope of recognition.
OSHA recognition of an NRTL signifies that the organization meets the requirements specified in 29 CFR 1910.7. Recognition is an acknowledgment that the organization can perform independent safety testing and certification of the specific products covered within its scope of recognition. Each NRTL's scope of recognition includes (1) the type of products the NRTL may test, with each type specified by its applicable test standard; and (2) the recognized site(s) that has/have the technical capability to perform the product-testing and product-certification activities for test standards within the NRTL's scope. Recognition is not a delegation or grant of government authority; however, recognition enables employers to use products approved by the NRTL to meet OSHA standards that require product testing and certification.
The Agency processes applications by an NRTL for initial recognition and for an expansion or renewal of this recognition, following requirements in Appendix A to 29 CFR 1910.7. This appendix requires that the Agency publish two notices in the
TUVAM currently has three facilities (sites) recognized by OSHA for product testing and certification, with its headquarters located at: TÜV SÜD America, Inc., 10 Centennial Drive, Peabody, Massachusetts 01960. A complete list of TUVAM's scope of recognition is available at
TUVAM submitted an application, dated June 9, 2014 (Exhibit 14–1—TUVAM Request for Expansion), to expand its recognition to include one additional test standard. OSHA staff performed a comparability analysis and reviewed other pertinent information. OSHA did not perform any on-site reviews in relation to this application.
Table 1 below lists the appropriate test standards found in TUVAM's application for expansion for testing and certification of products under the NRTL Program.
TUVAM submitted an acceptable application for expansion of its scope of recognition. OSHA's review of the application file, and the comparability analysis, indicate that TUVAM can meet the requirements prescribed by 29 CFR 1910.7 for expanding its recognition to include the addition of this one test standard for NRTL testing and certification listed above. This preliminary finding does not constitute an interim or temporary approval of TUVAM's application.
OSHA welcomes public comment as to whether TUVAM meets the requirements of 29 CFR 1910.7 for expansion of its recognition as an NRTL. Comments should consist of pertinent written documents and exhibits. Commenters needing more time to comment must submit a request in writing, stating the reasons for the request. Commenters must submit the written request for an extension by the due date for comments. OSHA will limit any extension to 10 days unless the requester justifies a longer period. OSHA may deny a request for an extension if the request is not adequately justified. To obtain or review copies of the exhibits identified in this notice, as well as comments submitted to the docket, contact the Docket Office, Room N–2625, Occupational Safety and Health Administration, U.S. Department of Labor, at the above address. These materials also are available online at
OSHA staff will review all comments to the docket submitted in a timely manner and, after addressing the issues raised by these comments, will recommend to the Assistant Secretary for Occupational Safety and Health whether to grant TUVAM's application for expansion of its scope of recognition. The Assistant Secretary will make the final decision on granting the application. In making this decision, the Assistant Secretary may undertake other proceedings prescribed in Appendix A to 29 CFR 1910.7. OSHA will publish a public notice of its final decision in the
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. Accordingly, the Agency is issuing this notice pursuant to 29 U.S.C. 657(g)(2), Secretary of Labor's Order No. 1–2012 (77 FR 3912, Jan. 25, 2012), and 29 CFR 1910.7.
Occupational Safety and Health Administration (OSHA), Labor.
Notice of intent to renew the ACCSH Charter.
The Secretary of Labor intends to renew the Charter of the Advisory Committee on Construction Safety and Health. The current ACCSH Charter will expire on November 26, 2014.
Mr. Damon S. Bonneau, Office of Construction Services, Directorate of Construction, Occupational Safety and Health Administration, Room N–3468, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210; telephone (202) 693–2020 (TTY (877) 889–5627); email
ACCSH is a continuing advisory committee established under Section 107 of the Contract Work Hours and Safety Standards Act (Construction Safety Act (CSA)) (40 U.S.C. 3704(d)(4)), to advise the Secretary and the Assistant Secretary of Labor for Occupational Safety and Health in the formulation of construction safety and health standards as well as on policy matters arising under the CSA and the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 651
In accordance with the Federal Advisory Committee Act (FACA), as amended (5 U.S.C. App. 2 § 14(b)(2)), and its implementing regulations (41 CFR part 102–3 et seq.), the ACCSH Charter must be renewed every two years. The current ACCSH Charter will expire on November 26, 2014. The new Charter includes minor updates to reflect increases in the full-time employees required to support the Committee (1.5 to 1.8) and minor updates to better describe the management of the Committee's records.
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is granted by section 7 of the Occupational Safety and Health Act of 1970 (29 U.S.C. 656), section 107 of the Contract Work Hours and Safety Standards Act (Construction Safety Act) (40 U.S.C. 3704), the Federal Advisory Committee Act (5 U.S.C. App. 2), 29 CFR part 1912, 41 CFR part 102–3, and Secretary of Labor's Order No. 1–2012 (77 FR 3912, Jan. 25, 2012).
National Aeronautics and Space Administration (NASA).
Notice of Meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92–463, as amended, the National Aeronautics and Space Administration announces a forthcoming meeting of the Aerospace Safety Advisory Panel.
Wednesday, October 29, 2014, 1:00 p.m. to 2:30 p.m., Local Time.
NASA Marshall Space Flight Center, Building 4220, Room 1103, Huntsville, Alabama 35812.
Ms. Marian Norris, Aerospace Safety Advisory Panel Administrative Officer, National Aeronautics and Space Administration, Washington, DC 20546, (202) 358–4452 or
The Aerospace Safety Advisory Panel (ASAP) will hold its Fourth Quarterly Meeting for 2014. This discussion is pursuant to carrying out its statutory duties for which the Panel reviews, identifies, evaluates, and advises on those program activities, systems, procedures, and management activities that can contribute to program risk. Priority is given to those programs that involve the safety of human flight. The agenda will include:
The meeting will be open to the public up to the seating capacity of the room. Seating will be on a first-come basis. This meeting is also available telephonically. Any interested person may call the USA toll free conference call number (800) 857–7040; pass code 6749544. Attendees will be required to sign a visitor's register. All U.S. citizens desiring to attend the Aerospace Safety Advisory Panel meeting at the Marshall Space Flight Center must provide their full name, company affiliation (if applicable), driver's license number and state, citizenship, place of birth, and date of birth to the Marshall Space Flight Center Protective Services Office no later than close of business on October 24, 2014.
All non-U.S. citizens must submit their name; current address; driver's license number and state (if applicable); citizenship; company affiliation (if applicable) to include address, telephone number, and title; place of birth; date of birth; U.S. visa information to include type, number, and expiration date; U.S. Social Security number (if applicable); Permanent Resident card (green card) number and expiration date (if applicable); place and date of entry into the U.S.; and passport information to include country of issue, number, and expiration date to the Marshall Space Flight Center Security Office no later than close of business on October 22, 2014. If the above information is not received by the noted dates, attendees should expect a minimum delay of two (2) hours.
Please provide the appropriate data, via fax at (256) 544–2101, noting at the top of the page “Public Admission to the ASAP Meeting at MSFC.” For security questions, please call Becky Hopson at (256) 544–4541. All visitors to this meeting will be required to process in through the Redstone/Marshall Space Flight Center Joint Visitor Control Center located on Rideout Road, north of Gate 9, prior to entering Marshall Space Flight Center.
At the beginning of the meeting, members of the public may make a 5-minute verbal presentation to the Panel on the subject of safety in NASA. To do so, please contact Ms. Marian Norris at
In accordance with the Federal Advisory Committee Act (Pub. L. 92–463, as amended), the National Science Foundation announces the following meeting:
Purpose of Meeting: To provide advice and recommendations to the National Science Foundation on major goals and policies pertaining to Social, Behavioral and Economic Sciences Directorate (SBE) programs and activities.
• Directorate Update: Dr. Fay Lomax Cook.
• Joint Meeting of SBE Advisory Committee (AC) and NSF Advisory Committee for Cyberinfrastructure.
• Reproducibility and Data Sharing.
• Privacy and Confidentiality.
• Report from SBE AC Subcommittee on Replicability in Science.
• Report from SBE AC Subcommittee on Advancing SBE Survey Research.
• Directions for SBE Science in the 21th Century: Beyond the Mosaic.
• Meeting with NSF Leadership.
• National Center for Science and Engineering Statistics.
• Understanding the Brain.
• Agenda and Dates for Future Meetings, Assignments and Concluding Remarks.
In accordance with the Federal Advisory Committee Act (Pub. L. 92–463, as amended), the National Science Foundation announces the following meeting:
Operated assisted teleconference is available for this meeting. Call 800–857–3133 with password EHR AC and you will be connected to the audio portion of the meeting.
To attend the meeting in person, all visitors must contact the Directorate for Education and Human Resources (
Meeting materials and minutes will also be available on the EHR Advisory Committee Web site at
• Introduction by Joan Ferrini-Mundy, Assistant Director for Education and Human Resources.
• Program discussions on implementing the report
• Panel and Discussion on New Directions in Assessment Metrics.
• Business from NSF Advisory Committees and Directorates.
• Panel and Discussion on Models and Theories for Big Data Use in Educations Research.
• Welcome from Dr. France Córdova, NSF Director.
• Plenary Session Discussion on Replication and Reproducibility of Science Findings in STEM Education.
• Recognition, Closing Remarks, and Wrap Up.
Nuclear Regulatory Commission.
Notice of pending NRC action to submit an information collection request to the Office of Management and Budget (OMB) and solicitation of public comment.
The U.S. Nuclear Regulatory Commission (NRC) invites public comment about our intention to request the OMB's approval for renewal of an existing information collection that is summarized below. We are required to publish this notice in the
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6.
7.
Submit, by December 2, 2014, comments that address the following questions:
1. Is the proposed collection of information necessary for the NRC to properly perform its functions? Does the information have practical utility?
2. Is the burden estimate accurate?
3. Is there a way to enhance the quality, utility, and clarity of the information to be collected?
4. How can the burden of the information collection be minimized, including the use of automated collection techniques or other forms of information technology?
The public may examine, and have copied for a fee, publicly-available documents, including the draft supporting statement, at the NRC's Public Document Room, Room O–1F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852. The OMB clearance requests are available at the NRC's Web site:
Comments submitted in writing or in electronic form will be made available for public inspection. Because your comments will not be edited to remove any identifying or contact information, the NRC cautions you against including any information in your submission that you do not want to be publicly disclosed. Comments submitted should reference Docket No. NRC–2013–0088. You may submit your comments by any of the following methods: Electronic comments: go to
Questions about the information collection requirements may be directed to the NRC's Clearance Officer, Tremaine Donnell (T–5 F42), U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, telephone: 301–415–6258, or by email to
For the Nuclear Regulatory Commission.
Pursuant to 10 CFR 2.313(c) and 2.321(b), the Atomic Safety and Licensing Board (Board) in the above-captioned
All correspondence, documents, and other materials shall continue to be filed in accordance with the NRC E-Filing rule.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning a request for extension and expansion of
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202–789–6820.
On September 19, 2014, the Postal Service filed a request, pursuant to 39 U.S.C. 3641(d)(2) and Order No. 1539, to extend the duration of the Metro Post market test for an additional year and to expand the test to additional markets across the nation during this additional year.
The Postal Service intends to expand the Metro Post market test to a number of additional markets over the next year so that it can examine the market for same-day delivery in a wider range of metropolitan areas.
Accordingly, the Postal Service requests to extend the Metro Post market test for one additional year, until December 16, 2015, and to expand the test into other metropolitan areas over the coming year.
The Commission reopens Docket No. MT2013–1 to consider matters raised by the Postal Service's Request. Interested persons may submit comments on whether the Postal Service's filing in the captioned docket is consistent with the policies of 39 U.S.C. 3641. Comments are due no later than October 9, 2014. The filing can be accessed via the Commission's Web site (
The Commission appoints Elisabeth S. Shellan to represent the interests of the general public (Public Representative) in this docket.
1. The Commission reopens Docket No. MT2013–1 to consider matters raised by the Postal Service's Request.
2. Pursuant to 39 U.S.C. 505, the Commission appoints Elisabeth S. Shellan to serve as an officer of the Commission (Public Representative) to represent the interests of the general public in this proceeding.
3. Comments are due no later than October 9, 2014.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
The RRB invites comments on the proposed collection of information to determine (1) the practical utility of the collection; (2) the accuracy of the estimated burden of the collection; (3) ways to enhance the quality, utility, and clarity of the information that is the subject of collection; and (4) ways to minimize the burden of collections on respondents, including the use of automated collection techniques or other forms of information technology. Comments to the RRB or OIRA must contain the OMB control number of the ICR. For proper consideration of your comments, it is best if the RRB and OIRA receive them within 30 days of the publication date.
The RRB uses a Personal Identification Number (PIN)/Password system that allows RRB customers to conduct business with the agency electronically. As part of the system, the RRB collects information needed to establish a unique PIN/Password that allows customer access to RRB Internet-based services. The information collected is matched against records of the railroad employee that are maintained by the RRB. If the information is verified, the request is approved and the RRB mails a Password Request Code (PRC) to the requestor. If the information provided cannot be verified, the requestor is advised to contact the nearest field office of the RRB to resolve the discrepancy. Once a PRC is obtained from the RRB, the requestor can apply for a PIN/Password online. Once the PIN/Password has been established, the requestor has access to RRB Internet-based services.
Completion is voluntary, however, the RRB will be unable to provide a PRC or allow a requestor to establish a PIN/Password (thereby denying system access), if the requests are not completed.
Comments regarding the information collection should be addressed to Charles Mierzwa, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611–2092 or
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 498 (17 CFR 230.498) under the Securities Act of 1933 (15 U.S.C. 77a
The purpose of rule 498 is to enable a fund to provide investors with a Summary Prospectus containing key information necessary to evaluate an investment in the fund. Unlike many other federal information collections, which are primarily for the use and benefit of the collecting agency, this information collection is primarily for the use and benefit of investors. The information filed with the Commission also permits the verification of compliance with securities law requirements and assures the public availability and dissemination of the information.
Based on an analysis of fund filings, the Commission estimates that approximately 9,082 portfolios are using a Summary Prospectus. The Commission estimates that the annual hourly burden per portfolio associated with the compilation of the information required on the cover page or the beginning of the Summary Prospectus is 0.5 hours, and estimates that the annual hourly burden per portfolio to comply with the Web site posting requirement is approximately 1 hour, requiring a total of 1.5 hours per portfolio per year.
Estimates of the average burden hours are made solely for the purposes of the Paperwork Reduction Act and are not derived from a comprehensive or even a representative survey or study of the costs of Commission rules and forms. Under rule 498, use of the Summary Prospectus is voluntary, but the rule's requirements regarding provision of the statutory prospectus upon investor request are mandatory for funds that elect to send or give a Summary Prospectus in reliance upon rule 498. The information provided under rule 498 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
The public may view the background documentation for this information collection at the following Web site:
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 30b2–1 (17 CFR 270.30b2–1) under the Investment Company Act of 1940 (15 U.S.C. 80a–1
The Commission estimates that there are 2,430 funds, with a total of approximately 11,080 portfolios, that are governed by the rule. For purposes of this analysis, the burden associated with the requirements of rule 30b2–1 has been included in the collection of information requirements of rule 30e–1 and Form N–CSR, rather than the rule. The Commission has, however, requested a one hour burden for administrative purposes.
The collection of information under rule 30b2–1 is mandatory. The information provided under rule 30b2–1 is not kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
The public may view the background documentation for this information collection at the following Web site,
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Rule 17f–2(d) requires that records created pursuant to the fingerprinting requirements of Section 17(f)(2) of the Act be maintained and preserved by every member of a national securities exchange, broker, dealer, registered transfer agent and registered clearing agency (“covered entities” or “respondents”); permits, under certain circumstances, the records required to be maintained and preserved by a member of a national securities exchange, broker, or dealer to be maintained and preserved by a self-regulatory organization that is also the designated examining authority for that member, broker or dealer; and permits the required records to be preserved on microfilm. The general purpose of Rule 17f–2 is to: (i) Identify security risk personnel; (ii) provide criminal record information so that employers can make fully informed employment decisions; and (iii) deter persons with criminal records from seeking employment or association with covered entities. The rule enables the Commission or other examining authority to ascertain whether all covered persons are being fingerprinted and whether proper procedures regarding fingerprinting are being followed. Retention of these records for a period of not less than three years after termination of a covered person's employment or relationship with a covered entity ensures that law enforcement officials will have easy access to fingerprint cards on a timely basis. This in turn acts as an effective deterrent to employee misconduct.
Approximately 5,300 respondents are subject to the recordkeeping requirements of the rule. Each respondent maintains approximately 60 new records per year, each of which takes approximately 2 minutes to maintain, for an annual burden of approximately 2 hours per respondent (60 records times 2 minutes). The total annual burden for all respondents is approximately 10,600 hours (5,300 respondents times 2 hours). As noted above, all records maintained subject to the rule must be retained for a period of not less than three years after termination of a covered person's employment or relationship with a covered entity. In addition, we estimate the total cost to respondents is approximately $119,000.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
The public may view background documentation for this information collection at the following Web site:
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Under the Investment Company Act of 1940 (15 U.S.C. 80a–1
The purpose of Form N–54A is to notify the Commission that the investment company making the notification elects to be subject to Sections 55 through 65 of the Investment Company Act, enabling the Commission to administer those provisions of the Investment Company Act to such companies.
The Commission estimates that on average approximately 14 business development companies file these notifications each year. Each of those business development companies need only make a single filing of Form N–54A. The Commission further estimates that this information collection imposes a burden of 0.5 hours, resulting in a total annual PRA burden of 7 hours. Based on the estimated wage rate, the total cost to the business development company industry of the hour burden for complying with Form N–54A would be approximately $2,338.
The collection of information under Form N–54A is mandatory. The information provided by the form is not kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.
The public may view the background documentation for this information collection at the following Web site,
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 34b–1 under the Investment Company Act (17 CFR 270.34b–1) governs sales material that accompanies or follows the delivery of a statutory prospectus (“sales literature”). Rule 34b–1 deems to be materially misleading any investment company (“fund”) sales literature required to be filed with the Securities and Exchange Commission (“Commission”) by Section 24(b) of the Investment Company Act (15 U.S.C. 80a–24(b)) that includes performance data, unless the sales literature also includes the appropriate uniformly computed data and the legend disclosure required in investment company advertisements by rule 482 under the Securities Act of 1933 (17 CFR 230.482). Requiring the inclusion of such standardized performance data in sales literature is designed to prevent misleading performance claims by funds and to enable investors to make meaningful comparisons among funds.
The Commission estimates that on average approximately 130 respondents file 13,685
The collection of information under rule 34b–1 is mandatory. The information provided under rule 34b–1 is not kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.
The public may view the background documentation for this information collection at the following Web site,
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The title for the collection of information is “Form N–6F (17 CFR 274.15), Notice of Intent to Elect to be Subject to Sections 55 through 65 of the Investment Company Act of 1940.” The purpose of Form N–6F is to notify the Commission of a company's intent to file a notification of election to become subject to Sections 55 through 65 of the Investment Company Act of 1940 (15 U.S.C. 80a–1
The Commission estimates that on average approximately 15 companies file these notifications each year. Each of those companies need only make a single filing of Form N–6F. The Commission further estimates that this information collection imposes burden of 0.5 hours, resulting in a total annual PRA burden of 7.5 hours. Based on the estimated wage rate, the total cost to the industry of the hour burden for complying with Form N–6F would be approximately $2,505.
The collection of information under Form N–6F is mandatory. The information provided under the form is not kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
The public may view the background documentation for this information collection at the following Web site,
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Rule 17a–19 requires every national securities exchange and registered national securities association to file a Form X–17A–19 with the Commission and the Securities Investor Protection Corporation (“SIPC”) within 5 business days of the initiation, suspension, or termination of any member and, when terminating the membership interest of any member, to notify that member of its obligation to file financial reports as required by Exchange Act Rule 17a–5(b).
Commission staff anticipates that the national securities exchanges and registered national securities associations collectively will make 800 total filings annually pursuant to Rule 17a–19 and that each filing will take approximately 15 minutes. The total reporting burden is estimated to be approximately 200 total annual hours.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
The public may view background documentation for this information collection at the following Web site:
The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of September 2014. A copy of each application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at
Diane L. Titus at (202) 551–6810, SEC, Division of Investment Management, Chief Counsel's Office, 100 F Street NE., Washington, DC 20549–8010.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to extend the implementation rollout of its new Options Floor Broker Management System.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposal is to extend the rollout of the Exchange's enhancements to the Options Floor Broker Management System (“FBMS”). Today, FBMS enables Floor Brokers and/or their employees to enter, route, and report transactions stemming from options orders received on the Exchange. FBMS also establishes an electronic audit trail for options orders represented by Floor Brokers on the Exchange. Floor Brokers can use FBMS to submit orders to Phlx XL, rather than executing the orders in the trading crowd.
With the new FBMS, all options transactions on the Exchange involving at least one Floor Broker are required to be executed through FBMS. In connection with order execution, the Exchange allows FBMS to execute two-sided orders entered by Floor Brokers, including multi-leg orders up to 15 legs, after the Floor Broker has represented the orders in the trading crowd. FBMS also provides Floor Brokers with an enhanced functionality called the complex calculator that calculates and displays a suggested price of each individual component of a multi-leg order, up to 15 legs, submitted on a net debit or credit basis.
The Exchange received approval to implement the FBMS enhancements as of June 1, 2013,
Implementation began on March 7, 2014. In its most recent filing delaying implementation,
Accordingly, the Exchange seeks an additional two month period (until November 3, 2014) to be able to continue the implementation rollout; the Exchange announced the specific date on which the trial period will end and the old FBMS will no longer be available in advance through an Options
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange continues to believe, as it stated when proposing these enhancements, that these enhancements to FBMS should result in the Exchange's trading floor operating in a more efficient way, which should help it compete with other floor-based exchanges and help the Exchange's Floor Brokers compete with floor brokers on other options exchanges.
A written comment was received in support of the proposal.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of filing.
The Commission believes that the waiver of the 30-day operative delay is consistent with the protection of investors and the public interest as it will clarify when the delayed implementation of the FBMS will be effective and operative immediately. In addition, because the proposal only delays the implementation date of the FBMS and does not make any additional changes to the FBMS itself, it does not raise any novel regulatory issues. The Commission notes that the implementation period was scheduled to expire on September 1, 2014, when the existing FMBS would cease to operate and the new FBMS would be fully implemented. However, Phlx has indicated that it needs additional time to continue the implementation rollout of the new FMBS. Therefore, the Commission designates the proposal operative upon filing.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act.
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.
All submissions should refer to File Number SR–Phlx–2014–59. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On June 13, 2014, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
As stated in the Notice, FINRA is proposing to amend the Codes to increase certain arbitration filing fees, member surcharges and process fees, and hearing session fees for the primary purpose of increasing arbitrator honoraria.
Although FINRA acknowledged that there are non-monetary benefits to serving as an arbitrator, FINRA still believes that “the current honoraria level is a barrier to recruiting.”
To fund these honoraria increases, FINRA is proposing to increase certain fees and surcharges assessed in the arbitration forum. Specifically, FINRA's proposal would amend Rules 12214 (Payment of Arbitrators), 12800 (Simplified Arbitration), 12900 (Fees Due When a Claim is Filed), 12901 (Member Surcharge), 12902 (Hearing Session Fees, and Other Costs and Expenses), and 12903 (Process Fees Paid by Members) of the Customer Code. The proposed rule change would also amend Rules 13214 (Payment of Arbitrators), 13800 (Simplified Arbitration), 13900 (Fees Due When a Claim is Filed), 13901 (Member Surcharge), 13902 (Hearing Session Fees, and Other Costs and Expenses), and 13903 (Process Fees Paid by Members) of the Industry Code.
In general, the proposal would increase the member surcharges and
The following sections outline each of FINRA's proposed rule change amendments.
Arbitrator honoraria are the payments that FINRA makes to its arbitrators for the services they provide to FINRA's dispute resolution forum.
FINRA noted that “[c]hairpersons are often the arbitrators on FINRA's rosters with the most experience who have completed chairperson training.”
Arbitrators also receive honoraria when they decide contested motions requesting the issuance of a subpoena without a hearing (“contested subpoena requests”).
Finally, under Rule 12800, when a claimant
Under the proposed rule change, FINRA would amend Rules 12214 and 12800 of the Customer Code to increase the arbitrator honoraria.
Specifically, FINRA is proposing to amend Rule 12214(a) to increase the payment to each arbitrator for each hearing session in which the arbitrator participates from $200 to $300 per hearing session. The rule would also be amended to increase the additional amount that chairpersons receive from $75 to $125 per day of hearings. Rule 12214(d) would be amended to increase the honoraria that arbitrators receive when they decide contested subpoena requests from $200 to $250. Finally, Rule 12800(f) would be amended to increase the honoraria for simplified arbitration cases, which is a flat per case payment, from $125 to $350. FINRA stated that “[a]lthough no hearings are conducted in simplified arbitrations, these cases can be time-consuming, and, in FINRA's view, the current honoraria level does not reflect fairly the arbitrator's time and effort to render a decision.”
To fund these increases in arbitrator honoraria, FINRA is proposing to increase certain filing fees, member surcharges and process fees, and the hearing session fees assessed under the Codes as illustrated in the tables below.
Currently, Rules 12900(a) and 13900(a) require a customer, associated person, other non-member, or member who files a claim, counterclaim, cross claim, or third party claim to pay a filing fee to initiate an arbitration. The filing fee consists of two parts: (1) A non-refundable fee, which FINRA keeps when a claim is filed, and (2) a deposit, which FINRA may return in whole or in part to the party that filed the claim in certain circumstances.
Under the proposed rule change, FINRA would amend Rules 12900 and 13900 to increase the filing fees for investors, associated persons, other non-members, or members bringing claims of more than $500,000.
As reflected in Table 2, under the proposed rule change, FINRA would increase the filing fees for claim amounts beginning at the $500,000.01 to $1,000,000 tier, so that the fee increases impact only those claimants with larger claims.
The proposed rule change would also create two new tiers, at the upper level, to spread the cost increases among larger claims. The first new tier of $1,000,000.01 to $5,000,000 would have a filing fee of $2,000. The second new tier would begin at over $5,000,000, with a filing fee of $2,250.
In addition, the proposed rule change would increase the unspecified filing fee by $325. FINRA believes the unspecified claim fees should fall in the middle of the claim amount tiers for each fee type, where a majority of the specified claims are clustered.
As stated above, FINRA believes that these increases would help fund the increases in arbitrator honoraria. Furthermore, FINRA believes potential impact of the proposed increased filing fee would be mitigated by, among other things, (1) FINRA allocating most of the increases to the refundable portion of the filing fee;
As reflected in Table 3, the proposed rule change would also increase the filing fee for members at the highest claim amount tiers, as well as at the unspecified claim tier. For each of the above increases, FINRA stated that it is proposing to add the increased amount to the refundable portion of the filing fee, explaining that “this part of the filing fee, which is linked closely to FINRA's costs to administer arbitration cases, particularly hearing sessions, could be avoided if the parties agree to settle.”
Currently, FINRA Rules 12901(a) and 13901(a) provide that a surcharge will be assessed against each member that: (1) Files a claim, counterclaim, cross claim, or third party claim under the Codes; (2) is named as a respondent in a claim, counterclaim, cross claim, or third party claim filed and served under the Codes; or (3) employed, at the time the dispute arose, an associated person who is named as a respondent in a claim, counterclaim, cross claim, or third party claim filed and served under the Codes. FINRA explained that member surcharges are intended to allocate the costs of administering the arbitration case to the brokerage firms that are involved in those cases. Thus, each member is assessed a member surcharge, based on the aggregate claim amount, when it is brought into the case, whether through a claim, counterclaim, cross claim or third party claim. FINRA noted that the member surcharge is the responsibility of the member party and cannot be allocated to any other party (“non-allocable”).
The proposal would amend Rules 12901 and 13901 to increase the member surcharges primarily for claim amounts larger than $250,000. The proposal would also make a technical change to the title of the tiers in the “Member Surcharge” charts from “Amount in Dispute” to “Amount of Claim,” so that the title describing the claim amounts in all of the fee charts in the Codes would be consistent.
Table 4 (below) illustrates the current member surcharges, the proposed surcharge, and percentage increases.
As reflected in Table 4, the proposal would reduce the member surcharge for some smaller claims
The proposal would also combine the current $25,000.01-to-$30,000 and $30,000.01-to-$50,000 tiers. FINRA stated that this change “was intended to make the proposed tiers in the surcharge schedule more consistent with other fee schedules in the Codes.”
Currently, FINRA Rules 12902(a) and 13902(a) assess a hearing session fee for each hearing session held. A hearing session is a meeting of the parties and arbitrators, including any hearing, pre-hearing, and injunctive hearing.
As FINRA explained, the hearing session fee is allocable to the parties and based on the highest claim amount within the case. In addition, Rules 12902(a)(1) and 13902(a)(1) provide arbitrators the authority to apportion the fees in any manner, including assessing
FINRA is proposing to amend Rule 12902 to increase the hearing session fees for claims of more than $500,000.
Tables 5 and 6 (below) illustrate the current fee for hearing sessions with either one or three arbitrators, the proposed fee, dollar and percentage changes, and the arbitrator payment at each tier.
As reflected in Table 5 (below), under the proposed rule change, the fees for a hearing session with one arbitrator would not change.
FINRA stated that “[i]n assessing the hearing session fees for cases heard by one arbitrator, FINRA determined to retain the current fee structure . . . even though the current fees would not cover the proposed increased honoraria payments for claims in the $.01–$10,000 tiers.”
As reflected in Table 6 (below), the proposal would create new tiers for claims amounts starting at $500,000.01 for hearing sessions with three arbitrators and would increase the fees only for those tiers.
FINRA stated that it would retain the current fees for lower claim amounts despite the fact that “the hearing session fees do not cover the forum's actual costs for smaller claims.”
Currently, FINRA Rules 12903(a) and 13903(a) require each member that is a party to an arbitration in which the claim amount is more than $25,000 to pay process fees, which are assessed at specific milestones in each case.
As reflected in Table 7 (below), the proposal would combine the prehearing process fee and hearing process fee, into one fee, which would be due at the time the parties are sent the arbitrator lists.
Table 7 (below) shows the current process fees, the proposed combined fees, and the changes between the two.
The proposal would increase the fees for claim amounts beginning with the new $250,000.01-to-$500,000 tier. Similar to the member surcharge increase discussed above, FINRA is proposing to spread the process fee increases among larger claim amounts, while retaining or decreasing the fees associated with the lower claim amounts.
As noted above, the Commission received eight comment letters on the proposed rule change
While a majority of the commenters supported the proposed increase in arbitrator honoraria, two commenters opposed the proposed increase in filing fees that customers would pay to help fund the honoraria increases.
One of these commenters expressed concern “that requiring investors to pay the increased honorarium by raising the filing fees may deny them access to the
Similarly, a second commenter opposed “FINRA's effort to pass along increased honoraria costs to investors that are forced into FINRA's dispute resolution forum as the result of industry mandatory pre-dispute arbitration agreements.”
In addition, both of these commenters argued that because FINRA member firms use pre-dispute arbitration agreements (“PDAAs”) to require their customers to arbitrate claims, investors do not have a choice of forum. Consequently, these commenters asserted that such investors should not be required to pay the proposed increase in filing fees.
In response, FINRA noted that “as claimants and respondents utilize the arbitration facilities to resolve disputes, it would be inequitable for industry members to pay 100 percent of the filing fee increase.”
In response to the comment that investors may not be able to afford the proposed filing fees after having suffered “catastrophic losses,”
In its response, FINRA also noted that neither the use of PDAAs by FINRA members nor whether certain claims should be litigated in court or arbitrated is the subject of the proposal. Consequently, FINRA stated that both issues are “outside the scope of the filing.”
Therefore, for these reasons, FINRA declined to modify the proposed rule change to assign all filing fee increases to FINRA members.
One commenter that opposed the proposal, stating that FINRA members should be responsible for paying all of the proposed increased filing fees, also contended that “[t]his point is emphasized even more when you consider that arbitration panels rarely assess forum fees against respondents even when they find the respondents liable for the claimants' losses.”
FINRA refuted this commenter's assertion, calling it “inaccurate and misleading.”
For these reasons, FINRA declined to modify its proposal in response to comments.
One commenter claimed that FINRA's proposal does not provide sufficient information “to assess the reasonableness or anticipated effectiveness of the increases that FINRA proposes” because the statistical models and underlying data were not provided to the public.
In response to this comment, FINRA stated that the information provided in the proposal is “sufficient to elicit meaningful comment.”
One commenter claimed that it cannot assess whether there is a need for increased arbitrator honoraria because FINRA's proposal does not provide “basic information regarding the existing size or quality of FINRA's
In response, FINRA stated that it “relies on a diverse roster of over 6,300 arbitrators to maintain its fair, impartial and efficient system of dispute resolution” and that “[t]he exact number of arbitrators, broken down by public and non-public classifications, is updated monthly and published on [FINRA's] Web site.”
With respect to the commenter's concerns about expanding FINRA's geographical presence, FINRA explained that it “already focuses on areas of the country where there is a lower number of available arbitrators” and that “[i]n its effort to recruit arbitrators from a diverse group of professionals, FINRA continues to conduct outreach activities in underserved locations.”
FINRA stated that “the increased honoraria would be helpful in its recruiting efforts, as staff has received feedback from prospective applicants who have declined to apply when they learn of the current pay structure.”
For these reasons, FINRA declined to modify its proposal.
One commenter expressed concern that applying the proposed increased honoraria prospectively would create a two-tier pay structure: One for arbitrators assigned before the proposal's effective date and another for those assigned after the effective date.
In response, FINRA explained that, although it understands the concern, it believes that if the suggestion was implemented it “would have a negative impact on the forum's resources.”
For these reasons, FINRA declined to modify the proposal to make the honoraria increase partially retroactive to pending cases.
One commenter suggested that “FINRA should also consider the impact increased arbitrator compensation could have on certain conflicts of interest.”
In response, FINRA stated that it “does not believe that increasing the honoraria would prevent arbitrators from performing their duties and deciding disputes in a fair manner, as they must agree to do by executing the arbitrator oath.”
FINRA also clarified that, although the commenter does not define “set honorarium,” FINRA interpreted it to mean “a fixed amount, regardless of the number of motions decided or hearings held during a case.”
For these reasons, FINRA declined to amend the proposal to pay a “set honorarium.”
One commenter suggested changing FINRA's current payment structure for arbitrators “from sessions of `four hours or less' to an hourly rate.”
In response, FINRA explained that the structure of hearing session payments is not the subject of this rule filing and therefore outside the scope of the proposal.
The Commission has carefully considered the proposal, the comments received, and FINRA's responses to the comments. Based on its review of the record, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.
As outlined above, the Commission received eight comment letters on the proposed rule change
Specifically, the Commission believes that the proposed rule change would further the purposes of the Act as it provides for the equitable allocation of reasonable fees, surcharges and other charges among FINRA members, customers, associated persons, or other non-members using FINRA's arbitration forum.
Moreover, the Commission also believes that the proposed rule change would further the purposes of the Act as it is reasonably designed to protect investors and the public interest.
For the reasons stated above, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act” or “SEA”)
FINRA is proposing to adopt NASD Rule 3010(e) (Qualifications Investigated) relating to background investigations as FINRA Rule 3110(e) (Responsibility of Member to Investigate Applicants for Registration) in the consolidated FINRA rulebook. The proposed rule change streamlines and clarifies the rule language and adds a provision to require members to adopt written procedures that are reasonably designed to verify the accuracy and completeness of the information contained in an applicant's Form U4 (Uniform Application for Securities Industry Registration or Transfer). In addition, the proposed rule change adds Supplementary Material .15 (Temporary Program to Address Underreported Form U4 Information) to FINRA Rule 3110 (Supervision) to establish a temporary program that will issue a refund to members of Late Disclosure Fees assessed for the late filing of responses to Form U4 Question 14M, subject to specified conditions.
The proposed rule change would delete NASD Rule 3010(f) (Applicant's Responsibility), Incorporated NYSE Rule 345.11 (Investigation and Records) and Incorporated NYSE Rule Interpretation 345.11/01 (Application—Investigation) and /02 (Application—Records).
The text of the proposed rule change is available on FINRA's Web site at
In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
As part of the process of developing a new consolidated rulebook (“Consolidated FINRA Rulebook”),
The proposed rule change would delete NASD Rule 3010(f) because it has been rendered obsolete. The proposed rule change would also delete Incorporated NYSE Rule 345.11
A critical part of the registration process in the securities industry is the background investigation of applicants for registration and the timely and accurate reporting of information to the Central Registration Depository (CRD®) system via the Form U4. For instance, FINRA reviews the information disclosed on the Form U4 to determine whether an applicant is subject to a statutory disqualification
NASD Rule 3010(e) provides that a firm must ascertain by investigation the good character, business reputation, qualifications and experience of an applicant before the firm applies to register that applicant with FINRA.
NYSE Rule 345.11, which is the corresponding NYSE rule, requires firms to investigate thoroughly the previous record of: (1) Persons required to be registered with the NYSE; (2) persons who regularly handle or process securities or monies or maintain the books and records relating to securities
The Form U4 requires that the person signing the form on behalf of the firm certify that he or she has taken appropriate steps to verify the accuracy and completeness of the information contained in and with that form.
FINRA is proposing to amend FINRA Rule 3110 by adding a new paragraph (e) and incorporating the requirements of NASD Rule 3010(e) into that paragraph, subject to the following changes.
FINRA is proposing to streamline and clarify the rule language. For instance, NASD Rule 3010(e) currently provides that “[e]ach member shall have the responsibility and duty to ascertain by investigation the good character, business repute, qualifications, and experience of any person prior to making such a certification in the application of such person for registration with this Association,” whereas proposed FINRA Rule 3110(e) provides that “[e]ach member shall ascertain by investigation the good character, business reputation, qualifications and experience of an applicant before the member applies to register that applicant with FINRA and before making a representation to that effect on the application for registration.” Further, proposed FINRA Rule 3110(e) clarifies that a firm is required to review a copy of an applicant's most recent Form U5 if the applicant previously has been registered with FINRA or another self-regulatory organization. With respect to a firm's obligation to review an applicant's Form U5, the proposed rule continues to provide that if the firm is unable to review the Form U5, it has to demonstrate that it has made reasonable efforts to do so. FINRA expects firms to use this provision in very limited circumstances, such as where the previous firm fails to file a Form U5 or goes out of business before filing a Form U5. FINRA also is proposing to re-label current FINRA Rule 3110(e) (Definitions) as FINRA Rule 3110(f) (Definitions) and update the cross-references in FINRA Rule 3110 to reflect this change.
In addition, FINRA is proposing to include in proposed FINRA Rule 3110(e) a requirement that firms adopt written procedures that are reasonably designed to verify the accuracy and completeness of the information contained in an applicant's Form U4 no later than 30 calendar days after the form is filed with FINRA. FINRA believes that such a requirement is consistent with the requirements of NYSE Rule 345.11 and the Form U4. The proposed requirement would only apply to an initial or a transfer Form U4 for an applicant for registration, and not to Form U4 amendments. FINRA further believes that imposing such a requirement would not be unduly burdensome for firms; FINRA expects that firms already have a review process in place to verify the information contained in the Form U4 for most applicants for registration.
Proposed FINRA Rule 3110(e) would also require that a firm's written procedures must, at a minimum, provide for a search of reasonably available public records
A member could comply with the requirement to conduct a public records search in several ways. For example, a member may satisfy the requirement by: (1)(a) reviewing a credit report from a major national credit reporting agency that contains public record information (such as bankruptcies, judgments and liens), or (b) searching a reputable national public records database; and (2) reviewing the fingerprint results obtained as part of the registration process. Alternatively, a member could comply with this requirement by using the services of a specialized provider, such as Business Information Group, Inc. (BIG),
FINRA encourages firms to conduct the required public records search prior to filing the initial or transfer Form U4 to avoid the fees associated with filing a Form U4 amendment. In addition, FINRA recognizes that there will on occasion be circumstances beyond a firm's control that prevent completion of the verification process within 30 calendar days after the Form U4 is filed with FINRA. For example, where a firm is relying on fingerprint results for purposes of a criminal public records search, and the FBI determines the fingerprints to be “illegible” and requires resubmission of the fingerprints. In such circumstances, the firm's procedures should provide that the verification should be completed as soon as is practical.
FINRA is proposing to implement proposed FINRA Rule 3110(e) on December 1, 2014, which coincides with the implementation date for the consolidated FINRA supervision rules. FINRA will announce the effective date of proposed FINRA Rule 3110(e) in a
As announced by FINRA on April 24, 2014, to verify against public records whether material financial information has been timely and accurately reported to the CRD system via the Form U4, FINRA is performing a one-time search of specific financial public records, including bankruptcies, judgments and liens, on all registered persons.
In the course of these reviews, if FINRA identifies instances where required information has not been reported to the CRD system via the Form U4, FINRA contacts the firm and asks that the information be reported or that the firm provide an explanation as to why the information is not reportable. If the firm reports the information on the Form U4, FINRA reviews the information and assesses a Disclosure Processing Fee.
However, FINRA is proposing to add Supplementary Material .15 to FINRA Rule 3110 to establish a temporary program that will issue a refund to members of Late Disclosure Fees assessed for the late filing of responses to Form U4 Question 14M (unsatisfied judgments or liens) if the following conditions are met: (1) The Form U4 amendment is filed between April 24, 2014 and March 31, 2015; (2) the judgment or lien is under $5,000 and more than five years old (from the date the judgment or lien is filed with a court as reported on Form U4 Judgment/Lien DRP, Question 4); and (3) the registered person was not employed by, or otherwise associated with, the firm filing the amended Form U4 on the date the judgment or lien was filed with the court. FINRA believes that such a refund would provide members with an additional incentive to report information relating to unsatisfied judgments or liens that are older and of a less significant amount, and it would save FINRA the time and resources expended in contacting firms and requesting that such information be reported. Firms would still be charged a Disclosure Processing Fee ($110.00) for filing amended Form U4 disclosure information.
As noted above, proposed FINRA Rule 3110.15 has a retroactive effective date of April 24, 2014, and it will automatically sunset on March 31, 2015. Members will not be able to use the program after March 31, 2015. FINRA believes that it is appropriate for proposed FINRA Rule 3110.15 to have a retroactive effective date of April 24, 2014 because that is the date that FINRA announced its plan to perform a search of specified public records to verify the accuracy and completeness of specific financial and criminal information reported on the Form U4.
NASD Rule 3010(f) requires an applicant for registration to provide, upon a member's request, a copy of his or her Form U5. There is a corresponding provision in NYSE Rule 345.11. FINRA is proposing to eliminate the requirement because members have electronic access to an applicant's Form U5 through the CRD system.
FINRA also is proposing to delete NYSE Rule 345.11 and NYSE Rule Interpretation 345.11/01 and/02 in their entirety as they are substantially similar to proposed FINRA Rule 3110(e), addressed by other rules
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
FINRA notes that the proposed rule change transfers requirements from NASD Rule 3010(e), NYSE Rule 345.11 and NYSE Rule Interpretation 345.11/01 and/02 unchanged into the Consolidated Rulebook and, as such, those transferred requirements do not impose any new burdens for members that are already subject to the current rules.
The proposed rule change would require members to adopt written procedures that are reasonably designed to verify the accuracy and completeness of the information contained in an applicant's Form U4 no later than 30 calendar days after the form is filed with FINRA, including, at a minimum, procedures to conduct (either directly or through a third-party service provider) a search of reasonably available public records to verify the accuracy and completeness of the information.
FINRA expects that firms already have a review process in place to verify the information contained in the Form U4 for applicants for registration because currently the person signing the form on behalf of the firm must certify that he or she has taken appropriate steps to verify the accuracy and completeness of the information contained in and with that form. Therefore, the requirement to adopt written procedures that are reasonably designed to verify the accuracy and completeness of the information contained in an applicant's Form U4 should not create an unreasonable burden for members.
With respect to the requirement to conduct a public records search, FINRA is aware that many of the large and mid-size firms already have a review process in place that requires a search of public records,
FINRA is aware that many information providers, including the major national credit reporting agencies, provide such public records search services. For instance, as noted above, FINRA has contracted with BIG to provide competitive pricing to members currently at a cost of $10 to $13 per applicant (depending on volume) for a public records search. FINRA is providing two sample cost estimates for large, mid-size and small firms
FINRA estimates that there are approximately 126,800 applicants for registration each year (based upon the average from the last four years). FINRA estimates that 75 percent of these applicants (approximately 95,100) are from 172 large firms and that 10 percent of these applicants (approximately 12,700) are from 205 mid-size firms. FINRA is aware that many of these large and mid-size firms already have a review process in place that requires a public records search, and as a result the proposed rule change would not impose significant burdens on these firms. FINRA estimates that the remaining 15 percent of applicants (approximately 19,000) are from 2,900 small firms. Based on the per firm average of applicants for registration with large, medium and small firms, FINRA estimates that the average cost of complying with the requirement would be in the range of: (1) $5,529 to $7,188 per year for large firms; (2) $620 to $805 per year for mid-size firms; and (3) $66 to $85 per year for small firms.
FINRA estimates that there are approximately 219,000 pre-hire search requests on the CRD system each year (based upon the average from the last four years). FINRA estimates that 85 percent of the pre-hire checks (approximately 186,400) are from 172 large firms and that 7.5 percent of the pre-hire checks (approximately 16,400) are from 205 mid-size firms. The remaining 7.5 percent (approximately 16,400) are from 1,855 small firms. FINRA notes that these pre-hire check estimates are based on the voluntary checks firms conduct on the CRD system, which are free of charge, and are not the same as the public records search discussed in the proposed rule change. However, to the extent that the number of voluntary pre-hire checks is informative of the anticipated number of public record searches, FINRA estimates that the average annual cost of complying with the requirement would be in the range of: (1) $10,837 to $14,088 per firm for large firms; (2) $800 to $1,040 per firm for mid-size firms; and (3) $88 to $115 per firm for small firms.
FINRA understands that these costs will vary significantly depending on the size of a firm and its registration activity in any given year. In addition, FINRA notes that, in some instances, a public records search may uncover matters that might require further investigation for which the member may incur additional costs.
With respect to the temporary program under proposed FINRA Rule 3110.15, FINRA notes that members currently are required to verify the accuracy and completeness of the information contained in the Form U4 and to amend the form as necessary. The temporary program would encourage members to comply with their existing obligations and allow them to receive a refund of Late Disclosure Fees if the conditions specified in proposed FINRA Rule 3110.15 are satisfied. As such, FINRA does not believe that the temporary program will result in any burden on members.
Written comments were neither solicited nor received.
Within 45 days of the date of publication of this notice in the
(A) by order approve or disapprove such 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,
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, 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.
It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Nudg Media Inc. (“Nudg”) because of questions regarding the accuracy of assertions by Nudg and by others, in press releases to investors concerning, among other things: the company's assets and business plan. Nudg Media Inc. is a Nevada corporation with its principal place of business located in Carson City, Nevada. Its stock is quoted on OTC Link, operated by OTC Markets Group Inc., under the ticker: NDDG.
The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company.
By the Commission.
Determinations: “The Forever Now: Contemporary Painting in an Atemporal World”
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 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.
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.
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 object, 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.
The Secretary of State has determined, pursuant to authority delegated by Presidential Memorandum of October 9, 2012 (the “ISA Delegation Memorandum”), that the following persons have engaged in sanctionable activity described in section 5(a)(6) of the Iran Sanctions Act of 1996 (Pub. L. 104–172) (50 U.S.C. 1701 note) (“ISA”), as amended, and that certain sanctions are imposed as a result: Dettin SpA.
The Secretary of State has also determined, pursuant to authority delegated by Presidential Memorandum of June 3, 2013 (the “IFCA Delegation Memorandum”), that the following persons have engaged in sanctionable activity described in section 1244 of the Iran Freedom and Counter-Proliferation Act of 2012 (Pub. L. 112–239) (“IFCA”), and that certain sanctions are imposed as a result: Goldentex FZE.
On general issues: Paul Pavwoski, Office of Economic Sanctions Policy and Implementation, Department of State, Telephone: (202) 647–8836.
Pursuant to section 5(a)(6) of ISA and the ISA Delegation Memorandum, the Secretary determined that the following sanctions, as described in section 6 of ISA, are to be imposed on Dettin SpA:
1. Procurement sanction. The United States Government shall not procure, or enter into any contract for the procurement of, and goods or services from Dettin SpA.
2. Export-Import Bank assistance for exports. The Export-Import Bank of the United States shall not give approval to the issuance of any guarantee, insurance, extension of credit, or participation in the extension of credit in connection with the export of any goods or services to Dettin SpA.
3. Banking transactions. Any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of Dettin SpA, shall be prohibited.
4. Property transactions. It shall be prohibited to:
a. Acquire, hold, withhold, use, transfer, withdraw, transport, import, or export any property that is subject to the jurisdiction of the United States and with respect to which Dettin SpA has any interest;
b. Deal in or exercise any right, power, or privilege with respect to such property; or
c. Conduct any transactions involving such property.
5. Foreign Exchange. Any transactions in foreign exchange that are subject to the jurisdiction of the United States and in which Dettin SpA has any interest, shall be prohibited.
If the Secretary determines that a person has engaged in sanctionable activity under Section 1244(d) of IFCA, the Secretary is required to impose 5 of the 12 sanctions provided for in Section 6 of ISA. Pursuant to section 1244(d) of IFCA and the IFCA Delegation Memorandum, the Secretary determined that the following sanctions as described in section 6 of ISA are to be imposed on Goldentex FZE:
1. Ban on Investment in Equity or Debt of Sanctioned Person. Investment by U.S. persons in the debt or equity of Goldentex FZE shall be prohibited.
2. Loans from United States Financial Institutions. U.S. financial institutions shall be prohibited from making loans or providing credits to Goldentex FZE totaling more than $10,000,000 in any 12-month period unless Goldentex FZE is engaged in activities to relieve human suffering and the loans or credits are provided for such activities.
3. Banking Transactions. Any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of Goldentex FZE, shall be prohibited.
4. Property Transactions. It shall be prohibited to:
a. Acquire, hold, withhold, use, transfer, withdraw, transport, import, or export any property that is subject to the jurisdiction of the United States and with respect to which Goldentex FZE has any interest;
b. Deal in or exercise any right, power, or privilege with respect to such property; or
c. Conduct any transactions involving such property.
5. Foreign Exchange Transactions. Transactions in foreign exchange that are subject to the jurisdiction of the United States in which Goldentex FZE has any interest are prohibited.
The sanctions described above with respect to Dettin SpA and Goldentex FZE shall remain in effect until otherwise directed pursuant to the provisions of ISA, IFCA, or other applicable authority. Pursuant to the authority delegated to the Secretary of State in the ISA and IFCA Delegation Memoranda, relevant agencies and instrumentalities of the United States Government shall take all appropriate measures within their authority to carry out the provisions of this notice. The Secretary of the Treasury is taking appropriate action to implement the sanctions for which authority has been delegated to the Secretary of the Treasury pursuant to the Delegation Memorandum and Executive Order 13574 of May 23, 2011.
The following constitutes a current list, as of this date, of persons on whom ISA sanctions have been imposed. The particular sanctions imposed on an individual person are identified in the relevant
• Belarusneft (see Public Notice 7408, 76 FR 18821, April 5, 2011).
• BimehMarkazi-Central Insurance of Iran (see Public Notice 8268, 76 FR 21183, April 9, 2013).
• Cambis, Dimitris (see Public Notice 8268, 76 FR 21183, April 9, 2013).
• Dettin SpA.
• FAL Oil Company Limited (see Public Notice 7776, 77 FR 4389, Jan. 27, 2012).
• Ferland Company Limited (see Public Notice 8352, 78 FR 35351, June 12, 2013).
• Goldentex FZE.
• Impire Shipping (see Public Notice 8268, 76 FR 21183, April 9, 2013).
• Jam Petrochemical Company (see Public Notice 8352, 78 FR 35351, June 12, 2013).
• Kish Protection and Indemnity (a.k.a. Kish P&I) (see Public Notice 8268, 76 FR 21183, April 9, 2013).
• Kuo Oil (S) Pte. Ltd. (see Public Notice 7776, 77 FR 4389, Jan. 27, 2012).
• NaftiranIntertrade Company (a.k.a. NICO) (see Public Notice 7197, 75 FR 62916, Oct. 13, 2010).
• Niksima Food and Beverage JLT (see Public Notice 8352, 78 FR 35351, June 12, 2013).
• Petrochemical Commercial Company International (a.k.a. PCCI) (see Public Notice 7585, 76 FR 56866, September 14, 2011).
• Petróleos de Venezuela S.A. (a.k.a. PDVSA) (see Public Notice 7585, 76 FR 56866, September 14, 2011).
• Royal Oyster Group (see Public Notice 7585, 76 FR 56866, September 14, 2011).
• Speedy Ship (a.k.a. SPD) (see Public Notice 7585, 76 FR 56866, September 14, 2011).
• Sytrol (see Public Notice 8040, 77 FR 59034, September 25, 2012).
• Zhuhai Zhenrong Company (see Public Notice 7776, 77 FR 4389, Jan. 27, 2012).
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Notice and request for comments.
In compliance with the Paperwork Reduction Act of 1995, this notice announces that the Information Collection Request (ICR) abstracted below requesting regular review is being forwarded to the Office of Management and Budget (OMB) for review and comment. The ICR describes the nature of the information collection and its expected burden. The
Comments must be submitted on or before November 3, 2014.
Mr. Robert Brogan, Office of Planning and Evaluation Division, RRS–21, Federal Railroad Administration, 1200 New Jersey Ave. SE., Mail Stop 25, Washington, DC 20590 (Telephone: (202) 493–6292), or Ms. Kimberly Toone, Office of Information Technology, RAD–20, Federal Railroad Administration, 1200 New Jersey Ave. SE., Mail Stop 35, Washington, DC 20590 (Telephone: (202) 493–6132). (These telephone numbers are not toll-free.)
The Paperwork Reduction Act of 1995 (PRA), Public Law 104–13, sec. 2, 109 Stat. 163 (1995) (codified as revised at 44 U.S.C. 3501–3520), and its implementing regulations, 5 CFR part 1320, require Federal agencies to issue two notices seeking public comment on information collection activities before OMB may approve paperwork packages. 44 U.S.C. 3506, 3507; 5 CFR 1320.5, 1320.8(d)(1), 1320.12. On June 30, 2014, FRA published a 60-day notice in the
On August 29, 2014, FRA received a joint comment from the Association of American Railroads (AAR) and the American Short Line and Regional Railroad Association (ASLRRA) (Commenters). The Commenters raised three main points. First, the Commenters assert that the crude oil routing information the EO requires railroads to provide to SERCs is sensitive information from a security perspective and should only be available to persons with a need-to-know the information (e.g., emergency responders and emergency response planners). Second, the Commenters assert that the same information is commercially-sensitive information that should remain confidential and not be publically available. Finally, the Commenters assert that the EO is not serving a useful purpose as the information required by the EO to be provided to the SERCs is already provided to emergency responders through AAR Circular OT–55–N.
The EO requires that railroads make crude oil routing information available to [SERCs]. Specifically, the EO requires that a railroad provide to the SERC in each state in which it operates trains transporting 1,000,000 gallons or more of Bakken crude oil information on the number of such trains traveling per week through each county and the routes over which the trains operate.
While AAR and ASLRRA do not believe it was DOT's intention, the EO resulted in the information required to be disclosed by the EO to be made publicly available. Such a result is hardly a necessary consequence of informing government officials of the transportation of Bakken crude oil through their jurisdictions. Railroads were already informing government officials of the hazardous materials transported through their communities pursuant to AAR's circular governing operating practices for the transportation of hazardous materials, OT–55.
In their comment, AAR and ASLRRA further remarked:
Unfortunately, in so far as confidentiality is concerned, the result of the EO has proven inconsistent with DOT's intent. Since SERCs in many states have contended they have no choice but to make the routing information public because of the laws governing SERCs, the SERCs have refused to keep crude oil routing information confidential.
The EO is not needed to provide emergency responders with notice that crude oil shipments are being transported through their communities because railroads have been providing that information for many years. OT–55 provides that railroads will give emergency response agencies and planning groups information on the hazardous materials transported through their communities. Class I railroads and short lines have notified communities as provided by OT–55.
For emergency response planning purposes, there is no need to disclose the actual route taken by a crude oil train. Notifying an emergency responder of the hazardous materials transported through the community, including crude oil, is sufficient.
Railroading is a highly competitive business. A railroad's traffic is susceptible to competing railroads and competing modes. As is the case with any company engaged in a competitive business, railroads keep their customers confidential to the extent possible. Forced disclosure of routing information provides a means for competitors to ascertain a railroad's customers and constitutes the disclosure of confidential commercial information.
Although DOT and FRA in particular, recognize the Commenters concerns relating to the potential confidentiality of the information required to be provided under the EO, DOT notes that the information does not fall into any of the fifteen categories of Sensitive Security Information (SSI) defined by either DOT or Transportation Security Administration (TSA) regulations.
The Commenters are correct in that DOT's intent in issuing the EO was not to cause the widespread public disclosure of the information, but rather to ensure that emergency responders have an understanding of the volume and frequency with which Bakken crude oil is transported through their communities so that they can prepare their response plans and resources accordingly. DOT notes that the Commenters do not document any actual harm that has occurred by the public release of the information required to be provided to the States under the EO. That being said, DOT understands that railroads may have an appropriate claim that the information required to be provided to the SERCs constitutes confidential business information, but the merit of such claims may differ by State depending on each State's open records and sunshine laws. For these reasons, FRA concludes that the information required to be provided to the SERCs under the EO is neither security-sensitive nor commercially-sensitive information that is protected by Federal law.
With regard to the Commenters' assertion that the EO is not serving a useful purpose as the information required by the EO to be provided to the States is already available to emergency responders through OT–55, FRA notes that there are important distinctions between the information required to be provided by railroads under the EO and the nature and content of the information provided pursuant to OT–55. First, the railroad's sharing of information contemplated by OT–55 is only voluntary. Second, the railroad's voluntary sharing of information under OT–55 is only upon written request of emergency response or emergency planning groups. Third, the information voluntarily shared pursuant to OT–55 is “commodity flow information” covering “the top 25 hazardous commodities transported through the community in rank order.” Large quantities of Bakken crude oil in single trains may or may not be part of this top-25 commodity ranking in any given community. In contrast, by mandating in the EO that railroads provide the identified information on the transportation of large quantities of Bakken crude oil to States, the EO helps ensure that local emergency responders have access to that information. Further, the information that the EO mandates railroads to provide to States is very specific, limited to one commodity (Bakken crude oil), more detailed than the information voluntarily shared pursuant to OT–55, and specifically designed to ensure that local emergency responders are provided sufficient information to confirm that they have an understanding of the volume, route, and frequency with which Bakken crude oil is transported through their jurisdictions so that they can prepare emergency response plans and resources accordingly. For these reasons, FRA strongly disagrees with the Commenters' assertion that the EO is not serving a useful purpose.
Finally, DOT notes that a pending Pipeline and Hazardous Materials Safety Administration Notice of Proposed Rulemaking (NPRM) proposes to codify into Federal regulations the terms of the EO.
Before OMB decides whether to approve these proposed collections of information, it must provide 30 days for public comment. 44 U.S.C. 3507(b); 5 CFR 1320.12(d). Federal law requires OMB to approve or disapprove paperwork packages between 30 and 60 days after the 30-day notice is published. 44 U.S.C. 3507(b)–(c); 5 CFR 1320.12(d);
The summary below describes the nature of the ICR and the expected burden. The revised request is being submitted for clearance by OMB as required by the PRA.
A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this notice in the
44 U.S.C. 3501–3520.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before November 3, 2014.
Comments should refer to docket number MARAD–2014–0125. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Linda Williams, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23–453, Washington, DC 20590. Telephone 202–366–0903, Email
As described by the applicant the intended service of the vessel CIAO is:
The complete application is given in DOT docket MARAD–2014–0125 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
The Department of the Treasury will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, Public Law 104–13, on or after the date of publication of this notice.
Comments should be received on or before November 3, 2014 to be assured of consideration.
Send comments regarding the burden estimate, or any other aspect of the information collection, including suggestions for reducing the burden, to (1) Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at
Copies of the submission(s) may be obtained by emailing
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
The Veterans Benefits Administration (VBA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before December 2, 2014.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Nancy J. Kessinger at (202) 632–8924 or FAX (202) 632–8925.
Under the PRA of 1995 (Pub. L. 104–13; 44 U.S.C. 3501–3521), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
By direction of the Secretary.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
The Veterans Benefits Administration (VBA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before December 2, 2014.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Nancy J. Kessinger at (202) 632–8924 or FAX (202) 632–8925.
Under the PRA of 1995 (Pub. L. 104–13; 44 U.S.C. 3501–3521), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
By direction of the Secretary.
Commodity Futures Trading Commission.
Proposed rule; advance notice of proposed rulemaking.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is proposing regulations to implement section 4s(e) of the Commodity Exchange Act (“CEA”), as added by section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). This provision requires the Commission to adopt initial and variation margin requirements for certain swap dealers (“SDs”) and major swap participants (“MSPs”). The proposed rules would establish initial and variation margin requirements for SDs and MSPs but would not require SDs and MSPs to collect margin from non-financial end users. In this release, the Commission is also issuing an Advance Notice of Proposed Rulemaking requesting public comment on the cross-border application of such margin requirements. The Commission is not proposing rules on this topic at this time. It is seeking public comment on several potential alternative approaches.
Comments must be received on or before December 2, 2014.
You may submit comments, identified by RIN 3038–AC97 and Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants, by any of the following methods:
• Agency Web site, via its Comments Online process at
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Please submit your comments using only one of these methods.
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from
John C. Lawton, Deputy Director, Division of Clearing and Risk, 202–418–5480,
On July 21, 2010, President Obama signed the Dodd-Frank Act.
Section 731 of the Dodd-Frank Act added a new section 4s to the CEA setting forth various requirements for SDs and MSPs. Section 4s(e) mandates the adoption of rules establishing margin requirements for SDs and MSPs.
The term Prudential Regulator is defined in section 1a(39) of the CEA, as amended by Section 721 of the Dodd-Frank Act. This definition includes the Federal Reserve Board (“FRB”); the Office of the Comptroller of the Currency (“OCC”); the Federal Deposit Insurance Corporation (“FDIC”); the Farm Credit Administration; and the Federal Housing Finance Agency.
The definition specifies the entities for which these agencies act as Prudential Regulators. These consist generally of federally insured deposit institutions, farm credit banks, federal home loan banks, the Federal Home Loan Mortgage Corporation, and the Federal National Mortgage Association. The FRB is the Prudential Regulator under section 4s not only for certain banks, but also for bank holding companies, certain foreign banks treated as bank holding companies, and certain subsidiaries of these bank holding companies and foreign banks. The FRB is not, however, the Prudential Regulator for nonbank subsidiaries of bank holding companies, some of which are required to be registered with the Commission as SDs or MSPs. In general, therefore, the Commission is required to establish margin requirements for all registered SDs and MSPs that are not subject to a Prudential Regulator. These include, among others, nonbank subsidiaries of bank holding companies, as well as certain foreign SDs and MSPs.
Specifically, section 4s(e)(1)(B) of the CEA provides that each registered SD
Section 4s(e)(2)(B) provides that the Commission shall adopt rules for SDs and MSPs, with respect to their activities as an SD or an MSP, for which there is not a Prudential Regulator imposing (i) capital requirements and (ii) both initial and variation margin requirements on all swaps that are not cleared by a registered derivatives clearing organization (“DCO”).
Section 4s(e)(3)(A) provides that to offset the greater risk to the SD or MSP and the financial system arising from the use of swaps that are not cleared, the requirements imposed under section 4s(e)(2) shall (i) help ensure the safety and soundness of the SD or MSP and (ii) be appropriate for the risk associated with the non-cleared swaps.
Section 4s(e)(3)(C) provides, in pertinent part, that in prescribing margin requirements the Prudential Regulator and the Commission shall permit the use of noncash collateral the Prudential Regulator or the Commission determines to be consistent with (i) preserving the financial integrity of markets trading swaps and (ii) preserving the stability of the United States financial system.
Section 4s(e)(3)(D)(i) provides that the Prudential Regulators, the Commission, and the Securities and Exchange Commission (“SEC”) shall periodically (but not less frequently than annually) consult on minimum capital requirements and minimum initial and variation margin requirements.
Section 4s(e)(3)(D)(ii) provides that the Prudential Regulators, Commission and SEC shall, to the maximum extent practicable, establish and maintain comparable minimum capital and minimum initial and variation margin requirements, including the use of noncash collateral, for SDs and MSPs.
Following extensive consultation and coordination with the Prudential Regulators, the Commission published proposed rules for public comment in 2011.
The Commission received 102 comment letters. The Prudential Regulators received a comparable number. The commenters included financial services industry associations, agricultural industry associations, energy industry associations, insurance industry associations, banks, brokerage firms, investment managers, insurance companies, pension funds, commercial end users, law firms, public interest organizations, and other members of the public. The commenters addressed numerous topics including applicability of the rules to certain products, applicability to certain market participants, margin calculation methodologies, two-way vs. one-way margin, margin thresholds, permissible collateral, use of independent custodians, rehypothecation of collateral, and harmonization with other regulators.
The Commission has taken the comments it received into consideration in developing the further proposal contained herein. This proposal differs in a number of material ways from the previous proposal
While the comments on the 2011 proposal were being reviewed, regulatory authorities around the world determined that global harmonization of margin standards was an important goal. The CFTC and the Prudential Regulators decided to hold their rulemakings in abeyance pending completion of the international efforts.
In October 2011, the Basel Committee on Banking Supervision (“BCBS”) and the International Organization of Securities Commissions (“IOSCO”), in consultation with the Committee on Payment and Settlement Systems (“CPSS”) and the Committee on Global Financial Systems (“CGFS”), formed a working group to develop international standards for margin requirements for uncleared swaps. Representatives of more than 20 regulatory authorities participated. From the United States, the CFTC, the FDIC, the FRB, the OCC, the Federal Reserve Bank of New York, and the SEC were represented.
In July 2012, the working group published a proposal for public comment.
After consideration of the comments on the proposal and the results of the QIS, the group published a near-final proposal in February 2013 and requested comment on several specific issues.
The final report was issued in September 2013.
The 2013 international framework recommends that appropriate margining practices be in place with respect to all derivative transactions that are not cleared by central counterparties (“CCPs”). The 2013 international framework does not include a margin requirement for physically settled foreign exchange (“FX”) forwards and swaps. The framework also would not apply initial margin requirements to the fixed physically-settled FX component of cross-currency swaps.
The 2013 international framework recommends bilateral exchange of initial and variation margin for non-cleared derivatives between covered entities. The precise definition of “covered entities” is to be determined by each national regulator, but in general should include financial firms and systemically important non-financial entities. Sovereigns, central banks, certain multilateral development banks, the Bank for International
Under the 2013 international framework, all covered entities that engage in non-cleared derivatives should exchange, on a bilateral basis, the full amount of variation margin with a zero threshold on a regular basis (
The 2013 international framework states that the potential future exposure of a non-cleared derivative should reflect an estimate of an increase in the value of the instrument that is consistent with a one-tailed 99% confidence level over a 10-day horizon (or longer, if variation margin is not collected on a daily basis), based on historical data that incorporates a period of significant financial stress.
The 2013 international framework permits the amount of initial margin to be calculated by reference to internal models approved by the relevant national regulator or a standardized margin schedule, but covered entities should not “cherry pick” between the two calculation methods. Models may allow for conceptually sound and empirically demonstrable portfolio risk offsets where there is an enforceable netting agreement in effect. However, portfolio risk offsets may only be recognized within, and not across, certain well-defined asset classes: credit, equity, interest rates and foreign exchange, and commodities. A covered entity using the standardized margin schedule may adjust the gross initial margin amount (notional exposure multiplied by the relevant percentage in the table) by a “net-to-gross ratio,” which is also used in the bank counterparty credit risk capital rules to reflect a degree of netting of derivative positions that are subject to an enforceable netting agreement.
The 2013 international framework recommends that national supervisors develop a definitive list of eligible collateral assets. The 2013 international framework includes examples of permissible collateral types, provides a schedule of standardized haircuts, and indicates that model-based haircuts may be appropriate. In the event that a dispute arises over the value of eligible collateral, the 2013 international framework provides that both parties should make all necessary and appropriate efforts, including timely initiation of dispute resolution protocols, to resolve the dispute and exchange any required margin in a timely fashion.
The 2013 international framework provides that collateral collected as initial margin from a “customer” (defined as a “buy-side financial firm”) should be segregated from the initial margin collector's proprietary assets. The initial margin collector also should give the customer the option to individually segregate its initial margin from other customers' margin. In very specific circumstances, the initial margin collector may use margin provided by the customer to hedge the risks associated with the customer's positions with a third party. To the extent that the customer consents to rehypothecation, it should be permitted only where applicable insolvency law gives the customer protection from risk of loss of initial margin in instances where either or both of the initial margin collector and the third party become insolvent. Where a customer has consented to rehypothecation and adequate legal safeguards are in place, the margin collector and the third party to which customer collateral is rehypothecated should comply with additional restrictions detailed in the 2013 international framework, including a prohibition on any further rehypothecation of the customer's collateral by the third party.
The 2013 international framework recommends that national supervisors establish margin requirements for transactions between affiliates as appropriate in a manner consistent with each jurisdiction's legal and regulatory framework.
Under the 2013 international framework, home-country supervisors may allow a covered entity to comply with a host-country's margin regime if the host-country margin regime is consistent with the 2013 international framework. A branch may be subject to the margin requirements of either the headquarters' jurisdiction or the host country.
The 2013 international framework phases in margin requirements between December 2015 and December 2019. Covered entities should begin exchanging variation margin by December 1, 2015. The date on which a covered entity should begin to exchange initial margin with a counterparty depends on the notional amount of non-cleared derivatives (including physically settled FX forwards and swaps) entered into both by its consolidated corporate group and by the counterparty's consolidated corporate group.
The Commission seeks comment on whether and how fluctuations resulting from exchange rate movements should be addressed. In particular, should these amounts be expressed in terms of a single currency in all jurisdictions to prevent such fluctuations? Should the amounts be adjusted over time if and when exchange rate movements necessitate realignment? Are there other approaches to deal with fluctuations resulting from significant exchange rate movements? Are there other issues that should be considered in connection to the effects of fluctuating exchange rates?
During the financial crisis of 2008–2009, DCOs met all their obligations without any financial support from the government. By contrast, significant sums were expended by governmental entities as the result of losses incurred in connection with uncleared swaps. For example, a unit of American International Group (“AIG”) entered into many credit default swaps and did not post initial margin or regularly pay variation margin on these positions.
A key reason for this difference in the performance of cleared and uncleared swaps is that DCOs use variation margin and initial margin as the centerpiece of their risk management programs while these tools often were not universally used in connection with uncleared swaps. Consequently, in designing the proposed margin rules for uncleared swaps, the Commission has built upon the sound practices for risk management employed by central counterparties for decades.
Variation margin serves as a mechanism for periodically recognizing changes in the value of open positions and reducing unrealized losses to zero. Open positions are marked to their current market value each day and funds are transferred between the parties to reflect any change in value since the previous time the positions were marked. This process prevents losses from accumulating over time and thereby reduces both the chance of default and the size of any default should one occur.
Initial margin serves as a performance bond against potential future losses. If a party fails to meet its obligation to pay variation margin, resulting in a default, the other party may use initial margin to cover some or all of any loss. Because the payment of variation margin prevents losses from compounding over an extended period of time, initial margin only needs to cover any additional losses that might accrue between the previous time that variation margin was paid and the time that the position is liquidated.
Well-designed margin systems protect both parties to a trade as well as the overall financial system. They serve both as a check on risk-taking that might exceed a party's financial capacity and as a resource that can limit losses when there is a failure by a party to meet its obligations.
The statutory provisions cited above reflect Congressional recognition that (i) margin is an essential risk-management tool and (ii) uncleared swaps pose greater risks than cleared swaps. As discussed further below, many commenters expressed concern that the imposition of margin requirements on uncleared swaps will be very costly for SDs and MSPs.
The discussion below addresses: (i) The products covered by the proposed rules; (ii) the market participants covered by the proposed rules; (iii); the nature and timing of the margin obligations; (iv) the methods of calculating initial margin; (v) the methods of calculating variation margin; (vi) permissible forms of margin; (vii) custodial arrangements; (viii) documentation requirements; (ix) the implementation schedule; and (x) advance notice of proposed rulemaking on the cross-border application of the rules.
In developing the proposed rules, the Commission staff worked closely with the staff of the Prudential Regulators.
The proposed rules are consistent with the 2013 international framework. In some instances, as contemplated in the framework, the proposed rules provide more detail than the framework. In a few other instances, the proposed rules are stricter than the framework. Any such variations from the framework are noted in the discussion below.
As noted above, section 4s(e)(2)(B)(ii) of the CEA directs the Commission to establish both initial and variation margin requirements for SDs and MSPs “on all swaps that are not cleared.” The scope provision of the proposed rules
The term “cleared swap” is defined in section 1a(7) of the CEA to include any swap that is cleared by a DCO registered with the Commission. The Commission notes, however, that SDs and MSPs also clear swaps through foreign clearing organizations that are not registered with the Commission. The Commission believes that a clearing organization that is not a registered DCO must meet certain basic standards in order to avoid creating a mechanism for evasion of the uncleared margin requirements. Accordingly, the Commission is proposing to include in the definition of cleared swaps certain swaps that have been accepted for clearing by an entity that has received a no-action letter from the Commission staff or exemptive relief from the Commission permitting it to clear such swaps for U.S. persons without being registered as a DCO.
The Commission requests comment on whether it is appropriate to exclude swaps that are cleared by an entity that is not a registered DCO. If so, the Commission further requests comment on whether the proposed rule captures the proper clearing organizations. For example, should the Commission require that the clearing organizations be qualifying central counterparties (“QCCPs”)
Because the pricing of swaps reflects the credit arrangements under which they were executed, it could be unfair to the parties and disruptive to the markets to require that the rules apply to positions executed before the applicable compliance dates. The rules, however, would permit SDs and MSPs voluntarily to include swaps executed before the applicable compliance date in portfolios margined pursuant to the proposed rules.
As a result of the determination by the Secretary of the Treasury to exempt foreign exchange swaps and foreign exchange forwards from the definition of swap,
In a cross-currency swap, the parties exchange principal and interest rate payments in one currency for principal and interest rate payments in another currency. The exchange of principal occurs upon the inception of the swap, with a reversal of the exchange of principal at a later date that is agreed upon at the inception of the swap. The foreign exchange transactions associated with the fixed exchange of principal in a cross-currency swap are closely related to the exchange of principal that occurs in the context of a foreign exchange forward or swap. Accordingly, the Commission is proposing to treat that portion of a cross-currency swap that is a fixed exchange of principal in a manner that is consistent with the treatment of foreign exchange forwards and swaps. This treatment of cross-currency swaps is limited to cross-currency swaps and does not extend to any other swaps such as non-deliverable currency forwards.
The Commission requests comment on the proposed treatment of products. In particular, commenters are invited to discuss the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
As noted above, section 4s(e)(2)(B) of the CEA directs the Commission to impose margin requirements on SDs and MSPs for which there is no Prudential Regulator (“covered swap entities” or “CSEs”).
Because different types of counterparties can pose different levels of risk, the Commission's proposed requirements would differ depending on the category of counterparty. The proposed rules would establish three categories of counterparty: (i) SDs and MSPs, (ii) financial end users,
a.
Financial end users would include any entity that (i) is specified in the definition, and (ii) is not an SD or MSP. The definition lists numerous entities whose business is financial in nature. The proposed rule also would permit the Commission to designate additional entities as financial end users if it identified additional entities whose activities and risk profile would warrant inclusion. As contemplated by the 2013 international framework, the CFTC proposal, which is the same as the Prudential Regulator's proposal, contains greater detail in defining financial end users than the international standards.
In developing the definition, the Commission and the Prudential Regulators sought to provide clarity about whether particular counterparties would be subject to the margin requirements of the proposed rule. The definition is an attempt to strike a balance between the need to capture all financial counterparties that pose significant risk to the financial system and the danger of being overly inclusive.
The Commission believes that financial firms generally present a higher level of risk than other types of counterparties because the profitability and viability of financial firms is more tightly linked to the health of the financial system than other types of counterparties. Because financial counterparties are more likely to default during a period of financial stress, they pose greater systemic risk and risk to the safety and soundness of the CSE.
The list of financial entities is based to a significant extent on Federal statutes that impose registration or chartering requirements on entities that engage in specified financial activities. Such activities include deposit taking and lending, securities and swaps dealing, investment advisory activities, and asset management.
Because Federal law largely looks to the States for the regulation of the business of insurance, the proposed definition broadly includes entities organized as insurance companies or supervised as such by a State insurance regulator. This element of the proposed definition would extend to reinsurance and monoline insurance firms, as well as insurance firms supervised by a foreign insurance regulator.
The proposal also would cover a broad variety and number of nonbank lending and retail payment firms that operate in the market. To this end, the proposal would include State-licensed or registered credit or lending entities
In addition, real estate investment companies would be financial end users, as they are entities that would be investment companies under section 3 of the Investment Company Act but for section 3(c)(5)(C). Furthermore, other securitization vehicles would be financial end users in cases where those vehicles are entities that are deemed not to be investment companies under section 3 of the Investment Company Act pursuant to Rule 3a–7. The Commission also notes that the category of investment companies registered with the SEC under the Investment Company Act would include registered investment companies as well as business development companies.
Under the proposed rule, those cooperatives that are financial institutions, such as credit unions, Farm Credit System banks and associations, and the National Rural Utilities Cooperative Finance Corporation would be financial end users because their sole business is lending and providing other financial services to their members, including engaging in swaps in connection with such loans.
The Commission remains concerned, however, that one or more types of financial entities might escape classification under the specific Federal or State regulatory regimes included in the proposed definition of a financial end user. Accordingly, the definition includes two additional prongs. First, the definition would cover an entity that is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets. The Commission requests comment on the extent to which there are (or may be in the future) pooled investment vehicles that are not captured by the other prongs of the definition (such as the provisions covering private funds under the Investment Advisers Act or commodity pools under the CEA). The Commission also requests comment on whether this aspect of the definition of financial end user provides sufficiently clear guidance to covered swap entities and market participants as to its intended scope, and whether it adequately maintains a distinction between financial end users and commercial end users.
Second, the proposal would allow the Commission to require a swap dealer and major swap participant (“covered swap entity”) to treat an entity as a financial end user for margin purposes, even if the person is not specifically listed within the definition of “financial end user” or if the entity is excluded from the definition of financial end user as described below. This provision was included out of an abundance of caution to act as a safety mechanism in the event that an entity didn't fall squarely within one of the listed categories but was effectively acting as a financial end user.
To address the classification of foreign entities as financial end users, the proposal would require the covered swap entity to determine whether a foreign counterparty would fall within another prong of the financial end user definition if the foreign entity was organized under the laws of the United States or any State. The Commission recognizes that this approach would impose upon covered swap entities the difficulties associated with analyzing a foreign counterparty's business activities in light of a broad array of U.S. regulatory requirements. The alternative, however, would require covered swap entities to gather a foreign counterparty's financial reporting data and determine the relative amount of enumerated financial activities in which the counterparty is engaged over a rolling period.
The definition of financial entities
The Commission notes that States would not be excluded from the definition of financial end user, as the term “sovereign entity” includes only central governments. The categorization of a State or particular part of a State as a financial end user depends on whether that part of the State is otherwise captured by the definition of financial end user. For example, a State entity that is a “governmental plan” under ERISA would meet the definition of financial end user.
For a foreign entity that was not a central government, a foreign regulator could request a determination whether the entity was a financial end user. Such a determination could extend to other similarly situated entities in that jurisdiction.
The Commission seeks comment on all aspects of the financial end user definition, including whether the definition has succeeded in capturing all entities that should be included. The Commission requests comment on whether there are additional entities that should be included as financial end users and, if so, how those entities should be defined. Further, the Commission also requests comment on whether there are additional entities that should be excluded from the definition of financial end user and why those particular entities should be excluded. The Commission also requests comment on whether another approach to defining financial end user (
The Commission requests comment on the costs and benefits of the proposed definition of financial end user. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
As noted above, banks would be financial end users under the proposal. They would be subject to initial margin requirements if they entered into uncleared swaps with CSEs and, as discussed below, had material swaps exposure. Staff of the Prudential Regulators have indicated that they expect that the proposed rule likely will have minimal impact on small banks.
Staff of the Prudential Regulators believe that the vast majority of small banks do not engage in swaps at or near that level of activity that would meet the material swaps exposure threshold. If, however, a small bank did exceed the threshold level, the Prudential Regulators believe it would be appropriate for the protection of both the CSE and the small bank for two-way initial margin to be posted. The Commission notes that, as discussed in more detail below, initial margin would only need to be posted to the extent it exceeded $65 million.
The proposed rule would require a CSE to exchange daily variation margin with a small bank, regardless of whether the institution had material swap exposure. However, the covered swap entity would only be required to collect variation margin from a small bank when the amount of both initial margin and variation margin required to be collected exceeded $650,000. The Prudential Regulators have indicated that they expect that the vast majority of small banks will have a daily margin requirement that is below this amount.
The Commission requests comment on all aspects of the proposed treatment of small banks. In particular, the Commission requests comment on the interaction of this proposal with clearing exemptions that have been granted.
The proposal generally would cover swaps between CSEs and their affiliates that are financial end users. The Commission notes that other applicable laws require transactions between banks and their affiliates to be on an arm's length basis. For example, section 23B of the Federal Reserve Act provides that many transactions between a bank and its affiliates must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the bank as those prevailing at the time for comparable transactions with or involving nonaffiliated companies.
The Commission requests comment on all aspects of the proposed treatment of transactions with affiliates. In particular, the Commission requests comment on the interaction of this proposal with clearing exemptions that have been granted.
The proposed definition of the term “multilateral development bank,” includes a provision encompassing “[a]ny other entity that provides financing for national or regional development in which the U.S. government is a shareholder or contributing member or which the Commission determines poses comparable credit risk.” The Commission seeks comment regarding this definition. In particular, is the criterion of comparability of credit risk appropriate for this definition? Should the Commission look to other characteristics of the entity in determining whether it should be within the definition of “multilateral development bank”?
A CSE would not be required to exchange initial margin with a financial end user if the financial end user did not have “material swaps exposure.”
This provision recognizes that a financial end user that has relatively smaller positions does not pose the same risks as a financial end user with
While adoption of a material swaps exposure threshold is consistent with the 2013 international framework,
The 2013 international framework defines smaller financial end users as those counterparties that have a gross aggregate amount of covered swaps below €8 billion, which, at current exchange rates, is approximately equal to $11 billion. The preliminary view of the Commission and the Prudential Regulators is that defining material swaps exposure as a gross notional exposure of $3 billion, rather than $11 billion, is appropriate because it reduces systemic risk without imposing undue burdens on covered swap entities, and therefore, is consistent with the objectives of the Dodd-Frank Act. This view is based on data and analyses that have been conducted since the publication of the 2013 international framework.
Specifically, the Commission and the Prudential Regulators have reviewed actual initial margin requirements for a sample of cleared swaps. These analyses indicate that there are a significant number of cases in which a financial end user would have a material swaps exposure level below $11 billion but would have a swap portfolio with an initial margin collection amount that significantly exceeds the proposed permitted initial margin threshold amount of $65 million. The intent of both the Commission and the 2013 international framework is that the initial margin threshold provide smaller counterparties with relief from the operational burden of measuring and tracking initial margin collection amounts that are expected to be below $65 million. Setting the material swaps exposure threshold at $11 billion appears to be inconsistent with this intent, based on the recent analyses.
The table below summarizes actual initial margin requirements for 4,686 counterparties engaged in cleared interest rate swaps. Each counterparty represents a particular portfolio of cleared interest rate swaps. Each counterparty had a swap portfolio with a total gross notional amount less than $11 billion and each is a customer of a CCP's clearing member. Column (1) displays the initial margin amount as a percentage of the gross notional amount. Column (2) reports the initial margin, in millions of dollars that would be required on a portfolio with a gross notional amount of $11 billion.
As shown in the table above, the average initial margin rate across all 4,686 counterparties, reported in Column (1), is 2.1 percent, which would equate to an initial margin collection amount, reported in Column (2), of $231 million on an interest rate swap portfolio with a gross notional amount of $11 billion. This average initial margin collection amount significantly exceeds the proposed permitted threshold amount of $65 million. Seventy-five percent of the 4,686 cleared interest rate swap portfolios exhibit an initial margin rate in excess of 0.6 percent, which equates to an initial margin amount on a cleared interest rate swap portfolio of $66 million (approximately equal to the proposed permitted threshold amount).
The data above represent actual margin requirements on a sample of interest rate swap portfolios that are cleared by a single CCP. Some CCPs also provide information on the initial margin requirements on specific and representative swaps that they clear. The Chicago Mercantile Exchange (“CME”), for example, provides information on the initial margin requirements for cleared interest rate swaps and credit default swaps that it clears. This information does not represent actual margin requirements on actual swap portfolios that are cleared by the CME but does represent the initial margin that would be required on specific swaps if they were cleared at the CME. The table below presents the initial margin requirements for two swaps that are cleared by the CME.
According to the CME, the initial margin requirement on the interest rate swap and the credit default swap are both roughly two percent of the gross notional amount. This initial margin rate translates to an initial margin amount of roughly $216 million on a swap portfolio with a gross notional amount of $11 billion. Accordingly, this data also indicates that the initial margin collection amount on a swap portfolio with a gross notional size of $11 billion could be significantly larger than the proposed permitted initial margin threshold of $65 million.
In addition to the information provided in the tables above, the Commission's preliminary view is that additional considerations suggest that the initial margin collection amounts associated with uncleared swaps could be even greater than those reported in the tables above. The tables above represent initial margin requirements on cleared interest rate and credit default index swaps. Uncleared swaps in other asset classes, such as single name equity or single name credit default swaps, are likely to be riskier and hence would require even more initial margin. In addition, uncleared swaps often contain complex features, such as nonlinearities, that make them even riskier and would hence require more initial margin. Finally, uncleared swaps are generally expected to be less liquid than cleared swaps and must be margined, under the proposed rule, according to a ten-day close-out period rather than the five-day period required for cleared swaps. The data presented above pertains to cleared swaps that are margined according to a five-day and not a ten-day close-out period. The requirement to use a ten-day close-out period would further increase the initial margin requirements of uncleared versus cleared swaps.
In light of the data and considerations noted above, the Commission's preliminary view is that it is appropriate and consistent with the intent of the 2013 international framework to identify a material swaps exposure with a gross notional amount of $3 billion rather than $11 billion (€8 billion) as is suggested by the 2013 international framework. Identifying a material swaps exposure with a gross notional amount of $3 billion is more likely to result in an outcome in which entities with a gross notional exposure below the material swaps exposure amount would be likely to have an initial margin collection amount below the proposed permitted initial margin threshold of $65 million. The Commission does recognize, however, that even at the lower amount of $3 billion, there are likely to be some cases in which the initial margin collection amount of a portfolio that is below the material swaps exposure amount will exceed the proposed permitted initial margin threshold amount of $65 million. The Commission's preliminary view is that such instances should be relatively rare and that the operational benefits of using a simple and transparent gross notional measure to define the material swaps exposure amount are substantial.
The Commission notes that under the implementation schedule set out below, this requirement would not take effect until January 1, 2019.
The Commission requests comment on all aspects of the material swaps exposure provision. In particular, the Commission requests comment on the proposal to establish a level that is lower than the level set forth in the 2013 international framework. Are there alternative measurement methodologies that do not rely on gross notional amounts that should be used? Does the proposed rule's use and definition of the material swaps exposure raise any competitive equity issues that should be considered? Are there any other aspects of the material swaps exposure that should be considered by the Commission?
The Commission requests comment on the costs and benefits of the proposed definition of material swaps exposure. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
Non-financial end users would include any entity that was not an SD, an MSP, or a financial end user. The proposal would not require CSEs to exchange margin with non-financial end users. The Commission believes that such entities, which generally are using swaps to hedge commercial risk, pose less risk to CSEs than financial entities. Therefore, under section 4s(e)(3)(A)(ii) of the CEA, applying a different standard to trades by CSEs with non-financial entities than to trades by CSEs with covered counterparties would be “appropriate to the risk.”
This approach is consistent with Congressional intent. Senior Congressional leaders have stated that they do not believe that non-financial end users should be required to post margin for uncleared swaps.
The Commission's proposal is generally consistent with the proposal of the Prudential Regulators but differs in some particulars. The Prudential Regulators' proposal contains the following provision:
A covered swap entity is not required to collect initial margin with respect to any non-cleared swap or non-cleared security-based swap with a counterparty that is neither a financial end user with material swaps exposure nor a swap entity but shall collect initial margin at such times and in such forms (if any) that the covered swap entity determines appropriately address the credit risk posed by the counterparty and the risks of such non-cleared swaps and non-cleared security-based swaps.
The Commission's proposal does not contain this provision.
The Commission's proposal contains other provisions designed to address the mandate under section 4s(e)(3)(A)(i) that Commission rules “help ensure the safety and soundness” of SDs and MSPs. First, as discussed further below, the rules would require CSEs to enter into certain documentation with all counterparties, including non-financial entities, to provide clarity about the parties' respective rights and obligations.
Second, the proposal would require each CSE to calculate hypothetical initial and variation margin amounts each day for positions held by non-financial entities that have material swaps exposure to the covered counterparty.
Subject to thresholds discussed below, the proposal would require each CSE to collect initial margin from, and to post initial margin with, each covered counterparty on or before the business day after execution
Recognizing that SDs and MSPs pose greater risk to the markets and the financial system than other swap market participants, Congress established a comprehensive regulatory scheme for them including registration, recordkeeping, reporting, margin, capital, and business conduct requirements. Accordingly, under the mandate of section 4s(e)(3)(C) to preserve the financial integrity of markets trading swaps and to preserve the stability of the United States financial system, the Commission is proposing to require SDs and MSPs to collect initial margin from, and to post initial margin with, one another.
Similarly, as discussed above, the Commission believes that financial end users with material swaps exposure potentially pose greater risk to CSEs and to the financial system than non-financial end users or financial end users with smaller aggregate exposures. Accordingly, under the mandate of section 4s(e)(3)(A) to help ensure the safety and soundness of SDs and MSPs, the Commission is proposing to require SDs and MSPs to collect initial margin from, and to post initial margin with, financial end users.
Notably, the proposal would require both collecting and posting of initial margin by CSEs (“two-way margin”). Two-way margin helps to ensure the safety and soundness of CSEs. Daily collection of initial margin increases the safety and soundness of the CSE by providing collateral to cover potential future exposure from each counterparty. That is, if a counterparty fails to meet an obligation, the CSE can liquidate the initial margin that it holds to cover some or all of the loss. But daily posting of initial margin also helps to ensure the safety and soundness of a CSE by making it more difficult for the CSE to build up exposures that it cannot fulfill. That is, the requirement that a CSE post initial margin acts as a discipline on its risk taking. The requirement also would make it more difficult for a rogue trader to hide his positions.
In the wake of clearing mandates, uncleared swaps are likely to be more customized and consequently trade in a less liquid market than cleared swaps. As a result, uncleared swaps potentially might take a longer time and require a greater price premium to be liquidated than cleared swaps, particularly in distressed market conditions. Initial margin is designed to address these risks.
The proposal contains a provision stating that a CSE would not be deemed to have violated its obligation to collect initial margin if it took certain steps.
The Commission requests comment on all aspects of the proposal relating to the nature and timing of initial margin. In particular, the Commission requests comment on two-way initial margin.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
Subject to a minimum transfer amount discussed below, the proposal would require each CSE to collect variation margin from, and to pay variation margin to, each counterparty that is a swap entity or a financial end user, on or before the end of the business day after execution for each swap with that counterparty.
Two-way variation margin would protect the safety and soundness of CSEs for the same reasons discussed above in connection with initial margin. Two-way variation margin has been a keystone of the ability of DCOs to manage risk. Each day, starting on the day after execution, current exposure is removed from the market through the payment and collection of variation margin.
If two-way variation margin were not required for uncleared swaps between CSEs and counterparties that are swap entities or financial end users, current exposures might accumulate beyond the financial capacity of a counterparty. In contrast to initial margin, which is designed to cover potential future exposures, variation margin addresses actual current exposures, that is, losses that have already occurred. Unchecked accumulation of such exposures was one of the characteristics of the financial crisis which, in turn, led to the enactment of the Dodd-Frank Act.
In contrast to the initial margin requirement, which would only apply to financial end users with material swaps exposure, the proposed variation margin requirement would apply to all financial end users regardless of whether the entity had material swaps exposure. This is consistent with international standards.
The proposal would permit netting of variation margin across swaps.
As is the case for initial margin, the proposal contains a provision stating that a CSE would not be deemed to have violated its obligation to collect variation margin if it took certain steps.
The Commission requests comment on all aspects of the proposal relating to the nature and timing of variation margin.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
Under the proposed rules, a CSE could calculate initial margin using either a model-based method or a standardized table-based method.
When a CSE entered into a swap with a counterparty that was either another CSE or an SD/MSP subject to a Prudential Regulator, each party would bear the responsibility for calculating the amount that it would collect.
When, however, a CSE entered into a swap with a financial entity, the CSE would have responsibility for calculating both the amount it collected and the amount it posted.
As noted, the rules would permit CSEs and their covered counterparties to establish margin thresholds of up to $65 million. This means that the parties could agree not to post and/or to collect any margin amount falling below this threshold level. For covered entities that were part of a consolidated group, a single threshold would be applied across the consolidated group, not individually to each entity.
Concern has been expressed by some in the industry about the potential expense of two-way margin. The $65 million threshold is designed to mitigate that expense while continuing to protect the financial integrity of CSEs and the financial system. Smaller exposures would be permitted to go uncollateralized, but a significant percentage of all large exposures would be supported by collateral.
For example, if the initial margin calculated for a particular trade were $55 million, the CSE would not be required to post or to collect initial margin because the amount would be below the $65 million threshold. If the margin amount were $75 million, the CSE would only be required to post and to collect $10 million, the amount the margin calculation exceeded the $65 million threshold.
In order to reduce transaction costs, the proposal would establish a “minimum transfer amount” of $650,000.
For example, if a party posted $80 million as initial margin on Monday and the requirement increased to $80,400,000 on Tuesday, the party would not be required to post additional funds on Tuesday because the $400,000 increase would be less than the minimum transfer amount. If, however, on Wednesday, the requirement increased by another $400,000 to $80,800,000, the party would be required to post the entire $800,000 additional amount.
The Commission requests comment on the $65 million threshold and the $650,000 minimum transfer amount. The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
Consistent with international standards, the proposal would require CSEs to obtain the written approval of the Commission before using a model to calculate initial margin.
Given the central place of modeling in most margin systems and the complexity of the process, the Commission believes that these oversight provisions are necessary. The resources that would be needed, however, to initially review and to periodically assess margin models present a significant challenge to the Commission. To address this issue, the Commission would seek to coordinate with both domestic and foreign authorities in the review of models.
In many instances, CSEs whose margin models would be subject to Commission review would be affiliates of entities whose margin models would be subject to review by one of the Prudential Regulators. In such situations, the Commission would coordinate with the Prudential Regulators in order to avoid duplicative efforts and to provide expedited approval of models that a Prudential Regulator had already approved. For example, if a Prudential Regulator had approved the model of a depository institution registered as an SD, Commission review of a comparable model used by a non-bank affiliate of that SD would be greatly facilitated. Similarly, the Commission would coordinate with the SEC for CSEs that are dually registered and would coordinate with foreign regulators that had approved margin models for foreign CSEs. For CSEs that that wished to use models that were not reviewed by a Prudential Regulator, the SEC, or a foreign regulator, the Commission would coordinate, if possible, with the National Futures Association (“NFA”) as each CSE would be required to be a member of the NFA.
The Commission requests comment on all aspects of the proposed margin approval process. Specifically, the Commission requests comment on the appropriateness and feasibility of coordinating with the Prudential Regulators, the SEC, foreign regulators, and the NFA in this regard.
The Commission is also considering whether it would be appropriate to provide for provisional approval upon the filing of an application pending review. The Commission requests comment on the appropriateness of such an approach.
In order to expedite the review of models further, the Commission is proposing to delegate authority to staff to perform the functions described above. As is the case with existing delegations to staff, the Commission would continue to reserve the right to perform these functions itself at any time.
The Commission requests comment on whether additional procedural detail is appropriate. For example, should time frames be specified for completion of any of the functions?
To the extent that more than one uncleared swap is executed pursuant to an eligible master netting agreement (“EMNA”)
The proposal defines EMNA as any written, legally enforceable netting agreement that creates a single legal obligation for all individual transactions covered by the agreement upon an event of default (including receivership, insolvency, liquidation, or similar proceeding) provided that certain conditions are met. These conditions include requirements with respect to the covered swap entity's right to terminate the contract and to liquidate collateral and certain standards with respect to legal review of the agreement to ensure that it meets the criteria in the definition.
The Commission requests comment on all aspects of the proposed definition of EMNA. In particular, the Commission requests comment on whether the proposal provides sufficient clarity regarding the laws of foreign jurisdictions that provide for limited stays to facilitate the orderly resolution of financial institutions. The Commission also seeks comment regarding whether the provision for a contractual agreement subject by its terms to limited stays under resolution regimes adequately encompasses potential contractual agreements of this nature or whether this provision needs to be broadened, limited, clarified, or modified in some manner.
The proposal specifies a number of conditions that a model would have to meet to receive Commission approval.
The model must calculate potential future exposure using a one-tailed 99 percent confidence interval for an increase in the value of the uncleared swap or netting set of uncleared swaps due to an instantaneous price shock that is equivalent to a movement in all material underlying risk factors, including prices, rates, and spreads, over a holding period equal to the shorter of ten business days or the maturity of the swap.
The required 10-day close-out period assumption is consistent with counterparty credit risk capital requirements for banks. The calculation must be performed directly over a 10-day period. In the context of bank regulatory capital rules, a long horizon calculation (such as 10 days), under certain circumstances, may be indirectly computed by making a calculation over a shorter horizon (such as 1 day) and then scaling the result of the shorter horizon calculation to be consistent with the longer horizon. The proposed rule does not provide this option to covered swap entities using an approved initial margin model. The Commission's understanding is that the rationale for allowing such indirect calculations that rely on scaling shorter horizon calculations has largely been based on computational and cost considerations that were material in the
The model may reflect offsetting exposures, diversification, and other hedging benefits for uncleared swaps that are governed by the same EMNA by incorporating empirical correlations within the broad risk categories, provided the covered swap entity validates and demonstrates the reasonableness of its process for modeling and measuring hedging benefits. The categories are agriculture, credit, energy, equity, foreign exchange/interest rate, metals, and other. Empirical correlations under an eligible master netting agreement may be recognized by the model within each broad risk category, but not across broad risk categories. The sum of the initial margins calculated for each broad risk category must be used to determine the aggregate initial margin due from the counterparty.
For example, if a CSE entered into two credit swaps and two energy swaps with a single counterparty, the CSE could use an approved initial margin model to perform two separate calculations: the initial margin calculation for the credit swaps and the initial margin calculation for the energy commodity swaps. Each calculation could recognize offsetting and diversification within the credit swaps and within the energy commodity swaps. The result of the two separate calculations would then be summed together to arrive at the total initial margin amount for the four swaps (two credit swaps and two energy commodity swaps).
The Commission believes that the correlations of exposures across unrelated asset categories, such as credit and energy commodities, are not stable enough over time, and, in particular, during periods of financial stress, to be recognized in a regulatory margin model requirement. The Commission further believes that a single commodity asset class is too broad and that the relationship between disparate commodity types, such as aluminum and corn, are not stable enough to warrant hedging benefits within the initial margin model. The Commission seeks comment on this specific treatment of asset classes for initial margin purposes and whether fewer or more distinctions should be made.
The Commission is aware that some swaps may be difficult to classify into one and only one asset class because some swaps may have characteristics that relate to more than one asset class. Under the proposal, the Commission expects that the CSE would make a determination as to which asset class best represents the swap based on a holistic view of the underlying swap. As a specific example, many swaps may have some sensitivity to interest rates even though most of the swap's sensitivity relates to another asset class such as equity or credit. The Commission seeks comment on whether or not this approach is reasonable and whether or not instances in which the classification of a swap into one of the broad asset classes described above is problematic and material. If such instances are material, the Commission seeks comment on alternative approaches to dealing with such swaps.
The proposed rule requires the initial margin model to be calibrated to a period of financial stress. In particular, the initial margin model must employ a stress period calibration for each broad asset class (agricultural commodity, energy commodity, metal commodity, other commodity, credit, equity, and interest rate and foreign exchange). The stress period calibration employed for each broad asset class must be appropriate to the specific asset class in question. While a common stress period calibration may be appropriate for some asset classes, a common stress period calibration for all asset classes would only be considered appropriate if it is appropriate for each specific underlying asset class. Also, the time period used to inform the stress period calibration must include at least one year, but no more than five years, of equally-weighted historical data.
This proposed requirement is intended to balance the tradeoff between shorter and longer data spans. Shorter data spans are sensitive to evolving market conditions but may also overreact to short-term and idiosyncratic spikes in volatility. Longer data spans are less sensitive to short-term market developments but may also place too little emphasis on periods of financial stress, resulting in requirements that are too low. The requirement that the data be equally weighted is intended to establish a degree of consistency in model calibration while also ensuring that particular weighting schemes do not result in excessive margin requirements during short-term bouts of heightened volatility.
The model must use risk factors sufficient to measure all material price risks inherent in the transactions for which initial margin is being calculated. The risk categories must include, but should not be limited to, foreign exchange or interest rate risk, credit risk, equity risk, agricultural commodity risk, energy commodity risk, metal commodity risk, and other commodity risk, as appropriate. For material exposures in significant currencies and markets, modeling techniques must capture spread and basis risk and incorporate a sufficient number of segments of the yield curve to capture differences in volatility and imperfect correlation of rates along the yield curve.
The initial margin model must include all material risks arising from the nonlinear price characteristics of option positions or positions with embedded optionality and the sensitivity of the market value of the positions to changes in the volatility of the underlying rates, prices, or other material risk factors.
The proposed rule requires daily calculation of initial margin. The use of an approved initial margin model may result in changes to the initial margin amount on a daily basis for a number of reasons.
First, the characteristics of the swaps that have a material effect on their risk may change over time. As an example, the credit quality of a corporate reference entity upon which a credit default swap contract is written may undergo a measurable decline.
Second, any change to the composition of the swap portfolio that results in the addition or deletion of swaps from the portfolio would result in a change in the initial margin amount.
Third, the underlying parameters and data that are used in the model may change over time as underlying conditions change. For example, a new period of financial stress may be encountered in one or more asset classes. While the stress period calibration is intended to reduce the extent to which small or moderate changes in the risk environment influence the initial margin model's risk assessment, a significant change in the risk environment that affects the required stress period calibration could influence the margin model's overall assessment of the risk of a swap.
Fourth, quantitative initial margin models are expected to be maintained and refined on a continuous basis to
The proposed rule requires that a model used for calculating initial margin requirements be benchmarked periodically against observable margin standards to ensure that the initial margin required is not less than what a CCP would require for similar transactions.
The proposal would require CSEs to implement certain control mechanisms.
The CSE must maintain a risk management unit in accordance with existing Commission Regulation 23.600(c)(4)(i) that reports directly to senior management and is independent from the business trading units.
If the validation process revealed any material problems with the model, the CSE would be required to notify the Commission of the problems, describe to the Commission any remedial actions being taken, and adjust the model to insure an appropriate amount of initial margin is being calculated.
The CSE must have an internal audit function independent of the business trading unit that at least annually assesses the effectiveness of the controls supporting the model. The internal audit function must report its findings to the CSE's governing body, senior management, and chief compliance officer at least annually.
Given the complexity of margin models and the incentives to calculate lower margin amounts, the Commission believes that rigorous internal oversight is necessary to ensure proper functioning.
The Commission seeks comment on all aspects of the proposed standards for models and the proposed levels of regulatory review.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
Some CSEs might not have the internal technical resources to develop initial margin models or have simple portfolios for which they want to avoid the complexity of modeling. The table-based method would allow a CSE to calculate its initial margin requirements using a standardized table.
The Commission recognizes that using a notional amount measure of initial margin without any adjustment for offsetting exposures, diversification, and other hedging benefits might not accurately reflect the size or risks of a CSE's swap-based positions in many situations. Moreover, not adequately recognizing the benefits of offsets, diversification, and hedging might lead to large disparities between model-based and table-based initial margin requirements. These disparities might give rise to inequities between CSEs that elect to use an approved model and CSEs that rely on the table for computing their respective initial margin requirements.
To address these potential inequities, the Commission is proposing an adjustment to the table-based initial margin requirement. Specifically, the Commission would allow a CSE to calculate a net-to-gross ratio adjustment.
The net-to-gross ratio compares the net current replacement cost of the uncleared portfolio (in the numerator) with the gross current replacement cost of the uncleared portfolio (in the denominator). The net current replacement cost is the cost of replacing the entire portfolio of swaps that is covered under an eligible master netting agreement. The gross current replacement cost is the cost of replacing those swaps that have a strictly positive replacement cost.
For example, consider a portfolio that consists of two uncleared swaps in which the mark-to-market value of the first swap is $10 (
The net-to-gross ratio and gross standardized initial margin amounts provided in the table are used in conjunction with the notional amount of the transactions in the underlying swap portfolio to arrive at the total initial margin requirement as follows:
Standardized Initial Margin = 0.4 × Gross Initial Margin + 0.6 × NGR × Gross Initial Margin
Gross Initial Margin = the sum of the notional value multiplied by the applicable initial margin requirement percentage from the table A for each uncleared swap in the portfolio
The Commission notes that the calculation of the net-to-gross ratio for margin purposes must be applied only to swaps subject to the same EMNA and that the calculation is performed across transactions in disparate asset classes within a single netting agreement. (Thus, all non-cleared swaps subject to the same EMNA can be netted against each other in the calculation of the net-to-gross ratio. By contrast, under a model, netting is only permitted within each asset class). This approach is consistent with the standardized counterparty credit risk capital requirements.
The Commission also notes that if a counterparty maintains multiple swap portfolios under multiple EMNAs, the standardized initial margin amounts would be calculated separately for each portfolio with each calculation using the gross initial margin and net-to-gross ratio that is relevant to each portfolio. The total standardized initial margin would be the sum of the standardized initial margin amounts for each portfolio.
The proposed net-to-gross ratio adjustment is consistent with international standards.
The Commission seeks comment on all aspects of the proposed table-based approach. The Commission notes that the BCBS has recently adopted a new method for the purpose of capitalizing counterparty credit risk.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
Under the proposal, each CSE would be required to calculate variation margin for itself and for each covered counterparty using a methodology and inputs that to the maximum extent practicable and in accordance with existing Regulation 23.504(b)(4) rely on recently-executed transactions, valuations provided by independent third parties, or other objective criteria.
The proposal would also set forth several control mechanisms.
These provisions are consistent with international standards
The Commission believes that the accurate valuation of positions and the daily payment of variation margin to remove accrued risk is a critical element in assuring the safety and soundness of CSEs and in preserving the financial integrity of the markets. The Commission believes that its experience with cleared markets
The Commission believes that the proposed provisions avoid potential miscalculations and would allow the variation margin calculations to be monitored and, thereby, forestall potential problems that could exacerbate a crisis. These measures are designed to be prudent safeguards to be used to address weaknesses that may only become apparent over time.
The Commission seeks comment on all aspects of the proposed requirements for calculating variation margin.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
In general, the Commission believes that margin assets should share the following fundamental characteristics. The assets should be liquid and, with haircuts, hold their value in times of financial stress. The value of the assets should not exhibit a significant correlation with the creditworthiness of the counterparty or the value of the swap portfolio.
Guided by these principles, the Commission is proposing that CSEs may only post or accept certain assets to meet initial margin requirements to or from covered counterparties.
These are assets for which there are deep and liquid markets and, therefore, assets that can be readily valued and easily liquidated. This list includes a number of assets that were not included in the 2011 proposal. This is responsive to a number of commenters who expressed concern about the narrowness of that list and the potential that there would be insufficient available collateral.
The Commission notes that any debt security issued by a U.S. Government-sponsored enterprise that is not operating with capital support or another form of direct financial assistance from the U.S. government
The Commission also notes that eligible collateral would include other publicly-traded debt that has been deemed acceptable as initial margin by a Prudential Regulator.
Under the proposal, certain assets would be prohibited from use as initial margin.
The Commission requests comment on the securities subject to this restriction, and, in particular, on whether securities issued by other entities, such as non-bank systemically important financial institutions designated by the Financial Stability Oversight Council, also should be excluded from the list of eligible collateral.
Counterparties that wished to rely on assets that do not qualify as eligible collateral under the proposed rule still would be able to pledge those assets with a lender in a separate arrangement, such as collateral transformation arrangements, using the cash or other eligible collateral received from that separate arrangement to meet the minimum margin requirements.
Moreover, the Commission notes that the proposal would not restrict the types of collateral that could be collected or posted to satisfy margin terms that are bilaterally negotiated above required amounts. For example, if, notwithstanding the $65 million threshold, a CSE decided to collect initial margin to protect itself against the credit risk of a particular counterparty, the CSE could accept any form of collateral.
Except for U.S. dollars and the currency in which the payment obligations of the swap is required, assets posted as required initial margin would be subject to haircuts in order to address the possibility that the value of the collateral could decline during the period that it took to liquidate a swap position in default. The proposed collateral haircuts have been calibrated to be broadly consistent with valuation changes observed during periods of financial stress.
Because the value of noncash collateral and foreign currency may change over time, the proposal would require a CSE to monitor the value of such collateral previously collected to satisfy initial margin requirements and, to the extent the value of such collateral has decreased, to collect additional collateral with a sufficient value to ensure that all applicable initial margin requirements remain satisfied.
The Commission seeks comment on all aspects of the proposed requirements for eligible collateral for initial margin. In particular, the Commission requests comments on whether the list should be expanded or contracted in any way. If so, subject to what terms and conditions?
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
The proposal would require that variation margin be paid in U.S. dollars, or a currency in which payment obligations under the swap are required to be settled.
The proposal is narrower than the 2011 proposal which also permitted U.S. Treasury securities.
In this regard, the Commission notes that central counterparties generally require that variation margin be paid in cash. U.S. law applicable to cleared swaps is consistent with this practice. Section 5b(c)(2)(E) of the CEA requires derivatives clearing organizations to “complete money settlements on a timely basis (but not less frequently than once each business day).” CFTC Regulation 39.14(a)(1) defines “settlement” as, among other things, “payment and receipt of variation margin for futures, options, and swaps.” CFTC Regulation 39.14(b) requires that “except as otherwise provided by Commission order, derivatives clearing organizations shall effect a settlement with each clearing member at least once each business day.”
The Commission believes that this change from the 2011 proposal is appropriate because it better reflects that counterparties to swap transactions generally view variation margin payments as the daily settlement of their exposure(s) to one another. Additionally, limiting variation margin to cash should sharply reduce the potential for disputes over the value of variation margin.
Under this proposed rule, the value of cash paid to satisfy variation margin requirements is not subject to a haircut. Variation margin payments reflect gains and losses on a swap transaction, and payment or receipt of variation margin generally represents a transfer of ownership. Therefore, haircuts are not a
The proposal is stricter than international standards which do not require that variation margin be in cash.
The Commission seeks comment on all aspects of the proposed requirements for forms of variation margin.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
The proposal sets forth requirements for the custodial arrangements for initial margin posted for transactions between CSEs and covered counterparties.
Each CSE would be required to enter into custodial agreements containing specified terms. These would include a prohibition on rehypothecating the margin assets and standards for the substitution of assets.
The proposed rules are consistent with international standards except that international standards would allow rehypothecation under certain circumstances.
The proposed approach is grounded in several provisions of section 4s(e) of the CEA. First, section 4s(e)(3)(A)(i) mandates that margin rules “help ensure the safety and soundness of [SDs] and [MSPs].” Maintaining margin collateral at an independent custodian subject to specified terms protects both parties to a transaction by preventing assets from being lost or misused. In particular, a prohibition on rehypothecation enhances safety by avoiding the possibility that a margin asset will be lost because of the failure of a third party who was not a party to the original transaction.
Second, section 4s(e)(3)(C) mandates that margin rules preserve “the financial integrity of the markets trading swaps” and “the stability of the United States financial system.” Maintaining margin collateral at an independent custodian preserves financial integrity and financial stability by preventing the same asset from supporting multiple positions. If an SD could take collateral posted by a counterparty for one swap and reuse it to margin a second swap with another SD, and that SD could, in turn, do the same, this would increase leverage in the system and create the possibility of a cascade of defaults if one of these firms failed.
Third, section 4s(e)(3)(A) refers to the “greater risk” to SDs, MSPs, and the financial system “arising from the use of swaps that are not cleared.” It mandates rules “appropriate for the risk” associated with uncleared swaps. Margin posted by customers to futures commission merchants (“FCMs”) and by FCMs to DCOs for cleared swaps is subject to segregation requirements.
The proposed rules can be harmonized with section 4s(l) of the CEA which authorizes counterparties of an SD or an MSP to request that margin be segregated. As discussed above, covered counterparties pose risk to the financial system. The primary purpose of the proposed custodial arrangements is preservation of the financial integrity of the markets and the U.S. financial system although the arrangements will also have the effect of protecting individual market participants. Section 4s(l) is not made superfluous by the proposed rules because it would still be available for financial end users with less than material swaps exposure, for financial end users that post initial margin in excess of the required amount, and for non-financial end users that post initial margin. Such entities would be posting margin, by agreement, with SDs or MSPs. Section 4s(l) would provide them with an opportunity to obtain additional protection if they desired.
The Commission previously adopted rules implementing section 4s(l).
First, the proposal would amend § 23.701(a)(1) to read as follows: Notify each counterparty to such transaction that the counterparty has the right to require that any Initial Margin the counterparty provides in connection with such transaction be segregated in accordance with §§ 23.702 and 23.703
Second, the proposal would amend § 23.701(d) to read as follows: Prior to confirming the terms of any such swap, the swap dealer or major swap participant shall obtain from the counterparty confirmation of receipt by the person specified in paragraph (c) of this section of the notification specified in paragraph (a) of this section, and an election,
Third, the proposal would amend § 23.701(f) to read as follows: A counterparty's election,
The Commission seeks comment on all aspects of the proposed requirements regarding custodial arrangements.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
The proposal sets forth documentation requirements for CSEs.
The international standards do not contain a specific requirement for documentation. The requirements in the Prudential Regulators' proposal are consistent with the Commission proposal but the Commission proposal contains additional elements.
The Commission proposal contains a cross-reference to an existing Commission rule which already imposes documentation requirements on SDs and MSPs.
The Commission seeks comment on all aspects of the proposed requirements for documentation.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
The proposed rules establish the following implementation schedule:
December 1, 2015 for the requirements in § 23.153 for variation margin;
December 1, 2015 for the requirements in § 23.152 for initial margin for any uncleared swaps where both (i) the CSE combined with all its affiliates and (ii) its counterparty combined with all its affiliates, have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards, and foreign exchange swaps in June, July, and August 2015 that exceeds $4 trillion, where such amounts are calculated only for business days;
December 1, 2016 for the requirements in § 23.152 for initial margin for any uncleared swaps where both (i) the CSE combined with all its affiliates and (ii) its counterparty combined with all its affiliates, have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards, and foreign exchange swaps in June, July and August 2016 that exceeds $3 trillion, where such amounts are calculated only for business days;
December 1, 2017 for the requirements in § 23.152 for initial margin for any uncleared swaps where both (i) the CSE combined with all its affiliates and (ii) its counterparty combined with all its affiliates have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards, and foreign exchange swaps in June, July and August 2017 that exceeds $2 trillion, where such amounts are calculated only for business days;
December 1, 2018 for the requirements in § 23.152 for initial margin for any uncleared swaps where both (i) the CSE combined with all its affiliates and (ii) its counterparty combined with all its affiliates have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards, and foreign exchange swaps in June, July and August 2018 that exceeds $1 trillion, where such amounts are calculated only for business days;
December 1, 2019 for the requirements in § 23.152 for initial margin for any other CSE with respect to uncleared swaps entered into with any other counterparty.
This extended schedule is designed to give market participants ample time to develop the systems and procedures necessary to exchange margin and to make arrangements to have sufficient assets available for margin purposes. The requirements would be phased-in in steps from the largest covered parties to the smallest.
Variation margin would be implemented on the first date for two reasons. First, a significant part of the market currently pays variation margin so full implementation would be less disruptive. Second, the elimination of current exposures through the daily use of variation margin would be an effective first step in enhancing the safety and soundness of market participants and the financial integrity of the markets.
The proposal is consistent with international standards except for the 8 billion euro threshold, discussed above, that would apply starting Dec. 1, 2019 under the international standards.
The Commission requests comment on the costs and benefits of the proposed approach. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
The Commission requests comment on all aspects of the proposed rules. In particular, as noted above, the Commission invites comments on the potential costs and benefits of each provision. Commenters are urged to quantify the costs and benefits, if practicable. Commenters also may suggest alternatives to the proposed approach where the commenters believe that the alternatives would be appropriate under the CEA.
Section 2(i) of the CEA
Section 2(i) provides the Commission with express authority over activities outside the United States relating to swaps when certain conditions are met.
In this Advance Notice of Proposed Rulemaking, the Commission is considering three approaches to applying the margin requirements to Commission-registered SDs and MSPs, consistent with section 2(i): (1) A transaction-level approach that is consistent with the Commission's cross-border guidance (“Guidance Approach”);
Under the first option, the Commission would apply the margin requirements consistent with the Cross-Border Guidance. The Commission stated in the Guidance that it would generally treat the margin requirements (for uncleared swaps) as a transaction-level requirement. Consistent with the rationale stated in the Guidance, under this approach, the proposed margin requirements would apply to a U.S. SD/MSP (other than a foreign branch of a U.S. bank that is a SD/MSP) for all of their uncleared swaps (as applicable), irrespective of whether the counterparty is a U.S. person
On the other hand, under this approach, the proposed margin requirements would apply to a non-U.S. SD/MSP (whether or not it is a “guaranteed affiliate”
For trades between a non-U.S. SD/MSP (whether or not it is a guaranteed affiliate or an affiliate conduit) and a non-U.S. counterparty that is not a guaranteed affiliate or affiliate conduit, the Commission would not apply the margin requirements to such swaps.
In the case of a foreign branch of a U.S. bank that is a SD/MSP, the proposed margin requirements would apply with respect to all of its uncleared swaps, regardless of the counterparty. However, where the counterparty to the trade is another foreign branch of a U.S. bank that is a SD/MSP or is a non-U.S. person counterparty (whether or not it is a guaranteed affiliate or an affiliate conduit), the Commission would allow substituted compliance (
Below is a summary of how the margin requirements would apply under the Cross-Border Guidance Approach.
Under the second option, the Commission would adopt the Prudential Regulators' approach to cross-border application of the margin requirements.
However, the Prudential Regulators' proposal in this regard would be consistent with the Commission's Cross-Border Guidance Approach to margin requirements with respect to a trade between a non-U.S. SD/MSP and a non-U.S. person that is not guaranteed by a U.S. person. But under the definition of “foreign covered swap entity” in the Prudential Regulators' approach, a non-U.S. SD/MSP controlled by a U.S. person would not be a foreign covered swap entity, and thus, would not qualify for the exclusion from the margin requirement. In addition, the Prudential Regulators' proposal incorporates a “control” test for purposes of determining whether a registered SD/MSP (or in the Prudential Regulators' proposal, a “covered swap entity”) is not a “foreign” entity.
Under the third option, the Commission would treat the margin requirements as an entity-level requirement. Under this Entity-Level Approach, the Commission would apply its cross-border rules on margin on a firm-wide level, irrespective of whether the counterparty is a U.S. person.
In this Advance Notice of Proposed Rulemaking, the Commission requests comment on all aspects of these options to the cross-border application of the margin requirements. In particular, the Commission is interested in comments relating to the costs and benefits of the various approaches so that it can take that into consideration when developing proposed rules relating to the cross-border application of the margin rules. Commenters are encouraged to address, among other things, the following questions:
1. Under the Guidance Approach and Prudential Regulators Approach, certain trades involving a non-U.S. SD/MSP would be excluded from the Commission's margin rules. The Commission seeks comment on whether this exclusion is over- or under-inclusive, and if so, please explain why.
2. Each of the options provides for substituted compliance under certain situations. In light of the equal or greater supervisory interest of the foreign regulator in certain circumstances, the Commission is seeking comment on whether the scope of substituted compliance under each option is appropriate.
3. The Commission is seeking comments on whether, in defining a non-U.S. covered swap entity, it should use the concept of “control,” in determining whether a covered swap entity is (or should be treated as) a non-U.S. covered swap entity. If the Commission uses a concept of control, should it be the same as that used by the Prudential Regulators, or should it be different?
4. In the Commission's view, it is the substance, rather than the form, of an agreement, arrangement or structure that should determine whether it should be considered a “guarantee.” The Commission invites comment on how the term “guarantee” should be construed or defined in the context of these margin rules. For example, should the definition cover the multitude of different agreements, arrangements and structures that transfer risk directly back to the United States with respect to financial obligations arising out of a swap? Should the definition cover such agreements, arrangements and structures even if they do not specifically reference the relevant swap or affirmatively state that it does not apply to such swap? Should the definition cover agreements, arrangements and structures even if the other party to the swap terminates, waives, or revokes the benefit of such agreements, arrangements or structures?
5. The Commission seeks comments on the costs and benefits of harmonization with the Prudential Regulators' proposal.
6. The Commission invites commenters to comment in particular on the benefits of each of the approaches with respect to the statutory goal of protecting the financial system against the risks associated with uncleared swaps.
7. Given that some foreign jurisdictions may not adopt comparable margin requirements, the Commission seeks comment on the costs and benefits of not requiring substituted compliance in emerging markets with respect to certain transactions and what might be an appropriate threshold percentage of a swap portfolio of participants or other standard for a de minimis level. In particular, the Commission is seeking comment on potential competitive impacts. Commenters are encouraged to quantify, if practical.
8. The Commission seeks comment, including quantitative estimates in terms of notional volumes of swap activity, about how the different cross-border alternatives may impact the competitive landscape between U.S. entities and non-U.S. entities participating in swap markets. Specifically, the Commission seeks quantitative estimates of costs of transacting uncleared swaps with each category of counterparties, and/or access specific geographical markets, under each of the different alternatives. Commission seeks quantitative estimates of such impact on the ability of the affected market participants (who might be unable to access specific markets or counterparties) to hedge their risks using uncleared swaps. As the proposed margins on uncleared swaps are designed to strengthen market integrity, the Commission seeks comments on potential impact of each of these alternatives on market participants' business models and trading strategies that could potentially compromise this policy goal. Commenters are encouraged to quantify and provide institutional details.
9. The Commission is seeking comments on how the different alternatives impact price discovery? Commenters are encouraged to quantify, if practical. For instance, will different cross-border alternatives impact the ability of different categories of market participants, as contemplated in these alternatives, to transact uncleared swaps with each other? The Commission seeks quantitative estimates of such impact on transacted volumes and the pricing of uncleared swaps.
10. The Commission is seeking comments on the relative costs and difficulty of compliance associated with each of the three approaches. Is one of the approaches preferable to the others in this regard?
11. The Commission is seeking comments on the impact of each of the three approaches on a SD/MSP's risk management practices.
The Regulatory Flexibility Act (“RFA”) requires that agencies consider whether the regulations they propose will have a significant economic impact on a substantial number of small entities.
The Commission previously has determined that SDs and MSPs are not small entities for purposes of the RFA.
Accordingly, this proposed rule will not have a significant economic effect on any small entity. Therefore, the Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed regulations will not have a significant economic impact on a substantial number of small entities.
The Paperwork Reduction Act of 1995 (“PRA”)
The collections of information that are proposed by this rulemaking are necessary to implement section 4s(e) of the CEA, which expressly requires the Commission to adopt rules governing margin requirements for SDs and MSPs. If adopted, responses to this collection of information would be mandatory. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.
This proposed rulemaking clarifies the existing collection of information found in OMB Control Number 3038–
Proposed Regulations §§ 23.152(c) and 23.153(d) specify that a CSE shall not be deemed to have violated its obligation to collect or post initial and variation margin, respectively, from or to a counterparty if the CSE has made the necessary efforts to collect or post the required margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, or has otherwise demonstrated upon request to the satisfaction of the Commission that it has made appropriate efforts to collect or post the required margin.
Proposed Regulation § 23.154 establishes standards for initial margin models. These standards include (1) a requirement that a CSE review its initial margin model annually (§ 23.154(b)(4)); (2) a requirement that the covered swap entity validate its initial margin model initially and on an ongoing basis, describe to the Commission any remedial actions being taken, and report internal audit findings regarding the effectiveness of the initial margin model to the CSE's board of directors or a committee thereof (§§ 23.154(b)(5)(ii) through 23.154(b)(5)(iv)); (3) a requirement that the CSE adequately documents all material aspects of its initial margin model (§ 23.154(b)(6)); and (4) a requirement that the CSE adequately documents internal authorization procedures, including escalation procedures that require review and approval of any change to the initial margin calculation under the initial margin model, demonstrable analysis that any basis for any such change is consistent with the requirements of this section, and independent review of such demonstrable analysis and approval (§ 23.154(b)(7)).
Proposed Regulation § 23.155(b) requires a covered swap entity to create and maintain documentation setting forth the variation margin methodology, evaluate the reliability of its data sources at least annually, and make adjustments, as appropriate, and provides that the Commission at any time may require a covered swap entity to provide further data or analysis concerning the methodology or a data source.
Proposed Regulation § 23.158 requires a covered swap entity to execute trading documentation with each counterparty that is either a swap entity or financial end user regarding credit support arrangements that (1) provides the contractual right to collect and post initial margin and variation margin in such amounts, in such form, and under such circumstances as are required; and (2) specifies the methods, procedures, rules, and inputs for determining the value of each non-cleared swap or non-cleared security-based swap for purposes of calculating variation margin requirements, and the procedures for resolving any disputes concerning valuation. The reporting and recordkeeping requirements of proposed Regulation § 23.158, proposed Regulations § 23.154(b)(4) through (7), and proposed Regulation § 23.155(b) are contained in the provisions of Commission Regulations 23.500 through 23.506, which were adopted on September 11, 2012, and part of OMB Control No. 3038–0088.
To be sure, Commission Regulation § 23.504(b) requires an SD or MSP to maintain written swap trading relationship documentation that must include all terms governing the trading relationship between the SD or MSP and its counterparty, and Commission Regulation § 23.504(d) requires that each SD and MSP maintain all documents required to be created pursuant to Commission Regulation 23.504. Also, Commission Regulation § 23.502(c) requires each SD and MSP to notify the Commission and any applicable Prudential Regulator of any swap valuation dispute in excess of $20 million if not resolved in specified timeframes. Accordingly, this proposed rulemaking, specifically the requirements found in proposed Regulation § 23.154(b)(4) through (7), proposed Regulations §§ 23.155(b) and 23.158, would not impact the burden estimates currently provided for in OMB Control No. 3038–0088.
Collection 3038–0024 is currently in force with its control number having been provided by OMB. The proposal would revise collection 3038–0024 as discussed below.
Proposed Regulation § 23.154(b)(1) requires CSEs that wish to use initial margin models to obtain the Commission's approval, and to demonstrate to the Commission that the models satisfy standards established in § 23.154.
The requirement of proposed Regulation § 23.154(b)(1) that a CSE
Currently, there are approximately 100 SDs and MSPs provisionally registered with the Commission. The Commission further estimates that approximately 60 of the SDs and MSPs will be subject to the Commission's margin rules as they are not subject to a Prudential Regulator. The Commission further estimates that all SDs and MSPs will seek to obtain Commission approval to use models for computing initial margin requirements. The Commission estimates that the initial margin model requirements will impose an average of 240 burden hours per registrant.
Based upon the above, the estimated additional hour burden for collection 3038–0024 was calculated as follows:
The Commission invites the public and other Federal agencies to comment on any aspect of the reporting burdens discussed above. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments in order to: (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including the information will have practical utility; (2) evaluate the accuracy of the Commission's estimate of the burden of the proposed collection of information; (3) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and (4) minimize the burden of the collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology.
Comments may be submitted directly to the Office of Information and Regulatory Affairs, by fax at (202) 395–6566 or by email at
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.
The Commission recognizes that there is an inherent trade-off involved in setting minimum collateral standards. Such standards could increase margin requirements, which in turn would require market participants to post additional collateral. Posting additional collateral may result in opportunity costs in terms of lost returns from investing the funds in collateral, or in interest expenses incurred to raise additional funds. Such costs may reduce the investment returns for market participants posting collateral. On the other hand, minimum collateral standards help to mitigate counterparty credit risk. This is achieved by requiring market participants to post collateral that is sufficient to cover potential losses from default most of the time. The potential reduction in investment returns for market participants posting collateral might also be offset to some degree by improvements in pricing as a result of the reduction in risk of the swap. The reduction in counterparty credit risk from the posting of collateral may result in tighter spreads quoted by liquidity providers.
This proposed rulemaking is a re-proposal of prior CFTC proposed rulemaking.
Generally, the CFTC's margin rules will apply to a SD or MSP whenever
Generally, a CSE must collect IM from a counterparty that is (i) a swap entity, or (ii) a financial end-user with material swaps exposure ($3 billion notional during June, July and August of the previous year) in an amount that is no less than the greater of: (i) Zero (0) or (ii) the IM collection amount for such swap less the IM threshold amount ($65 million—not including any portion of the IM threshold amount already applied by the covered swap entity or its affiliates to other swaps with the counterparty or its affiliates).
Generally, a CSE must post IM for any swap with a counterparty that is a financial end-user with material swaps exposure (see above). A CSE is not required to collect IM from or post IM to commercial end-users.
There are two general methods for calculating initial margin, the standardized approach and the model-based approach. Under the standardized approach, the CSE must calculate IM collection amounts using a table/grid that is set out in the proposed rule.
The model-based approach calculates an amount of IM that is equal to the potential future exposure (“PFE”) of a swap or a netting set of swaps. PFE is an estimate of the one-tailed 99% confidence interval for an increase in the value of the swap over a 10 day period (
The rules for variation margin are as follows: (1) On or before the business day after execution of an uncleared swap between a covered swap entity and a counterparty that is a swap entity or a financial end user, the covered swap entity must collect variation margin from or pay variation margin to the counterparty; (2) a CSE is not required to collect or pay variation from commercial end-users; and (3) a CSE is not required to collect, post, or pay margin unless and until the total amount of margin transfer to be collected or posted for an individual counterparty exceeds the minimum transfer amount.
The eligible collateral for variation margin is cash funds denominated in (a) USD, or (b) a currency in which payment under the swap contracts is required. The eligible collateral for initial margin includes (subject to haircuts on value) financial instruments in various categories, including cash, Treasury securities, and various publicly traded debt and equity instruments. A CSE may not collect or post as initial margin any asset that is a security issued by (i) the party providing such asset or an affiliate of that party; (ii) various banking entities as listed in the proposed rule; or (iii) certain government-sponsored enterprises unless an exception applies.
As defined in the rule, a financial end-user is any counterparty that is not a covered swap entity and includes, among others: (i) A commodity pool, commodity trading advisor and commodity pool operator (all defined in the CEA); (ii) a private fund (defined in Investment Advisers Act); (iii) an employee benefit plan, as defined in ERISA section 3; (iv) a person predominantly engaged in activities that are in the business of banking, or in activities that are financial in nature (defined in section 4(k) of the BHCA); (v) a person defined in (a)–(d), if that person organized under the laws of the U.S.; and (vi) any other entity that in the Commission's discretion is a financial end-user. A non-financial end-user is any entity that is not a financial end-user or an SD/MSP.
Generally, a CSE entering into a swap with a swap entity or a financial end-user with material swap exposure who posts initial margin to the counterparty must comply with the following conditions: (1) All funds posted as initial margin must be held by a third-party custodian (unaffiliated with either party in the swap); (2) the third-party custodian is prohibited from re-hypothecating (or otherwise transferring) the initial margin; (3) the third-party custodian is prohibited from reinvesting the initial margin in any asset that would not qualify as eligible collateral; and (4) the custodial agreement is legal, valid, binding and enforceable in the event of bankruptcy, insolvency, or similar proceedings.
Generally, a CSE entering into a swap with a swap entity or a financial end-user with a material swap exposure that collects initial margin from the counterparty must require the same conditions listed above for initial margin posted.
Generally, CSEs must comply with the minimum margin requirements for uncleared swaps on or before the following dates. For variation margin, covered swap entities must comply by December 1, 2015. Initial margin is subject to a phased-in period. The compliance date is December 1, 2015 when both (i) the CSE and its affiliates and (ii) its counterparty and its affiliates, have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards and foreign exchange swaps for each business day in June, July and August 2015 that exceeds $4 trillion. The compliance date is December 1, 2016 when both (i) the CSE and its affiliates and (ii) its counterparty and its affiliates, have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards and foreign exchange swaps for each business day in June, July and August 2016 that exceeds $3 trillion. The compliance date is December 1, 2017 when both (i) the CSE and its affiliates and (ii) its counterparty and its affiliates, have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards and foreign exchange swaps for each business day in June, July and August 2017 that exceeds $2 trillion. The compliance date is December 1, 2018 when both (i) the CSE and its affiliates and (ii) its counterparty and its affiliates, have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards and foreign exchange swaps for each business day in June, July and August 2018 that exceeds $1 trillion. The compliance date is December 1, 2019 for any other covered swap entity with respect to uncleared swaps and uncleared security-based swaps entered into with any other counterparty.
The baseline against which this proposed rule will be compared is the status quo. This requires the Commission to assess what is the current practice within the swaps industry. At present, swap market participants are not legally required to post either initial or variation margin
In determining the current market practices, the Commission utilized several sources of swaps market data. These sources include (i) the ISDA Margin Survey 2014 (“ISDA Survey”), (ii) BIS's Quantitative impact study on margin requirements for non-centrally-cleared OTC derivatives (“BCBS/IOSCO Quantitative Impact Study”), and (iii) Swap Data Repository data (“SDR Data”). Although the data the Commission is considering might not be complete, the Commission requests comments regarding whether there is additional data that it should consider when developing its baseline.
A resource containing current market practice for uncleared swaps is the ISDA Survey.
Another source containing current market practices for uncleared swaps is the BCBS/IOSCO Quantitative Impact Study.
In light of the definition of potential future exposure in this proposal, it is useful to examine current practice. The table below, reproduced from the BCBS/IOSCO Quantitative Impact Study provides some statistics on potential future exposure, and related industry practices.
The Commission seeks comment on the representativeness of the BCBS/IOSCO's Quantitative Impact Study. How do the calculations in the BCBS/IOSCO's Quantitative Impact Study compare to the experience of financial institutions? Commenters are encouraged to quantify when possible.
Finally, the Commission reports aggregated data derived from data submitted to swap data repositories in a weekly swaps market report.
The Commission notes that OCC's Economic Impact Analysis for Swaps Margin Proposed Rule
The Commission points out that prudentially regulated CSEs, CFTC regulated CSEs, and SEC regulated CSEs will trade with each other. Thus, one cannot simply add the margin estimates by various regulators as this will double count the amount of initial margin collateral for swap transactions between differently regulated CSEs. The Commission seeks comment on how it should consider or allocate the common costs and benefits of the margin collateral that is required by more than one CSE regulator. Further, the Commission seeks comments on all aspects of its initial margin estimates and methods. Commenters are encouraged to quantify, if practical.
Margin helps to protect market participants from counterparty credit risk. It also helps to protect the public by lowering the probability of a financial crisis, because margin helps to impede or contain the risk of a cascade of defaults occurring. A cascade occurs when one participant defaulting causes subsequent defaults by its counterparties, and so on, resulting in a domino effect and a potential financial crisis.
The derivatives positions of swap market participants are limited by their ability to post margin. If the ability to post margin is binding, then required margin may reduce swap market exposures for some participants. In many cases, reduced swap market exposure for a participant may lower their probability of default, all else equal. Further, when a swap participant defaults, the margin can be used to absorb the losses to the counterparty. This facilitates the non-defaulting party reestablishing a similar position with a new counterparty.
In requiring daily variation margin payments, the proposed rule would require counterparties to mark-to-market all open swap positions. The process of marking swap contracts to market or model, forces participants to recognize losses promptly and to adjust collateral accordingly. This helps to prevent the accumulation of large unrecognized losses and exposures. Consequently, this frequent settling up may reduce the probability of default of the party who has been experiencing losses on the contract. The proposed rule however, requires a minimum payment amount of $650,000, which provides counterparties with operational relief. This minimum payment does not lower the amount owed, but permits deferral of margin exchanges until it is operationally efficient. In providing this relief the Commission believes that it will lower the overall burden on the financial system, but as a result of this amount being relatively small the Commission believes this deferral would not noticeably increase the overall risk to the financial system and the general public.
The proposed rule also provides that initial margin must be held at a third-party custodian. The margin amount held there cannot be rehypothecated with both parties having access to the collateral. This access is designed to prevent a liquidity event, inducing a cascading event. With rehypothecation, the collateral of some parties may be linked or used as collateral posted for other positions—the same collateral is posted for many positions for many different entities, resulting in a rehypothecation chain. When a default or liquidity event occurs at one link along the rehypothecation chain, it might induce further defaults or liquidity events for other links in the rehypothecation chain, because access to the collateral for other positions may be obstructed by a default along the chain, which may result in a liquidity event along the entire chain.
The cost of providing initial margin collateral reflects the cost of obtaining the assets used as collateral, which is either the cost of raising external funds, or the foregone income that could been earned had the firm invested in a different asset (opportunity cost). The effective cost is the difference between the relevant cost of obtaining eligible assets and the return on the assets that can be pledged as collateral. The effective cost will likely differ between entities and even desks in the same entity as well as over time as conditions change. At one extreme, it may be that some entities providing initial margin, such as pension funds and asset managers, will provide assets as initial margin that they already own and would have owned even if no requirements were in place. In such cases the economic cost of providing initial margin collateral is anticipated to be low. In other cases, entities engaging
The Commission seeks comment on the appropriate cost or a proxy for the costs to posting collateral for CFTC regulated entities, recognizing that CFTC entities may have different costs for pledging collateral. The Commission also seeks comments on the quantitative impact of these proposed rules on the pricing of swaps or other changes in the relationships between CSEs and counterparties.
The proposal also requires that variation margin be exchanged between covered swap entities and other swap entities and financial end-users. The Commission preliminarily believes that the impact of such requirements are low in the aggregate because: (i) regular exchange of variation margin is already a well-established market practice among a large number of market participants, and (ii) exchange of variation margin simply redistributes resources from one entity to another in a manner that imposes no aggregate liquidity costs. An entity that suffers a reduction in liquidity from posting variation margin is offset by an increase in the liquidity enjoyed by the entity receiving the variation margin because variation margin is posted with cash. The Commission notes that if the margin payments are not instantaneous, however, there may be a slight loss in liquidity while payments are being posted.
Posting margin may discourage some parties from hedging certain risks because it is no longer cost effective for them to do so. Consequently, this may reduce liquidity for some swap contracts. This concern is mitigated somewhat by exempting non-financial end users from having to post margin. Furthermore, not requiring parties to exchange variation margin when the change in valuation is small enough, $650,000, achieves additional cost savings. The proposed rule will create additional demand for eligible collateral to post as margin. Some advocates have expressed concern regarding the future availability of eligible assets for market participants to post as margin;
According to the Committee on the Global Financial System, there seems to be sufficient eligible collateral at present and in the near term, as they noted that “Current estimates suggest that the combined impact of liquidity regulation and OTC derivatives reforms could generate additional collateral demand to the tune of $4 trillion. At the same time, the supply of collateral assets is known to have risen significantly since end-2007. Outstanding amounts of AAA- and AA-rated government securities alone—based on the market capitalization of widely used benchmark indices—increased by $10.8 trillion between 2007 and 2012. Other measures suggest even greater increases in supply.”
The proposed margin requirements make cleared swaps relatively more attractive. The Commission is requiring ten day initial margins for uncleared swaps and only five day margin for cleared swaps. In addition, the Commission is only allowing limited netting for uncleared swaps. All else equal, due to multilateral netting, less collateral may be required in a cleared environment relative to an uncleared environment.
The Commission is allowing only limited netting for uncleared swaps. Limited netting may encourage participants to use a small number of counterparties for multiple swap transactions, because participants can only net swaps from those made with the same counterparty. This may encourage the concentration of risk among a few counterparties. However, these concerns may be mitigated somewhat by performing frequent portfolio compression exercises that facilitate multilateral netting.
Another cost of the rules may be a reduction in the efficacy of hedging. Rules that make standardized swaps relatively less expensive may induce some entities to forego some customized swaps that may better match their exposures. However, before an entity decides to use a standardized swap over a customized uncleared swap, it must weigh the potentially lower margin costs from using standardized swaps against potentially losses from imperfect hedges. Consequently, market participants will still use customized swaps when they believe such swaps are superior for their hedging needs.
All the market protection benefits discussed above may help to improve the integrity of markets, because they make it more likely that swap market participants will be able to perform on their contractual obligations. This comes with potential losses to participants who have to place their capital into margin and, hence potentially receive lower anticipated returns on their capital.
The Commission has endeavored to harmonize this rulemaking with the domestic prudential regulators, as well as with foreign regulators. Two of the goals of harmonization are to satisfy the statute as well as to create a more level playing field thereby promoting fairer competition between entities regulated in different jurisdictions or by different regulators. Otherwise, regulatory arbitrage opportunities might be substantial. Price arbitrage occurs when an identical asset simultaneously has two different prices, so that an arbitrager may buy that asset where it is cheaper and sell it where it is more expensive to garner a risk free profit. Similarly, a regulatory arbitrager takes advantage of regulatory discrepancies by adapting activities so as to locate them in jurisdictions to increase the arbitrager's regulatory profits (
The Commission is in discussion with domestic and foreign regulators on the material swap exposure threshold for financial end users to be required to post margin collateral. The Commission notes that some foreign regimes have proposed a higher threshold than $3 billion. In addition, the Commission realizes that setting a threshold lower than another jurisdiction may result in some market participants conducting some swaps in the jurisdiction with a lower threshold. The Commission is required, to the maximum extent practicable, to harmonize with prudential regulators, and domestic regulators are endeavoring to harmonize with foreign regulators, as well. Therefore, the Commission expects to consider the relative benefits that might come from having consistent standards against those that might come from having different thresholds. The Commission is seeking comment on the costs and benefits of setting the threshold for material swap exposure for financial end users to be required to post margin collateral at various levels. In particular, commenters are encouraged to discuss competitive impacts and to quantify, if practical. In addition, the Commission is seeking comments on the costs and benefits of not fully harmonizing its rules with those of the prudential regulators. Commenters are encouraged to discuss the operational difficulties and to quantify, if practical.
Inasmuch as larger banks tend to have a lower cost of capital than smaller banks, the posting of margin for uncleared swaps may result in a competitive advantage for larger banks when engaging in swaps, all else equal. Even though they are exempted from clearing as financial end users, small banks that have a material swaps exposure generally will have to post margin collateral when engaging in uncleared swaps with CFTC regulated CSEs. Thus, small banks may have to fund additional collateral to post as margin for uncleared swaps or engage in more cleared swaps that require relatively less collateral to post. The Commission is seeking comment on the costs and benefits of requiring small banks with material swaps exposures to post collateral with CFTC regulated CSEs. Commenters may choose to recognize that under the prudential regulators' proposal, small banks that have a material swaps exposure and that engage in swaps with prudentially regulated CSEs would have to post margin collateral for uncleared swaps, too. Further, commenters may also choose to recognize that the Commission is required to harmonize this rulemaking, to the maximum extent practicable, with the prudential regulators. Comments are encouraged to quantify, if practical.
The Commission is requiring ten day initial margins for uncleared swaps and only five day margin for cleared swaps. In addition, the Commission is only allowing limited netting for uncleared swaps. Consequently, these rules promote the use of more standardized cleared swaps at the expense of more customized and opaque swaps.
To the extent traders increase the use of standardized cleared swaps in response to these rules, it may lead to greater transparency, overall, in the swaps markets. Compared to uncleared swaps, standardized swaps' prices tend to be more transparent and the price discovery process for such swaps may improve with higher volumes. Conversely, lower volumes for uncleared swaps may negatively impact the price discovery process for such swaps. However, the Commission believes that the potential reduction in the efficacy of the price discovery process for uncleared swaps is less of a concern, because the price-setting process for uncleared swaps is not conducted on a regulated platform or pursuant to rules requiring transparency and is therefore relatively opaque in the current environment, anyway.
The Commission recognizes that another way the rules may affect price discovery is by promoting confidence in the market. As such, the margin collateral rules may protect, prophylactically, the price discovery process of some swap contracts in some circumstances. The rules might protect price discovery by reducing the frequency of trading interruptions in segments of the swap market due to credit risk concerns. This rulemaking might improve price discovery in these instances, because the presence of collateral mitigates credit risk concerns, and thereby allows these swap contract markets to remain functioning. In turn, this permits market participants to continue to observe the prices of these swaps.
The Commission requests comment on potential effects of the rule on price discovery as well as on the relative use of cleared and uncleared swaps, and on whether particular types of market participants, including intermediaries such as regulated trading platforms, will be impacted differently by the rule. Commenters are urged to quantify the costs and benefits, if practicable.
Margin helps to mitigate the credit risk exposure resulting from swap contracts. Further, it is a sound practice to regularly mark to market or model to prevent the accumulation of unrecognized losses and exposures (through the exchange of variation margin). At the same time, requiring margin may help deter traders from taking advantage of the inherent leverage in certain swap transactions.
The Commission is requiring ten day initial margins for uncleared swaps and only five day initial margin for cleared swaps. Thus, the rule may result in the use of more standardized cleared swaps at the expense of more customized swaps which may be harder to evaluate and risk manage; however, this may result in market participants using non-optimal hedging techniques, as noted above, which may increase overall risk at a firm.
Prohibiting rehypothecation at third-party custodians when both parties have access to the collateral will be helpful in the time of default. Otherwise, a liquidity event might occur that induces a cascading event, in which the positions will be linked to other positions and counterparties. The policy of not allowing rehypothecation, however, requires that more collateral be available to post as margin. As discussed above, this does not seem to be a serious problem at present, but it might become one in the future. In addition, to protect parties against the circumstance when pledged collateral might be appropriated by the counterparty, margins must be held at third parties. Facilitating the use of more customized models might induce market participants to more thoroughly analyze the risks of their swap transactions, and may lead to better risk
In this proposal, the Commission has added flexibility to what constitutes eligible collateral, allowing participants in uncleared swap transactions to `optimize' their collateral inasmuch as they may reduce their opportunity cost losses from pledging assets with lower anticipated returns. This may result in market participants focusing on improving their margin and risk management practices.
The Commission has not identified any other public interest considerations.
Swaps, Swap dealers, Major swap participants, Capital and margin requirements.
Authority delegations (Government agencies), Organization and functions (Government agencies).
For the reasons discussed in the preamble, the Commodity Futures Trading Commission proposes to amend 17 CFR chapter I as set forth below:
7 U.S.C. 1a, 2, 6, 6a, 6b, 6b–1, 6c, 6p, 6r, 6s, 6t, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21.
The margin requirements set forth in § 23.150 through § 23.159 shall apply to uncleared swaps, as defined in § 23.151, that are executed after the applicable compliance dates set forth in § 23.159.
For the purposes of §§ 23.150 through 23.159:
(1) Ownership, control, or power to vote 25 percent or more of a class of voting securities of the company, directly or indirectly or acting through one or more other persons;
(2) Ownership or control of 25 percent or more of the total equity of the company, directly or indirectly or acting through one or more other persons; or
(3) Control in any manner of the election of a majority of the directors or trustees of the company.
(1) The agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default, including upon an event of receivership, insolvency, liquidation, or similar proceeding, of the counterparty;
(2) The agreement provides the covered swap entity the right to accelerate, terminate, and close out on a net basis all transactions under the agreement and to liquidate or set off collateral promptly upon an event of default, including upon an event of receivership, insolvency, liquidation, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than in receivership, conservatorship, resolution under the Federal Deposit Insurance Act (12 U.S.C. 1811
(3) The agreement does not contain a walkaway clause (that is, a provision that permits a non-defaulting counterparty to make a lower payment than it otherwise would make under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement); and
(4) A covered swap entity that relies on the agreement for purposes of calculating the margin required by this part:
(i) Conducts sufficient legal review (and maintains sufficient written documentation of that legal review) to conclude with a well-founded basis that:
(A) The agreement meets the requirements of paragraphs (1) through (3) of this definition; and
(B) In the event of a legal challenge (including one resulting from default or from receivership, insolvency, liquidation, or similar proceeding) the relevant court and administrative authorities would find the agreement to be legal, valid, binding, and enforceable under the law of the relevant jurisdictions; and
(ii) Establishes and maintains written procedures to monitor possible changes in relevant law and to ensure that the agreement continues to satisfy the requirements of this definition.
(1) A counterparty that is not a swap entity and that is:
(i) A bank holding company or an affiliate thereof; a savings and loan holding company; or a nonbank financial institution supervised by the Board of Governors of the Federal Reserve System under Title I of the Dodd-Frank Act (12 U.S.C. 5323);
(ii) A depository institution; a foreign bank; a Federal credit union or State credit union as defined in section 2 of the Federal Credit Union Act (12 U.S.C. 1752(1) and (6)); an institution that functions solely in a trust or fiduciary capacity as described in section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(D)); an industrial loan company, an industrial bank, or other similar institution described in section 2(c)(2)(H) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(H));
(iii) An entity that is state-licensed or registered as:
(A) A credit or lending entity, including a finance company; money lender; installment lender; consumer lender or lending company; mortgage lender, broker, or bank; motor vehicle title pledge lender; payday or deferred deposit lender; premium finance company; commercial finance or lending company; or commercial mortgage company; except entities registered or licensed solely on account of financing the entity's direct sales of goods or services to customers;
(B) A money services business, including a check casher; money transmitter; currency dealer or exchange; or money order or traveler's check issuer;
(iv) A regulated entity as defined in section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)) and any entity for which the Federal Housing Finance Agency or its successor is the primary federal regulator;
(v) Any institution chartered and regulated by the Farm Credit Administration in accordance with the Farm Credit Act of 1971, as amended, 12 U.S.C. 2001
(vi) A securities holding company; a broker or dealer; an investment adviser as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)); an investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a–1
(vii) A private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80–b–2(a)); an entity that would be an investment company under section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3) but for section 3(c)(5)(C); or an entity that is deemed not to be an investment company under section 3 of the Investment Company Act of 1940 pursuant to Investment Company Act Rule 3a–7 of the Securities and Exchange Commission (17 CFR 270.3a–7);
(viii) A commodity pool, a commodity pool operator, a commodity trading advisor, or a futures commission merchant;
(ix) An employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income and Security Act of 1974 (29 U.S.C. 1002);
(x) An entity that is organized as an insurance company, primarily engaged in writing insurance or reinsuring risks underwritten by insurance companies, or is subject to supervision as such by a State insurance regulator or foreign insurance regulator;
(xi) An entity that is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets;
(xii) A person that would be a financial entity described in paragraphs (1)(i)–(xi) of this definition if it were organized under the laws of the United States or any State thereof; or
(xiii) Notwithstanding paragraph (2) of this definition, any other entity that the Commission determines should be treated as a financial end user.
(2) The term “financial end user” does not include any counterparty that is:
(i) A sovereign entity;
(ii) A multilateral development bank;
(iii) The Bank for International Settlements;
(iv) An entity that is exempt from the definition of financial entity pursuant to section 2(h)(7)(C)(iii) of the Act and implementing regulations; or
(v) An affiliate that qualifies for the exemption from clearing pursuant to section 2(h)(7)(D) of the Act.
(1) United States Dollar (USD);
(2) Canadian Dollar (CAD);
(3) Euro (EUR);
(4) United Kingdom Pound (GBP);
(5) Japanese Yen (JPY);
(6) Swiss Franc (CHF);
(7) New Zealand Dollar (NZD);
(8) Australian Dollar (AUD);
(9) Swedish Kronor (SEK);
(10) Danish Kroner (DKK);
(11) Norwegian Krone (NOK); and
(12) Any other currency designated by the Commission.
(1) A securities holding company;
(2) A broker or dealer;
(3) A futures commission merchant;
(4) A swap dealer; or
(5) A security-based swap dealer.
(1) The International Bank for Reconstruction and Development;
(2) The Multilateral Investment Guarantee Agency;
(3) The International Finance Corporation;
(4) The Inter-American Development Bank;
(5) The Asian Development Bank;
(6) The African Development Bank;
(7) The European Bank for Reconstruction and Development;
(8) The European Investment Bank;
(9) The European Investment Fund;
(10) The Nordic Investment Bank;
(11) The Caribbean Development Bank;
(12) The Islamic Development Bank;
(13) The Council of Europe Development Bank; and
(14) Any other entity that provides financing for national or regional
(a)
(2)
(b)
(2)
(c)
(1) The covered counterparty has refused or otherwise failed to provide, or to accept, the required initial margin to, or from, the covered swap entity; and
(2) The covered swap entity has:
(i) Made the necessary efforts to collect or to post the required initial margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, including pursuant to § 23.504(b)(4), if applicable, or has otherwise demonstrated upon request to the satisfaction of the Commission that it has made appropriate efforts to collect or to post the required initial margin; or
(ii) Commenced termination of the uncleared swap with the covered counterparty promptly following the applicable cure period and notification requirements.
(a)
(b)
(c)
(d)
(1) The counterparty has refused or otherwise failed to provide or to accept the required variation margin to or from the covered swap entity; and
(2) The covered swap entity has:
(i) Made the necessary efforts to collect or to pay the required variation margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, or has otherwise demonstrated upon request to the satisfaction of the Commission that it has made appropriate efforts to collect or to pay the required variation margin; or
(ii) Commenced termination of the uncleared swap with the counterparty promptly following the applicable cure period and notification requirements.
(a)
(i) A risk-based model that meets the requirements of paragraph (b) of this section; or
(ii) The table-based method set forth in paragraph (c) of this section.
(2) Each business day each covered swap entity shall calculate an initial margin amount to be posted with each covered counterparty that is a financial end user using:
(i) A risk-based model that meets the requirements of paragraph (b) of this section; or
(ii) The table-based method set forth in paragraph (c) of this section.
(3) Each covered swap entity may reduce the amounts calculated pursuant to paragraphs (a)(1) and (2) of this section by the initial margin threshold amount provided that the reduction does not include any portion of the initial margin threshold amount already applied by the covered swap entity or its affiliates in connection with other uncleared swaps or uncleared security-based swaps with the counterparty or its affiliates.
(4) The amounts calculated pursuant to paragraph (a)(3) of this section shall not be less than zero.
(5) A covered swap entity shall not be required to collect or to post an amount below the minimum transfer amount.
(6) For risk management purposes, each business day each covered swap entity shall calculate a hypothetical initial margin requirement for each swap for which the counterparty is a non-financial end user that has material swaps exposure to the covered swap entity as if the counterparty were a covered counterparty and compare that amount to any initial margin required pursuant to the margin documentation.
(b)
(ii) A covered swap entity shall demonstrate that the model satisfies all of the requirements of this section on an ongoing basis.
(iii) A covered swap entity shall notify the Commission in writing 60 days prior to:
(A) Extending the use of an initial margin model that has been approved to an additional product type;
(B) Making any change to any initial margin model that has been approved that would result in a material change in the covered swap entity's assessment of initial margin requirements; or
(C) Making any material change to modeling assumptions used by the initial margin model.
(iv) The Commission may rescind its approval of the use of any initial margin model, in whole or in part, or may impose additional conditions or requirements if the Commission determines, in its sole discretion, that the model no longer complies with this section.
(2)
(3)
(ii) All data used to calibrate the model shall be based on an equally weighted historical observation period of at least one year and not more than five years and must incorporate a period of significant financial stress for each broad asset class that is appropriate to the uncleared swaps to which the initial margin model is applied.
(iii) The model shall use risk factors sufficient to measure all material price risks inherent in the transactions for which initial margin is being calculated. The risk categories shall include, but should not be limited to, foreign exchange or interest rate risk, credit risk, equity risk, agricultural commodity risk, energy commodity risk, metal commodity risk, and other commodity risk, as appropriate. For material exposures in significant currencies and markets, modeling techniques shall capture spread and basis risk and shall incorporate a sufficient number of segments of the yield curve to capture differences in volatility and imperfect correlation of rates along the yield curve.
(iv) In the case of an uncleared cross-currency swap, the model need not recognize any risks or risk factors associated with the fixed, physically-settled foreign exchange transactions associated with the exchange of principal embedded in the cross-currency swap. The model shall recognize all material risks and risk factors associated with all other payments and cash flows that occur during the life of the uncleared cross-currency swap.
(v) The model may calculate initial margin for an uncleared swap or netting set of uncleared swaps covered by an eligible master netting agreement. It may reflect offsetting exposures, diversification, and other hedging benefits for uncleared swaps that are governed by the same eligible master netting agreement by incorporating empirical correlations within the following broad risk categories, provided the covered swap entity validates and demonstrates the reasonableness of its process for modeling and measuring hedging benefits: agriculture, credit, energy, equity, foreign exchange/interest rate, metals, and other. Empirical correlations under an eligible master netting agreement may be recognized by the model within each broad risk category, but not across broad risk categories.
(vi) If the model does not explicitly reflect offsetting exposures, diversification, and hedging benefits between subsets of uncleared swaps within a broad risk category, the covered swap entity shall calculate an amount of initial margin separately for each subset of uncleared swaps for which offsetting exposures, diversification, and other hedging benefits are explicitly recognized by the model. The sum of the initial margin amounts calculated for each subset of uncleared swaps within a broad risk category shall be used to determine the aggregate initial margin due from the counterparty for the portfolio of uncleared swaps within the broad risk category.
(vii) The sum of the initial margins calculated for each broad risk category shall be used to determine the aggregate initial margin due from the counterparty.
(viii) The model shall not permit the calculation of any initial margin amount to be offset by, or otherwise take into account, any initial margin that may be owed or otherwise payable by the covered swap entity to the counterparty.
(ix) The model shall include all material risks arising from the nonlinear price characteristics of option positions or positions with embedded optionality and the sensitivity of the market value of the positions to changes in the volatility of the underlying rates, prices, or other material risk factors.
(x) The covered swap entity shall not omit any risk factor from the calculation of its initial margin that the covered swap entity uses in its model unless it has first demonstrated to the satisfaction of the Commission that such omission is appropriate.
(xi) The covered swap entity shall not incorporate any proxy or approximation used to capture the risks of the covered swap entity's actual swaps unless it has first demonstrated to the satisfaction of the Commission that such proxy or approximation is appropriate.
(xii) The covered swap entity shall have a rigorous and well-defined process for re-estimating, re-evaluating, and updating its internal models to ensure continued applicability and relevance.
(xiii) The covered swap entity shall review and, as necessary, revise the data used to calibrate the model at least monthly, and more frequently as market conditions warrant, ensuring that the data incorporate a period of significant financial stress appropriate to the uncleared swaps to which the model is applied.
(xiv) The level of sophistication of the initial margin model shall be commensurate with the complexity of the swaps to which it is applied. In calculating an initial margin amount, the model may make use of any of the generally accepted approaches for modeling the risk of a single instrument or portfolio of instruments.
(xv) The Commission may in its sole discretion require a covered swap entity using a model to collect a greater amount of initial margin than that determined by the covered swap entity's model if the Commission determines that the additional collateral is appropriate due to the nature, structure, or characteristics of the covered swap entity's transactions or is commensurate with the risks associated with the transaction.
(4)
(5)
(ii) The covered swap entity's risk control unit shall validate its model prior to implementation and on an ongoing basis. The covered swap entity's validation process shall be independent of the development, implementation, and operation of the model, or the validation process shall be subject to an independent review of its adequacy and effectiveness. The validation process shall include:
(A) An evaluation of the conceptual soundness of (including developmental evidence supporting) the model;
(B) An ongoing monitoring process that includes verification of processes and benchmarking by comparing the covered swap entity's model outputs (estimation of initial margin) with relevant alternative internal and external data sources or estimation techniques including benchmarking against observable margin standards to ensure that the initial margin is not less than what a derivatives clearing organization would require for similar cleared transactions; and
(C) An outcomes analysis process that includes back testing the model.
(iii) If the validation process reveals any material problems with the model, the covered swap entity shall notify the Commission of the problems, describe to the Commission any remedial actions being taken, and adjust the model to insure an appropriately conservative amount of required initial margin is being calculated.
(iv) In accordance with § 23.600(e)(2), the covered swap entity shall have an internal audit function independent of the business trading unit and the risk management unit that at least annually assesses the effectiveness of the controls supporting the model measurement systems, including the activities of the business trading units and risk control unit, compliance with policies and procedures, and calculation of the covered swap entity's initial margin requirements under this part. At least annually, the internal audit function shall report its findings to the covered swap entity's governing body, senior management, and chief compliance officer.
(6)
(7)
(c)
(1)
(2)
(ii) Initial Margin = 0.4 × Gross Initial Margin + 0.6 × Net-to-Gross Ratio × Gross Initial Margin, where
(A) Gross Initial Margin = the sum of the product of each uncleared swap's effective notional amount and the gross initial margin requirement for all uncleared swaps subject to the eligible master netting agreement;
(B) Net-to-Gross Ratio = the ratio of the net current replacement cost to the gross current replacement cost;
(C) Gross Current Replacement cost = the sum of the replacement cost for each uncleared swap subject to the eligible master netting agreement for which the cost is positive; and
(D) Net Current Replacement Cost = the total replacement cost for all uncleared swaps subject to the eligible master netting agreement.
(a)
(2) Each covered swap entity shall have in place alternative methods for determining the value of an uncleared swap in the event of the unavailability or other failure of any input required to value a swap.
(3) For risk management purposes, each business day each covered swap entity shall calculate a hypothetical variation margin requirement for each swap for which the counterparty is a non-financial end user that has material swaps exposure to the covered counterparty as if the counterparty were a covered swap entity and compare that amount to any variation margin required pursuant to the margin documentation.
(b)
(2) Each covered swap entity shall evaluate the reliability of its data sources at least annually, and make adjustments, as appropriate.
(3) The Commission at any time may require a covered swap entity to provide further data or analysis concerning the methodology or a data source, including:
(i) An explanation of the manner in which the methodology meets the requirements of this section;
(ii) A description of the mechanics of the methodology;
(iii) The theoretical basis of the methodology;
(iv) The empirical support for the methodology; and
(v) The empirical support for the assessment of the data sources.
(a)
(i) U.S. dollars;
(ii) A major currency;
(iii) A currency in which payment obligations under the swap are required to be settled;
(iv) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of Treasury;
(v) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a U.S. government agency (other than the U.S. Department of Treasury) whose obligations are fully guaranteed by the full faith and credit of the U.S. government;
(vi) A publicly traded debt security issued by, or an asset-backed security fully guaranteed as to the timely payment of principal and interest by, a U.S. government-sponsored enterprise that is operating with capital support or another form of direct financial assistance received from the U.S. government that enables the repayments of the government-sponsored enterprise's eligible securities; or
(vii) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under the capital rules applicable to swap dealers subject to regulation by a prudential regulator;
(viii) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the Bank for International Settlements, the International Monetary Fund, or a multilateral development bank;
(ix) Other publicly-traded debt that has been deemed acceptable as initial margin by a prudential regulator; or
(x) A publicly traded common equity security that is included in:
(A) The Standard & Poor's Composite 1500 Index or any other similar index of liquid and readily marketable equity securities as determined by the Commission; or
(B) An index that a covered swap entity's supervisor in a foreign jurisdiction recognizes for purposes of including publicly traded common equity as initial margin under applicable regulatory policy, if held in that foreign jurisdiction; or
(xi) Gold.
(2)
(i) The party providing such asset or an affiliate of that party,
(ii) A bank holding company, a savings and loan holding company, a foreign bank, a depository institution, a market intermediary, a company that would be any of the foregoing if it were organized under the laws of the United States or any State, or an affiliate of any of the foregoing institutions, or
(iii) A U.S. government-sponsored enterprise after the termination of capital support or another form of direct financial assistance received from the U.S. government that enables the repayments of the government-sponsored enterprise's eligible securities unless:
(A) The security meets the requirements of paragraph (a)(1)(iv) of this section;
(B) The security meets the requirements of paragraph (a)(1)(vii) of this section; or
(C) The security meets the requirements of paragraph (a)(1)(viii) of this section.
(3)
(ii) At a minimum, each covered swap entity shall apply haircuts to any asset posted or received as initial margin under this section in accordance with the following table:
(iii) The value of initial margin collateral that is calculated according to the schedule in paragraph (a)(3)(ii) of this section will be computed as follows: The value of initial margin collateral for any collateral asset class will be computed as the product of the total value of collateral in any asset class and one minus the applicable haircut expressed in percentage terms. The total value of all initial margin collateral is calculated as the sum of the value of each type of collateral asset.
(4)
(5)
(b)
(i) U.S. dollars; or
(ii) A currency in which payment obligations under the swap are required to be settled.
(2)
(i) The counterparty has refused or otherwise failed to provide the variation margin to the covered swap entity; and
(ii) The covered swap entity:
(A) Has made the necessary efforts to collect the variation margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, including § 23.504(b), if applicable, or has otherwise demonstrated upon request to the satisfaction of the Commission that it has made appropriate efforts to collect the variation margin; or
(B) Has commenced termination of the swap or security-based swap with the counterparty.
(a)
(b)
(c)
(1) Prohibits the custodian from rehypothecating, repledging, reusing, or otherwise transferring (through securities lending, repurchase agreement, reverse repurchase agreement or other means) the funds or other property held by the custodian;
(2) Notwithstanding paragraph (c)(1) of this section, with respect to collateral posted or collected pursuant to § 23.152, requires the posting party, when it substitutes or directs the reinvestment of posted collateral held by the custodian:
(i) To substitute only funds or other property that are in a form that meets the requirements of § 23.156 and in an amount that meets the requirements of § 23.152, subject to applicable haircuts; and
(ii) To reinvest funds only in assets that are in a form that meets the requirements of § 23.156 and in an amount that meets the requirements of § 23.152, subject to applicable haircuts;
(3) Is legal, valid, binding, and enforceable under the laws of all relevant jurisdictions including in the event of bankruptcy, insolvency, or a similar proceeding.
(a)
(b)
(1) The methodology and data sources to be used to value uncleared swaps and collateral and to calculate initial margin for uncleared swaps entered into between the covered swap entity and the counterparty;
(2) The methodology and data sources to be used to value positions and to calculate variation margin for uncleared swaps entered into between the covered swap entity participant and the counterparty;
(3) The procedures by which any disputes concerning the valuation of uncleared swaps, or the valuation of assets posted as initial margin or paid as variation margin may be resolved;
(4) Any thresholds below which initial margin need not be posted by the covered swap entity and/or the counterparty; and
(5) Any thresholds below which variation margin need not be paid by the covered swap entity and/or the counterparty.
(a) Covered swap entities must comply with the minimum margin requirements for uncleared swaps on or before the following dates for uncleared swaps entered into on or after the following dates:
(1) December 1, 2015 for the requirements in § 23.153 for variation margin.
(2) December 1, 2015 for the requirements in § 23.152 for initial margin for any uncleared swaps where both the covered swap entity combined with all its affiliates and its counterparty combined with all its affiliates, have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards, and foreign exchange swaps in June, July, and August 2015 that exceeds $4 trillion, where such amounts are calculated only for business days.
(3) December 1, 2016 for the requirements in § 23.152 for initial margin for any uncleared swaps where
(4) December 1, 2017 for the requirements in § 23.152 for initial margin for any uncleared swaps where both the covered swap entity combined with all its affiliates and its counterparty combined with all its affiliates have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards, and foreign exchange swaps in June, July and August 2017 that exceeds $2 trillion, where such amounts are calculated only for business days.
(5) December 1, 2018 for the requirements in § 23.152 for initial margin for any uncleared swaps where both the covered swap entity combined with all its affiliates and its counterparty combined with all its affiliates have an average daily aggregate notional amount of uncleared swaps, uncleared security-based swaps, foreign exchange forwards, and foreign exchange swaps in June, July and August 2018 that exceeds $1 trillion, where such amounts are calculated only for business days.
(6) December 1, 2019 for the requirements in § 23.152 for initial margin for any other covered swap entity with respect to uncleared swaps entered into with any other counterparty.
(b) Once a covered swap entity and its counterparty must comply with the margin requirements for uncleared swaps based on the compliance dates in paragraph (a) of this section, the covered swap entity and its counterparty shall remain subject to the requirements of this subpart.
(a) * * *
(1) Notify each counterparty to such transaction that the counterparty has the right to require that any Initial Margin the counterparty provides in connection with such transaction be segregated in accordance with §§ 23.702 and 23.703 except in those circumstances where segregation is mandatory pursuant to § 23.157;
(d) Prior to confirming the terms of any such swap, the swap dealer or major swap participant shall obtain from the counterparty confirmation of receipt by the person specified in paragraph (c) of this section of the notification specified in paragraph (a) of this section, and an election, if applicable, to require such segregation or not. The swap dealer or major swap participant shall maintain such confirmation and such election as business records pursuant to § 1.31 of this chapter.
(f) A counterparty's election, if applicable, to require segregation of Initial Margin or not to require such segregation, may be changed at the discretion of the counterparty upon written notice delivered to the swap dealer or major swap participant, which changed election shall be applicable to all swaps entered into between the parties after such delivery.
7 U.S.C. 2(a)(12), 12a, 13(c), 13(d), 13(e), and 16(b).
(a) * * *
(6) All functions reserved to the Commission in §§ 23.150 through 23.159 of this chapter.
The following appendices will not appear in the Code of Federal Regulations.
On this matter, Chairman Massad and Commissioners Wetjen, Bowen, and Giancarlo voted in the affirmative. No Commissioner voted in the negative.
I support this proposed rule on margin requirements for uncleared swaps.
A key mandate of the Dodd-Frank Act was central clearing of swaps. This is a significant tool to monitor and mitigate risk, and we have already succeeded in increasing the overall percentage of the market that is cleared from an estimated 17% in 2007 to 60% last month, when measured by notional amount.
But cleared swaps are only part of the market. Uncleared, bilateral swap transactions will continue to be an important part of the derivatives market. This is so for a variety of reasons. Sometimes, commercial risks cannot be hedged sufficiently through clearable swap contracts. Therefore market participants must craft more tailored contracts that cannot be cleared. In addition, certain products may lack sufficient liquidity to be centrally risk-managed and cleared. This may be true even for products that have been in existence for some time. And there will—and always should be—innovation in the market, which will lead to new products.
That is why margin for uncleared swaps is important. It is a means to mitigate the risk of default and therefore the potential risk to the financial system as a whole. To appreciate the importance of the rule being proposed, we need only recall how Treasury and the Federal Reserve had to commit $182 billion to AIG, because its uncleared swap activities threatened to bring down our financial system.
The proposed rule requires swap dealers and major swap participants to post and collect margin in their swaps with one another. They must also do so in their swaps with financial entities, if the level of activity is above certain thresholds. The proposal does not require commercial end-users to post or collect margin, nor does it require any swap dealer or major swap participant to collect margin from or post margin to commercial end-users. This is an important point.
Today's proposal on margin also reflects the benefit of substantial collaboration between our staff and our colleagues at the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, as well as significant public comment. The Dodd-Frank Act directs each of the prudential regulators to propose rules on margin for the entities for which it is the primary regulator, whereas the CFTC is directed to propose a rule for other
We have also sought to harmonize our proposal with rules being developed in Europe and Asia. Our proposed rule is largely consistent with the standards proposed by Basel Committee on Banking Supervision and the International Organization of Securities Commissions, and we have been in touch with overseas regulators as we developed our proposal.
The importance of international harmonization cannot be understated. It is particularly important to reach harmonization in the area of margin for uncleared swaps, because this is a new requirement and we do not want to create the potential for regulatory arbitrage in the market by creating unnecessary differences. Margin for uncleared swaps goes hand in hand with the global mandates to clear swaps. Imposing margin on uncleared swaps will level the playing field between cleared and uncleared swaps and remove any incentive not to clear swaps that can be cleared.
Proposing this rule is an important step in our effort to finish the job of implementing the Dodd-Frank Act and will help us achieve the full benefit of the new regulatory framework, while at the same time protecting the interests of—and minimizing the burdens on—commercial end-users who depend on the derivatives markets to hedge normal business risks.
We recognize that more stringent margin requirements impose costs on market participants, and therefore the proposal includes a detailed cost-benefit analysis. I believe the proposed rule balances the inherent trade-off between mitigating systemic risk and minimizing costs on individual participants. I look forward to having public feedback on that analysis, as well as on the proposal as a whole.
I support the issuance of the proposed rules for uncleared margin. I look forward to reviewing well-considered, responsive and informative comments from the public. Seeking further public comment on this proposal is necessary given the passage of time and the further deliberations with our fellow regulators since the publishing of our 2011 proposal. For the same reasons, I urge the Commission to re-propose capital requirements for swap dealers and major swap participants, which are closely linked to the uncleared margin rules.
Uncleared over-the-counter swaps (OTC) and derivatives are vital to the U.S. economy. Used properly, they enable American companies and the banks they borrow from to manage changing commodity and energy prices, fluctuating currency and interest rates, and credit default exposure. They allow our state and local governments to manage their obligations and our pension funds to support healthy retirements. Uncleared swaps serve a key role in American business planning and risk management that cannot be filled by cleared derivatives. They do so by allowing businesses to avoid basis risk and obtain hedge accounting treatment for more complex, non-standardized exposures. While much of the swaps and OTC derivatives markets will eventually be cleared—a transition I have long supported—uncleared swaps will remain an important tool for customized risk management by businesses, governments, asset managers and other institutions whose operations are essential to American economic growth.
I support the Commission's decision to issue an advance notice of proposed rulemaking to determine how the uncleared margin rule should apply extraterritorially. I have long advocated that the Commission take a holistic, global approach to the cross-border application of its rules. This approach should prioritize the critical need for international harmony and certainty for American businesses and other market participants. It is undeniable that the lack of such certainty in the Commission's cross-border framework is causing fragmentation of what were once global markets, increasing systemic risk rather than diminishing it. I therefore applaud the Commission's decision to seek public comment on the most optimal cross-border framework with respect to uncleared margin.
In light of the recent decision from the U.S. District Court for the District of Columbia holding that the Commission's cross-border guidance is non-binding and that the Commission will have to justify the cross-border application of its rules each time it brings an enforcement action,
I believe that the advance notice of proposed rulemaking for the cross-border application of the uncleared margin rules demonstrates a pragmatism and flexibility that belies the oft repeated notion that CFTC rulemaking widely and woodenly overreaches in its assertion of extraterritorial jurisdiction. I commend it to our fellow regulators abroad as a portent of greater accord in global regulatory reform.
I look forward to reading and addressing well-considered comments on the cross-border issues. In particular, I join Commissioner Wetjen in welcoming thoughtful comment and analysis on the potential competitive impacts associated with each of the different approaches identified in the advance notice of proposed rulemaking. I encourage commentators to quantify, if practical, and be specific about particular provisions or concerns.
Furthermore, I think this rulemaking should be a template for things to come. I urge the Commission to follow the Securities and Exchange Commission's (SEC) lead and replace its non-binding guidance with a comprehensive set of rules, supported by a rigorous cost-benefit analysis, delineating when activities outside the United States will have a direct and significant connection with activities in, or effect on, commerce in the United States. Good regulation requires nothing less.
Notwithstanding my support for the issuance of these proposed rules and the advance notice of proposed rulemaking on cross-border issues in order to solicit comment, I have a number of substantive concerns which I will now address.
Today's proposal requires collateral coverage on uncleared swaps equal to a ten-day liquidation period. This ten-day calculation comports with rules adopted recently by the U.S. prudential bank regulators. Yet, it still must be asked: Is ten days the right calculation? Why not nine days; why not eleven? Should it be the same ten days for uncleared credit default swaps as it is for uncleared interest rate swaps and for all other swaps products? Surely, all non-cleared swap products do not have the same liquidity characteristics or risk profiles. I encourage commenters to provide their input on these questions.
SEC Chair Mary Jo White recently stated: “Our regulatory changes must be informed by clear-eyed, unbiased, and fact-based assessments of the likely impacts—positive and negative—on market quality for investors and issuers.”
I am troubled by recent press reports of remarks by unnamed Fed officials that the coverage period may be intentionally “punitive” in order to move the majority of trades into a cleared environment.
Any punitive or arbitrary squeeze on non-cleared swaps will surely have consequences—likely unintended—for American businesses and their ability to manage risk. With tens of millions of Americans falling back on part-time work, it is not in our national interest to deter U.S. employers from safely hedging commercial risk to free capital for new ventures that create full-time jobs. It is time we move away from punishing U.S. capital markets toward rules designed to revive American prosperity. I look forward to reviewing well-considered comments as to the appropriateness of a ten-day liquidation period, as well as its estimated costs and benefits, particularly the impact on American economic growth.
As noted in the preamble, the Dodd-Frank Act requires the CFTC, the SEC, and the prudential regulators to establish comparable initial and variation margin requirements for uncleared swaps.
I am pleased that the prudential regulators have moved in the CFTC's direction and will not require that non-financial end users pay margin unless necessary to address the credit risk posed by the counterparty and the risks of the swap.
I am also pleased that our collaboration with the BCBS/IOSCO
In this time of dismal economic growth, it is hard to justify placing higher burdens on America's medium-sized financial firms than those their overseas competitors face. We have not, in my opinion, sufficiently addressed in our cost benefit analysis the impact of this threshold difference on American firms and their customers. Where is the clear-eyed analysis of the impact of this rule on the American economy? I hope that the Commission will not perpetuate this divergence in the final rules without carefully weighing the costs and benefits. I encourage commenters to address this point and to supply any data and analysis that may be illuminating. It is time our rules were designed less to punish and more to promote U.S. capital markets. Punishment as a singular regulatory policy is getting old and counterproductive. It is time our rules focused on returning America to work and prosperity.
Similarly, I want to echo Commissioner Wetjen's call for comments on two areas where the Commission can harness international collaboration. First, I welcome comments on whether the Commission should exclude from the scope of this rulemaking any derivative cleared by a central counterparty (CCP) that is subject to regulation and supervision consistent with the CPSS–IOSCO Principles for Financial Market Infrastructures (PFMIs), an alternative on which the Commission seeks comment in the preamble. It is reported that at least one U.S. financial firm is a member at 70 different CCPs around the globe. The present proposal, if finalized, could result in trades cleared on many of these CCPs being treated as if they are uncleared.
I would also be interested in commenters' views on how the Commission should conduct its comparability analysis under this rulemaking. In the advance notice of proposed rulemaking, the Commission proposes to permit market participants to comply with foreign rules, if such rules are comparable to the Commission's margin requirements. Yet, a better approach may be to compare a foreign regime to the international standards put forward by the BCBS/IOSCO international working group that included participation from over 20 regulatory authorities. Doing so would give the Commission some comfort that foreign rules meet a necessary baseline, but could avoid unnecessary and potentially destabilizing disputes over comparability in the future. I hope the insights of interested parties will guide not only the Commission, but also the prudential regulators. I further hope all concerned parties can use this rulemaking as an opportunity to promote international comity at a time when it is sorely needed.
Another aspect of the proposed rules that concerns me is the treatment of financial entities that qualify for the small bank exemption from clearing and financial cooperatives. Section 2(h)(7)(C)(ii) of the CEA directed the Commission to consider whether to exempt from the definition of “financial entity” small banks, savings associations, farm credit system institutions and credit unions with total assets of $10 billion or less. In response, the Commission exempted these small financial institutions from the definition of financial entity for purposes of clearing. It recognized that these institutions serve a crucial function in the markets for hedging the commercial risk of non-financial end users. Moreover, the Commission acknowledged that the costs associated with clearing, including margin and other fees and expenses, may be prohibitive relative to the small number of swaps these firms execute over a given period of time.
Despite the CFTC's otherwise appropriate treatment of these small banks and financial cooperatives, the proposed margin rules treat them as financial institutions required to post
The proposed rules may also diminish the utility of the critically important, inter-affiliate clearing exemption the Commission adopted last year for certain eligible affiliate counterparties.
Finally, I believe it is important to allow the use of models when calculating initial margin. The proposed rules require the Commission's prior written approval before a model can be used, even though the Commission lacks adequate staff and expertise for evaluating models. We recognize in the preamble that many covered swap entities are affiliates of entities whose margin models are reviewed by one of the prudential regulators, the SEC, or a foreign regulator, and to avoid duplicative efforts we plan to coordinate with other regulators in an effort to expedite our review. Rather than go through a special approval process, however, I believe we should accept models approved by our fellow regulators, so long as they contain the required elements. Alternatively, as mentioned in the preamble and discussed at the open meeting, this may be an area in which the National Futures Association can provide assistance, and I am interested in hearing its views on the issue. I also join Commissioner Wetjen's call for discussion on the circumstances in which the Commission may permit market participants to continue using models while Commission staff is reviewing them. Given the CFTC's limited resources, I believe we should make every effort to leverage the expertise of other qualified regulators before asking for more tax dollars from Americans working two jobs just to stay afloat.
In spite of my stated concerns, I support the issuance of these proposed rules in order to solicit comment. They raise a number of important issues, particularly in their impact on the U.S. economy and job creation and the extent of their application across the globe. It is vital that we hear from interested parties on how to get them right. I commend the Chairman and my fellow Commissioners for their thoughtfulness and open-mindedness in arriving at the final proposals. I look forward to receiving and reviewing comments on the issues discussed above and all aspects of the rules.
Joint Service Committee on Military Justice (JSC), DoD.
Notice of Proposed Amendments to the Manual for Courts-Martial, United States (2012 ed.) and Notice of Public Meeting.
The Department of Defense is proposing changes to the
This notice also sets forth the date, time and location for a public meeting of the JSC to discuss the proposed changes.
This notice is provided in accordance with DoD Directive 5500.17, “Role and Responsibilities of the Joint Service Committee (JSC) on Military Justice,” May 3, 2003.
This notice is intended only to improve the internal management of the Federal Government. It is not intended to create any right or benefit, substantive or procedural, enforceable at law by any party against the United States, its agencies, its officers, or any person.
The JSC also invites members of the public to suggest changes to the Manual for Courts-Martial and address specific recommended changes with supporting rationale.
Comments on the proposed changes must be received no later than December 2, 2014. A public meeting for comments will be held on October 29, 2014, at 10:00 a.m. in the United States Court of Appeals for the Armed Forces, 450 E Street NW., Washington, DC 20442–0001.
You may submit comments, identified by docket number and title, by any of the following methods:
•
•
Capt Allison A. DeVito, Executive Secretary, Joint Service Committee on Military Justice, 1500 West Perimeter Road, Suite 1130, Joint Base Andrews, Maryland 20762, 240–612–4820, email-
The proposed amendments to the MCM are as follows:
(a) R.C.M. 201(f)(1) is amended to insert the following:
(b) R.C.M. 201(f)(1)(D) is inserted to read as follows:
“(D)
(c) R.C.M. 201(f)(2)(D) is inserted to read as follows:
“(D)
(d) R.C.M. 305(i)(2)(A)(i) is amended to read as follows:
“(i)
(e) R.C.M. 305(i)(2)(A)(iv) is inserted to read as follows:
“(iv)
(f) R.C.M. 305(i)(2)(C) is amended to read as follows:
“(C)
(g) R.C.M. 305(n) is inserted to read as follows:
“(n)
(h) R.C.M. 404(e) is amended to read as follows:
“(e) Unless otherwise prescribed by the Secretary concerned, direct a preliminary hearing under R.C.M. 405, and, if appropriate, forward the report of preliminary hearing with the charges to a superior commander for disposition.”
(i) A new rule, R.C.M. 404A, is inserted to read as follows:
(a) When a convening authority directs a preliminary hearing under R.C.M. 405, counsel for
the government shall, subject to R.C.M. 404A(b)-(d) below, within 5 days of issuance of the Article 32 appointing order, provide to the defense the following information or matters:
(1) Charge sheet;
(2) Article 32 appointing order;
(3) Documents accompanying the charge sheet on which the preferral decision was based;
(4) Documents provided to the convening authority when deciding to direct the preliminary hearing;
(5) Documents the counsel for the government intends to present at the preliminary hearing; and
(6) Access to tangible objects counsel for the government intends to present at the preliminary hearing.
(b)
(c)
(d)
(j) R.C.M. 405 is amended in its entirety to read as follows:
(a)
(b)
(c)
(d)
(1)
When the appointment of a judge advocate as the preliminary hearing officer is not practicable, or in exceptional circumstances in which the interest of justice warrants, the convening authority directing the preliminary hearing may detail an impartial commissioned officer, who is not the accuser, as the preliminary hearing officer. If the preliminary hearing officer is not a judge advocate, an impartial judge advocate certified under Article 27(b) shall be available to provide legal advice to the preliminary hearing officer.
When practicable, the preliminary hearing officer shall be equal or senior in grade to the military counsel detailed to represent the accused and the government at the preliminary hearing. The Secretary concerned may prescribe additional limitations on the appointment of preliminary hearing officers.
The preliminary hearing officer shall not depart from an impartial role and become an advocate for either side. The preliminary hearing officer is disqualified to act later in the same case in any other capacity.
(2)
(3)
(A)
(B)
(C)
(4)
(A) A reporter; and
(B) An interpreter.
(e)
(1) The preliminary hearing officer shall limit the inquiry to the examination of evidence, including witnesses, necessary to:
(A) Determine whether there is probable cause to believe an offense or offenses have been committed and whether the accused committed it;
(B) Determine whether a court-martial would have jurisdiction over the offense(s) and the accused;
(C) Consider whether the form of the charge(s) is proper; and
(D) Make a recommendation as to the disposition of the charge(s).
(2) If evidence adduced during the preliminary hearing indicates that the accused committed any uncharged
(f)
(1) Prior to any preliminary hearing under this rule the accused shall have the right to:
(A) Notice of any witnesses that the government intends to call at the preliminary hearing and copies of or access to any written or recorded statements made by those witnesses that relate to the subject matter of any charged offense;
(i) For purposes of this rule, a “written statement” is one that is signed or otherwise adopted or approved by the witness that is within the possession or control of counsel for the government; and
(ii) For purposes of this rule, a “recorded statement” is an oral statement made by the witness that is recorded contemporaneously with the making of the oral statement and contained in a digital or other recording or a transcription thereof that is within the possession or control of counsel for the government.
(B) Notice of, and reasonable access to, any other evidence that the government intends to offer at the preliminary hearing; and
(C) Notice of, and reasonable access to, evidence that is within the possession or control of counsel for the government that negates or reduces the degree of guilt of the accused for an offense charged.
(2) At any preliminary hearing under this rule the accused shall have the right to:
(A) Be represented by counsel;
(B) Be informed of the purpose of the preliminary hearing;
(C) Be informed of the right against self-incrimination under Article 31;
(D) Except in the circumstances described in R.C.M. 804(c)(2), be present throughout the taking of evidence;
(E) Cross-examine witnesses on matters relevant to the limited scope and purpose of the preliminary hearing;
(F) Present matters in defense and mitigation relevant to the limited scope and purpose of the preliminary hearing; and
(G) Make a statement relevant to the limited scope and purpose of the preliminary hearing.
(g)
(1)
(A) Prior to the preliminary hearing, defense counsel shall provide to counsel for the government the names of proposed military witnesses whom the accused requests that the government produce to testify at the preliminary hearing, and the requested form of the testimony, in accordance with the timeline established by the preliminary hearing officer. Counsel for the government shall respond that either (1) the government agrees that the witness testimony is relevant, not cumulative, and necessary for the limited scope and purpose of the preliminary hearing and will seek to secure the witness's testimony for the hearing; or (2) the government objects to the proposed defense witness on the grounds that the testimony would be irrelevant, cumulative, or unnecessary based on the limited scope and purpose of the preliminary hearing.
(B) If the government objects to the proposed defense witness, defense counsel may request that the preliminary hearing officer determine whether the witness is relevant, not cumulative, and necessary based on the limited scope and purpose of the preliminary hearing.
(C) If the government does not object to the proposed defense military witness or the preliminary hearing officer determines that the military witness is relevant, not cumulative, and necessary, counsel for the government shall request that the commanding officer of the proposed military witness make that person available to provide testimony. The commanding officer shall determine whether the individual is available based on operational necessity or mission requirements, except that a victim, as defined in this rule, who declines to testify shall be deemed to be not available. If the commanding officer determines that the military witness is available, counsel for the government shall make arrangements for that individual's testimony. The commanding officer's determination of unavailability due to operational necessity or mission requirements is final. The military witness's commanding officer determines the availability of the witness and, if there is a dispute among the parties, determines whether the witness testifies in person, by videoteleconference, by telephone, or similar means of remote testimony.
(2)
(A) Defense counsel shall provide to counsel for the government the names of proposed civilian witnesses whom the accused requests that the government produce to testify at the preliminary hearing, and the requested form of the testimony, in accordance with the timeline established by the preliminary hearing officer. Counsel for the government shall respond that either (1) the government agrees that the witness testimony is relevant, not cumulative, and necessary for the limited scope and purpose of the preliminary hearing and will seek to secure the witness's testimony for the hearing; or (2) the government objects to the proposed defense witness on the grounds that the testimony would be irrelevant, cumulative, or unnecessary based on the limited scope and purpose of the preliminary hearing.
(B) If the government objects to the proposed defense witness, defense counsel may request that the preliminary hearing officer determine whether the witness is relevant, not cumulative, and necessary based on the limited scope and purpose of the preliminary hearing.
(C) If the government does not object to the proposed civilian witness or the preliminary hearing officer determines that the civilian witness testimony is relevant, not cumulative, and necessary, counsel for the government shall invite the civilian witness to provide testimony and, if the individual agrees, shall make arrangements for that witness's testimony. If expense to the government is to be incurred, the convening authority who directed the preliminary hearing, or the convening authority's delegate, shall determine whether the witness testifies in person, by videoteleconference, by telephone, or similar means of remote testimony.
(3)
(A)
(i) Prior to the preliminary hearing, defense counsel shall provide to counsel for the government a list of evidence under the control of the government the accused requests the government produce to the defense for introduction at the preliminary hearing. The preliminary hearing officer may set a deadline by which defense requests
(ii) If the government objects to production of the evidence, defense counsel may request that the preliminary hearing officer determine whether the evidence should be produced. The preliminary hearing officer shall determine whether the evidence is relevant, not cumulative, and necessary based on the limited scope and purpose of the hearing. If the preliminary hearing officer determines that the evidence shall be produced, counsel for the government shall make reasonable efforts to obtain the evidence.
(B)
(i) Evidence not under the control of the government may be obtained through noncompulsory means or by
(ii) Prior to the preliminary hearing, defense counsel shall provide to counsel for the government a list of evidence not under the control of the government that the accused requests the government obtain. The preliminary hearing officer may set a deadline by which defense requests must be received. Counsel for the government shall respond that either (1) the government agrees that the evidence is relevant, not cumulative, and necessary for the limited scope and purpose of the preliminary hearing and shall issue
(iii) If the government objects to production of the evidence, defense counsel may request that the preliminary hearing officer determine whether the evidence should be produced. If the preliminary hearing officer determines that the evidence is relevant, not cumulative, and necessary based on the limited scope and purpose of the preliminary hearing and that the issuance of
(h)
(1) Mil. R. Evid. 301–303 and 305 shall apply in their entirety.
(2) Mil. R. Evid. 412 shall apply in any case that includes a charge defined as a sexual offense in Mil. R. Evid. 412(d), except that Mil. R. Evid. 412(b)(1)(C) shall not apply.
(3) Mil. R. Evid., Section V, Privileges, shall apply, except that Mil. R. Evid. 505(f)–(h) and (j); 506(f)–(h), (j), (k), and (m); 513(d)(8); and 514(d)(6) shall not apply.
(4) In applying these rules to a preliminary hearing, the term “military judge,” as used in these rules shall mean the preliminary hearing officer, who shall assume the military judge's authority to exclude evidence from the preliminary hearing, and who shall, in discharging this duty, follow the procedures set forth in the rules cited in subsections (h)(1)–(3) of this rule.
(5) Failure to meet the procedural requirements of the applicable rules of evidence shall result in exclusion of that evidence from the preliminary hearing, unless good cause is shown.
(i)
(1)
(2)
(A) The victim(s) of an offense under the UCMJ has the right to reasonable, accurate, and timely notice of a preliminary hearing relating to the alleged offense. For the purposes of this rule, a “victim” is a person who is alleged to have suffered a direct physical, emotional, or pecuniary harm as a result of the matters set forth in a charge or specification under consideration and is named in one of the specifications under consideration.
(B) A victim of an offense under consideration at the preliminary hearing is not required to testify at the preliminary hearing.
(C) A victim has the right not to be excluded from any portion of a preliminary hearing related to the alleged offense, unless the preliminary hearing officer, after receiving clear and convincing evidence, determines the testimony by the victim would be materially altered if the victim heard other testimony at the proceeding.
(D) A victim shall be excluded if a privilege set forth in Mil. R. Evid. 505 or 506 is invoked or if evidence is offered under Mil. R. Evid. 412, 513, or 514, for charges other than those in which the victim is named.
(3)
(A)
(B)
(4)
(5)
(A) After being notified of the time and place of the proceeding is voluntarily absent; or
(B) After being warned by the preliminary hearing officer that disruptive conduct will cause removal from the proceeding, persists in conduct which is such as to justify exclusion from the proceeding.
(6)
(7)
(8)
(j)
(1)
(2)
(A) A statement of names and organizations or addresses of defense counsel and whether defense counsel was present throughout the taking of evidence, or if not present the reason why;
(B) The substance of the testimony taken on both sides;
(C) Any other statements, documents, or matters considered by the preliminary hearing officer, or recitals of the substance or nature of such evidence;
(D) A statement that an essential witness may not be available for trial;
(E) An explanation of any delays in the preliminary hearing;
(F) A notation if counsel for the government failed to issue a
(G) The preliminary hearing officer's determination as to whether there is probable cause to believe the offense(s) listed on the charge sheet or otherwise considered at the preliminary hearing occurred;
(H) The preliminary hearing officer's determination as to whether there is probable cause to believe the accused committed the offense(s) listed on the charge sheet or otherwise considered at the preliminary hearing;
(I) The preliminary hearing officer's determination as to whether a court-martial has jurisdiction over the offense(s) and the accused;
(J) The preliminary hearing officer's determination as to whether the charge(s) and specification(s) are in proper form; and
(K) The recommendations of the preliminary hearing officer regarding disposition of the charge(s).
(3)
(4)
(5)
(k)
(k) R.C.M. 601(g) is inserted to read as follows:
“(g)
(l) R.C.M. 703(e)(2)(B) is amended to read as follows:
“(B)
(m) R.C.M. 703(e)(2)(C) is amended to read as follows:
“(C)
(1) A subpoena to secure evidence may be issued by:
(a) The summary court-martial;
(b) Detailed counsel for the government at an Article 32 preliminary hearing;
(c) After referral to a court-martial, detailed trial counsel;
(d) The president of a court of inquiry; or
(e) An officer detailed to take a deposition.”
(n) R.C.M. 703(f)(4)(B) is amended to read as follows:
(B)
(o) R.C.M. 801(a)(g) is inserted to read as follows:
“(6) In the case of a victim of an offense under the UCMJ who is under 18 years of age and not a member of the armed forces, or who is incompetent, incapacitated, or deceased, designate in writing, a family member, a representative of the estate of the victim, or another suitable individual to assume the victim's rights under the UCMJ.
(A) For the purposes of this rule, the individual is designated for the sole purpose of assuming the legal rights of the victim as they pertain to the victim's status as a victim of any offense(s) properly before the court.
(B)
(i) As soon as practicable, trial counsel shall notify the military judge, counsel for the accused and the victim(s) of any offense(s) properly before the court when there is an apparent requirement to appoint a designee under this rule.
(ii) The military judge will determine if the appointment of a designee is required under this rule.
(iii) At the discretion of the military judge, victim(s), trial counsel, and the accused may be given the opportunity to recommend to the military judge individual(s) for appointment.
(iv) The military judge is not required to hold a hearing before determining whether a designation is required or making such an appointment under this rule.
(v) If the military judge determines a hearing pursuant to Article 39(a), UCMJ, is necessary, the following shall be notified of the hearing and afforded the right to be present at the hearing: trial counsel, accused, and the victim(s).
(vi) The individual designated shall not be the accused.
(C) At any time after appointment, a designee shall be excused upon request by the designee or a finding of good cause by the military judge.
(D) If the individual appointed to assume the victim's rights is excused, the military judge shall appoint a successor consistent with this rule.”
(p) R.C.M. 806(b)(2) is insert following R.C.M. 806(b)(1) and before the Discussion section to read as follows:
“(2)
(q) R.C.M. 806(b)(2) is renumbered as R.C.M. 806(b)(3).
(r) R.C.M. 906(b)(8) is amended to read as follows:
“(8)
(s) R.C.M. 912(i)(3) is amended to read as follows:
“(3)
(t) R.C.M. 1001(a)(1)(B) is amended to read as follows:
“(B) Victim's right to be reasonably heard.
(u) R.C.M. 1001(a)(C)–(G) are re-lettered to read as follows:
“(C) Presentation by the defense of evidence in extenuation or mitigation or both.
(D) Rebuttal.
(E) Argument by trial counsel on sentence.
(F) Argument by defense counsel on sentence.
(G) Rebuttal arguments in the discretion of the military judge.”
(v) A new rule, R.C.M.1001A is inserted to read as follows:
“A victim of an offense of which the accused has been found guilty has the right to be reasonably heard at a sentencing hearing relating to that offense. For the purposes of this rule, the right to be reasonably heard means the right to testify under oath. Trial counsel shall ensure the victim has the opportunity to exercise that right. As used in this rule a “victim” is a person who has suffered direct physical, emotional, or pecuniary harm as a result of the commission of an offense. If the victim exercises the right to be reasonably heard, the victim shall be called by the court.”
(w) R.C.M. 1103A(a) is amended to read as follows:
(x) R.C.M. 1103A(b)(1) is amended to read as follows:
“(1)
(y) R.C.M. 1103A(b)(5) is inserted to read as follows:
“(5)
(z) R.C.M. 1105 is amended to read as follows:
(aa) R.C.M. 1105(b)(1) is amended to read as follows:
“(1) The accused may submit to the convening authority any matters that may reasonably tend to affect the convening authority's decision whether to disapprove any findings of guilty or to approve the sentence, except as may be limited by R.C.M. 1107(b)(3)(C). The convening authority is only required to consider written submissions.”
(bb) R.C.M. 1105(b)(2)(C) is amended to read as follows:
“(C) Matters in mitigation which were not available for consideration at the court-martial, except as may be limited by R.C.M. 1107(b)(3)(B); and”
(cc) R.C.M. 1107 is amended to read as follows:
(dd) R.C.M. 1107(b)(1) is amended to read as follows:
“(1)
(ee) R.C.M. 1107(b)(3)(A)(iii) is amended to read as follows:
“(iii) Any matters submitted by the accused under R.C.M. 1105 or, if applicable, R.C.M. 1106(f);
(ff) R.C.M. 1107(b)(3)(A)(iv) is inserted to read as follows:
“(iv) Any statement submitted by a crime victim pursuant to R.C.M. 1105A and subsection (C) below.”
(gg) R.C.M. 1107(b)(3)(B)(i) is amended to read as follows:
“(i) The record of trial, subject to the provisions of R.C.M. 1103A and subsection (C) below;”
(hh) R.C.M. 1107(c) is amended to read as follows:
“(c)
(1) For offenses charged under subsection (a) or (b) of Article 120; offenses charged under Article 120b; and offenses charged under Article 125.
(A) The convening authority is prohibited from:
(i) Setting aside any finding of guilt or dismissing a specification; or
(ii) Changing a finding of guilty to a charge or specification to a finding of guilty to an offense that is a lesser included offense of the offense stated in the charge or specification.
(B) The convening authority may direct a rehearing in accordance with subsection (e) of this rule.
(2) For offenses other than those listed in subsection (c)(1), for which the maximum sentence of confinement that may be adjudged does not exceed two years without regard to the jurisdictional limits of the court; and the sentence adjudged does not include dismissal, a dishonorable discharge, bad-conduct discharge, or confinement for more than six months:
(A) The convening authority may change a finding of guilty to a charge or specification to a finding of guilty to an offense that is a lesser included offense of the offense stated in the charge or specification; or
(B) Set aside any finding of guilty and:
(i) Dismiss the specification and, if appropriate, the charge; or
(ii) Direct a rehearing in accordance with subsection (e) of this rule.
(3) If the convening authority acts to dismiss or change any charge or specification for an offense, the convening authority shall provide, at the same time, a written explanation of the reasons for such action. The written explanation shall be made a part of the record of trial and action thereon.”
(ii) R.C.M. 1107(d)(1) is amended to read as follows:
“(1)
(A) The convening authority may not disapprove, commute, or suspend, in whole or in part, any portion of an adjudged sentence of confinement for more than six months.
(B) The convening authority may not disapprove, commute, or suspend that portion of an adjudged sentence that includes a dismissal, dishonorable discharge, or bad-conduct discharge.
(C) The convening authority may disapprove, commute, or suspend, in whole or in part, any portion of an adjudged sentence not explicitly prohibited by this rule, to include reduction in pay grade, forfeitures of pay and allowances, fines, reprimands, restrictions, and hard labor without confinement.
(D) The convening authority shall not disapprove, commute, or suspend any mandatory minimum sentence except in accordance with subsection (E) below.
(E)
(i)
(ii)
(F) If the convening authority acts to disapprove, commute, or suspend, in whole or in part, the sentence of the court-martial for an offense, the convening authority shall provide, at the same time, a written explanation of the reasons for such action. The written explanation shall be made a part of the record of trial and action thereon.”
(jj) R.C.M. 1107(d)(2) is amended to read as follows:
“(2)
(kk) R.C.M. 1107(f)(2) is amended to read as follows:
“(2)
(ll) R.C.M. 1107(g) is amended to read as follows:
“(g)
(mm) R.C.M. 1108 is amended to read as follows:
(nn) R.C.M. 1108(b) is amended to read as follows:
“(b)
(oo) R.C.M. 1301(c) is amended to read as follows:
(pp) R.C.M. 1301(c) is amended to number the current paragraph as (1) and insert a new second paragraph after the current Discussion as follows:
“(2) Notwithstanding subsection (c)(1) above, summary courts-martial do not have jurisdiction over offenses under Articles 120(a), 120(b), 120b(a), 120b(b), forcible sodomy under Article 125, and attempts thereof under Article 80, UCMJ. Such offenses shall not be referred to a summary court-martial.”
(qq) R.C.M. 406(b)(2) and R.C.M. 1103 are amended by changing “report of investigation” to “report of preliminary hearing” for offenses committed on or after 26 December 2014.
(rr) R.C.M. 603(b) and R.C.M. 912(f)(1)(F) are amended by changing “an investigating officer” to “a preliminary hearing officer” for offenses committed on or after 26 December 2014.
(ss) R.C.M. 705(c)(2)(E), R.C.M. 905(b)(1), and R.C.M. 906(b)(3) are amended by changing “Article 32 investigation” to “Article 32 preliminary hearing” for offenses committed on or after 26 December 2014.
(tt) R.C.M. 706(a), R.C.M. 706(c)(3)(A), R.C.M. 902(b)(2), R.C.M. 912(a)(1)(K), R.C.M. 1106(b), and R.C.M. 1112(c) are amended by changing “investigating officer” to “preliminary hearing officer” for offenses committed on or after 26 December 2014.
(a) Mil. R. Evid. 412(c)(2) is amended to read as follows:
“(2) Before admitting evidence under this rule, the military judge must conduct a hearing, which shall be closed. At this hearing, the parties may call witnesses, including the alleged victim, and offer relevant evidence. The alleged victim must be afforded a reasonable opportunity to attend and be heard. The right to be heard under this rule includes the right to be heard through counsel. In a case before a court-martial comprised of a military judge and members, the military judge shall conduct the hearing outside the presence of the members pursuant to Article 39(a). The motion, related papers, and the record of the hearing must be sealed in accordance with R.C.M. 1103A and remain under seal unless the military judge or an appellate court orders otherwise.”
(b) Mil. R. Evid. 513(e)(2) is amended to read as follows:
“(2) Before ordering the production or admission of evidence of a patient's records or communication, the military judge shall conduct a hearing. Upon the motion of counsel for either party and upon good cause shown, the military judge may order the hearing closed. At the hearing, the parties may call witnesses, including the patient, and offer other relevant evidence. The patient shall be afforded a reasonable opportunity to attend the hearing and be heard at the patient's own expense unless the patient has been otherwise subpoenaed or ordered to appear at the hearing. The right to be heard under this rule includes the right to be heard through counsel. However, the proceedings shall not be unduly delayed for this purpose. In a case before a court-martial comprised of a military judge and members, the military judge shall conduct the hearing outside the presence of the members.”
(c) The title of Mil. R. Evid. 514 is amended to read as follows:
“Victim advocate-victim and DoD Safe Helpline staff-victim privilege.”
(d) Mil. R. Evid. 514(a) is amended to read as follows:
“(a)
(e) Mil. R. Evid. 514(b)(3)–(5) is amended to read as follows
“(3) “DoD Safe Helpline staff” is a person who is designated by competent
(4) A communication is “confidential” if made in the course of the victim advocate-victim relationship or DoD Safe Helpline staff-victim relationship and not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of advice or assistance to the alleged victim or those reasonably necessary for such transmission of the communication.
(5) “Evidence of a victim's records or communications” means testimony of a victim advocate or DoD Safe Helpline staff, or records that pertain to communications by a victim to a victim advocate or DoD Safe Helpline staff, for the purposes of advising or providing assistance to the victim.”
(g) Mil. R. Evid. 514(c) is amended to read as follows:
“(c)
(h) Mil. R. Evid. 514(d)(2)–(4) is amended to read as follows:
“(2) When federal law, state law, Department of Defense regulation, or service regulation imposes a duty to report information contained in a communication;
(3) When a victim advocate or DoD Safe Helpline staff believes that a victim's mental or emotional condition makes the victim a danger to any person, including the victim;
(4) If the communication clearly contemplated the future commission of a fraud or crime, or if the services of the victim advocate or DoD Safe Helpline staff are sought or obtained to enable or aid anyone to commit or plan to commit what the victim knew or reasonably should have known to be a crime or fraud;”
(j) Mil. R. Evid. 514(e)(2) is amended to read as follows:
“(2) Before ordering the production or admission of evidence of a victim's records or communication, the military judge must conduct a hearing. Upon the motion of counsel for either party and upon good cause shown, the military judge may order the hearing closed. At the hearing, the parties may call witnesses, including the victim, and offer other relevant evidence. The victim must be afforded a reasonable opportunity to attend the hearing and be heard at the victim's own expense unless the victim has been otherwise subpoenaed or ordered to appear at the hearing. The right to be heard under this rule includes the right to be heard through counsel. However, the proceedings may not be unduly delayed for this purpose. In a case before a court-martial composed of a military judge and members, the military judge must conduct the hearing outside the presence of the members.”
(k) Mil. R. Evid. 615(e) is amended to read as follows:
“(e) A victim of an offense from the trial of an accused for that offense, unless the military judge, after receiving clear and convincing evidence, determines that testimony by the victim would be materially altered if the victim heard other testimony at that hearing or proceeding.”
(a) Paragraph 5, Article 81—Conspiracy, subsection a. is amended to read as follows:
“a. Text of statute.
(a) Any person subject to this chapter who conspires with any other person to commit an offense under this chapter shall, if one or more of the conspirators does an act to effect the object of the conspiracy, be punished as a court-martial may direct.
(b) Any person subject to this chapter who conspires with any other person to commit an offense under the law of war, and who knowingly does an overt act to effect the object of the conspiracy, shall be punished, if death results to one or more of the victims, by death or such other punishment as a court-martial or military commission may direct, and, if death does not result to any of the victims, by such punishment, other than death, as a court-martial or military commission may direct.”
(b) Paragraph 5, Article 81—Conspiracy, subsection b. is amended to read as follows:
“b.
(1)
(a) That the accused entered into an agreement with one or more persons to commit an offense under the UCMJ; and
(b) That, while the agreement continued to exist, and while the accused remained a party to the agreement, the accused or at least one of the co-conspirators performed an overt act for the purpose of bringing about the object of the conspiracy.
(2)
(a) That the accused entered into an agreement with one or more persons to commit an offense under the law of war;
(b) That, while the agreement continued to exist, and while the accused remained a party to the agreement, the accused knowingly performed an overt act for the purpose of bringing about the object of the conspiracy; and
(c) That death resulted to one or more victims.”
(c) Paragraph 5, Article 81—Conspiracy, paragraph e. is amended by adding “However, if the offense is also an offense under the law of war, the person knowingly performed an overt act for the purpose of bringing about the object of the conspiracy, and death results to one or more victims, the death penalty shall be an available punishment.” to the end of the paragraph.
(d) Paragraph 5, Article 81—Conspiracy, paragraph f. is amended to read as follows:
“f.
(1)
In that _____ (personal jurisdiction data), did, (at/on board—location) (subject-matter jurisdiction data, if required), on or about ____ 20 _ ___, conspired with _ ___ (and _ ____) to commit an offense under the Uniform Code of Military Justice, to wit: (larceny of _ ____, of a value of (about) $ _ ____, the property of _ ____), and in order to effect the object of the conspiracy the said _ ____ (and _ ____) did _ ____.
(2)
In that _ ____ ___ (personal jurisdiction data), did, (at/on board—location) (subject-matter jurisdiction data, if required), on or about _ ___ 20 _ ___, conspired with _ ___ (and _ ____) to commit an offense under the law of war, to wit: (murder of _ ____), and in order to effect the object of the conspiracy thesaid _ ____ knowingly did _ ____ resulting in the death of _ ____ ___.”
(e) Paragraph 16, Article 92—Failure to obey order or regulation, is amended by inserting the following text after subparagraph b(3)(c) and adding a new subparagraph b(3)(d):
(d) That such dereliction of duty resulted in death or grievous bodily harm to a person other than the accused.”
(f) Paragraph 16, Article 92—Failure to obey order or regulation, is amended by inserting new subparagraphs c(3)(e) and (f) as follows:
“(e) Grievous bodily harm. “Grievous bodily harm” means serious bodily injury. It does not include minor injuries, such as a black eye or a bloody nose, but does include fractured or dislocated bones, deep cuts, torn members of the body, serious damage to internal organs, and other serious bodily injuries.
(f) Where the dereliction of duty resulted in death or grievous bodily harm, an intent to cause death or grievous bodily harm is not required.”
(g) Paragraph 16, Article 92—Failure to obey order or regulation, is amended by inserting new subparagraph e(3)(B), re-lettering the existing subparagraph e(3)(B) as subparagraph e(3)(C) and inserting a new subparagraph e(3)(D) as follows:
“(B)
(C)
(D)
(h) Paragraph 16, Article 92—Failure to obey order or regulation, is amended by inserting new subparagraph f(4) as follows:
“(4)
In that, _ ____ ___ (personal jurisdiction data), who (knew) (should have known) of his/her duties (at/on board—location) (subject-matter jurisdiction data, if required), (on or about _ 20 _) (from about _ ___ 20 _ _ to about _ ___20__), was derelict in the performance of those duties in that he/she (negligently) (willfully) (by culpable inefficiency) failed _ ____, as it was his/her duty to do (, and that such dereliction of duty resulted in (grievous bodily harm, to wit: (broken leg) (deep cut) (fractured skull) to) (the death of) _ ____ ___.)
(Note: For (1) and (2) above, the punishment set forth does not apply in the following cases: if, in the absence of the order or regulation which was violated or not obeyed, the accused would on the same facts be subject to conviction for another specific offense for which a lesser punishment is prescribed; or, if the violation or failure to obey is a breach of restraint imposed as a result of an order. In these instances, the maximum punishment is that specifically prescribed elsewhere for that particular offense.)”
(i) Paragraph 17, Article 93—Cruelty and maltreatment, paragraph e. is amended to read as follows:
“ e.
(j) Paragraph 57, Article 131—Perjury, paragraphs c. is amended by changing “an investigation conducted under Article 32” to “a preliminary hearing conducted under Article 32” and by changing “an Article 32 investigation” to “an Article 32 preliminary hearing” for offenses occurring on or after 26 December 2014.
(k) Paragraph 96, Article 134—Obstructing justice, paragraph f. is amended by changing “an investigating officer” to “a preliminary hearing officer” and by changing “before such investigating officer” to “before such preliminary hearing officer” for offenses occurring on or after 26 December 2014.
(l) Paragraph 96a, Article 134—Wrongful interference with an adverse administrative proceeding, paragraph f. is amended by changing “an investigating officer” to “a preliminary hearing officer” and by changing “before such investigating officer” to “before such preliminary hearing officer” for offenses occurring on or after 26 December 2014.
(a) Article 92, Failure to obey order, regulation, Dereliction in performance of duties is amended to read as follows:
(b) Article 93, Cruelty & maltreatment of subordinates is amended to read as follows:
(c) Article 118, Murder is amended to delete the superscript “
(d) Article 134 is amended by inserting a new section “Stolen property: knowingly receiving, buying, concealing” before the entry for Article 134 “Straggling” as follows:
(a) Rule 201 is amended to insert the following at the end:
(b) Rule 201(f) is amended to insert the following at the end:
“
(c) Rule 305(i) is amended to insert the following at the end:
“
(d) Rule 305 is amended to insert the following at the end:
“(n)
(e) A new Analysis section is inserted for Rule 404A and reads as follows:
“
(f) The existing analysis to Rule 405 is removed and new analysis is inserted to read as follows:
“
(g) Rule 601(f) is amended by removing the word “new” before “provision”
(h) Rule 601 is amended by inserting the following at the end:
“(g)
(i) Rule 801(a) is amended to insert the following at the end:
“
(j) Rule 806(b) is amended by inserting the following at the end:
“
(k) Rule 906(b) is amended to insert the following at the end:
“
(l) Rule 1001(a) is amended by inserting the following at the end:
“
(m) A new Analysis section is inserted for Rule 1001A and reads as follows:
“
(n) Rule 1103A is amended to insert the following:
“This rule shall be implemented in a manner consistent with Executive Order 12958, as amended, concerning classified national security information.”
(o) Rule 1105(b) is amended to insert the following at the end:
“
(p) Rule 1107(b) is amended to insert the following at the end:
“
(q) The existing analysis to Rule 1107(c) is removed and new analysis is inserted as follows:
“
(r) The existing analysis to Rule 1107(d) is removed and new analysis is inserted as follows:
“
(s) Rule 1107(f) is amended by inserting the following at the end:
“
(t) Rule 1108(b) is amended by inserting the following at the end:
“
(u) Rule 1301(c) is amended by inserting the following at the end:
“
(a) Rule 412 is amended by inserting the following at the end:
“
(b) Rule 513 is amended by inserting the following at the end:
“
(c) Rule 514 is amended by inserting the following at the end:
“
(d) Rule 615 is amended by inserting the following at the end:
“
Paragraph 16, Article 92—Failure to obey order or regulation, is amended by inserting the following at the end:
“
(a) The Discussion following R.C.M. 201(a)(2) is amended to read as follows:
“Except insofar as required by the Constitution, the Code, or the Manual, such as persons listed under Article 2(a)(10), jurisdiction of courts-martial does not depend on where the offense was committed.”
(b) A new Discussion section is added immediately following R.C.M. 201(f)(2)(D):
“Pursuant to the National Defense Authorization Act for Fiscal Year 2014, only a general court-martial has jurisdiction over penetrative sex offenses under Articles 120, 120b, and 125, UCMJ.”
(c) A new Discussion section is added immediately after R.C.M. 305(i)(2)(A)(iv):
“Personal appearance by the victim is not required. A victim's right to be reasonably heard at a 7-day review may also be accomplished telephonically, by videoteleconference, or by written statement.”
(d) A new Discussion section is added immediately after R.C.M. 305(j)(1)(C):
“Upon a motion for release from pretrial confinement, a victim of an alleged offense committed by the prisoner has the right to reasonable, accurate, and timely notice of the motion and any hearing, the right to consult with counsel representing the government, and the right to be reasonably heard. Inability to reasonably afford a victim these rights shall not delay the proceedings.”
(e) A new Discussion section is added immediately after R.C.M. 305(n):
“For purposes of this rule, the term “victim of an alleged offense” means a person who has suffered direct physical, emotional, or pecuniary harm as a result of the commission of an offense under the UCMJ.”
(f) The discussion section following R.C.M. 404(e) is amended to read as follows:
“A preliminary hearing should be directed when it appears that the charges are of such a serious nature that trial by general court-martial may be warranted.
(g) A new Discussion section is added immediately following R.C.M. 404A(d):
“The purposes of this rule are to provide the accused with the documents used to make the determination to prefer charges and direct a preliminary hearing, and to allow the accused to prepare for the preliminary hearing. This rule is not intended to be a tool for discovery and does not impose the same discovery obligations found in R.C.M. 405 prior to amendments required by the National Defense Authorization Act for Fiscal Year 2014 or R.C.M. 701. Additional rules for disclosure of witnesses and other evidence in the preliminary hearing are provided in R.C.M. 405(g).”
(h) A new Discussion section is added immediately after R.C.M. 405(a):
“The function of the preliminary hearing is to ascertain and impartially weigh the facts needed for the limited scope and purpose of the preliminary hearing. The preliminary hearing is not intended to perfect a case against the accused and is not intended to serve as a means of discovery or to provide a right of confrontation required at trial. Determinations and recommendations of the preliminary hearing officer are advisory.
Failure to substantially comply with the requirements of Article 32, which failure prejudices the accused, may result in delay in disposition of the case or disapproval of the proceedings. See R.C.M. 905(b)(1) and 906(b)(3) concerning motions for appropriate relief relating to the preliminary hearing.
The accused may waive the preliminary hearing.
(i) A new Discussion section is added immediately after R.C.M. 405(d)(1):
“The preliminary hearing officer, if not a judge advocate, should be an officer in the grade of O-4 or higher. The preliminary hearing officer may seek legal advice concerning the preliminary hearing officer's responsibilities from an impartial source, but may not obtain such advice from counsel for any party or counsel for a victim.”
(j) A new Discussion section is added immediately after R.C.M. 405(e)(2):
“Except as set forth in subsection (h) below, the Mil. R. Evid. do not apply at a preliminary hearing. Except as prohibited elsewhere in this rule, a preliminary hearing officer may consider evidence, including hearsay, which would not be admissible at trial.”
(k) A new Discussion section is added immediately after R.C.M. 405(f)(2)(G):
“Unsworn statements by the accused, unlike those made under R.C.M. 1001(c)(2), shall be limited to matters in defense and mitigation.”
(l) A new Discussion section is added immediately after R.C.M. 405(g)(1)(C):
“A commanding officer's determination of whether an individual is available, as well as the means by which the individual is available, is a balancing test. The more important the testimony of the witness, the greater the difficulty, expense, delay, or effect on military operations must be to deny production of the witness. Based on operational necessity and mission requirements, the witness's commanding officer may authorize the witness to testify by video conference, telephone, or similar means of remote testimony. Factors to be considered in making this determination include the costs of producing the witness; the timing of the request for production of the witness; the potential delay in the proceeding that may be caused by the production of the witness; and the likelihood of significant interference with operational deployment, mission accomplishment, or essential training.”
(m) A new Discussion section is added immediately after R.C.M. 405(g)(2)(C):
“Factors to be considered in making this determination include the costs of producing the witness; the timing of the request for production of the witness; the potential delay in the proceeding that may be caused by the production of the witness; the willingness of the witness to testify in person; and, for child witnesses, the traumatic effect of providing in-person testimony. Civilian witnesses may not be compelled to provide testimony at a preliminary hearing. Civilian witnesses may be paid for travel and associated expenses to testify at a preliminary hearing.
(n) A new Discussion section is added immediately after R.C.M. 405(g)(3)(B)(iii):
“A
(o) A new Discussion section is added immediately after R.C.M. 405(h)(5):
“Before considering evidence offered under subsection (h)(2), the preliminary hearing officer must determine that the evidence offered is relevant for the limited scope and purpose of the hearing, that the evidence is proper under subsection (h)(2), and that the probative value of such evidence outweighs the danger of unfair prejudice to the alleged victim's privacy. The preliminary hearing officer shall set forth any limitations on the scope of such evidence.
Evidence offered under subsection (h)(2) above must be protected pursuant to the Privacy Act of 1974, 5 U.S.C. § 552a. Although Mil. R. Evid. 412(b)(1)(C) allows admission of evidence of the victim's sexual behavior or predisposition at trial when it is constitutionally required, there is no constitutional requirement at an Article 32 hearing. There is likewise no constitutional requirement for a pretrial hearing officer to consider evidence under Mil. R. Evid. 513(d)(8), and 514(d)(6) at an Article 32 hearing. Evidence deemed admissible by the preliminary hearing officer should be made a part of the report of preliminary hearing.
(p) A new Discussion section is added immediately after R.C.M. 405(i)(1):
“A preliminary hearing officer may only consider evidence within the limited purpose of the preliminary hearing and shall ensure that the scope of the hearing is limited to that purpose. When the preliminary hearing officer finds that evidence offered by either party is not within the scope of the hearing, he shall inform the parties and halt the presentation of that information.”
(q) A new Discussion section is added immediately after R.C.M. 405(i)(3)(A):
“The following oath may be given to witnesses:
“Do you (swear) (affirm) that the evidence you give shall be the truth, the whole truth, and nothing but the truth (so help you God)?”
The preliminary hearing officer is required to include in the report of the preliminary hearing a summary of the substance of all testimony.
All substantially verbatim notes of testimony and recordings of testimony should be preserved until the end of trial.
If during the preliminary hearing any witness subject to the Code is suspected of an offense under the Code, the preliminary hearing officer should comply with the warning requirements of Mil. R. Evid. 305(c), (d), and, if necessary (e).
Bearing in mind that counsel are responsible for preparing and presenting their cases, the preliminary hearing officer may ask a witness questions relevant to the limited scope and purpose of the hearing. When questioning a witness, the preliminary hearing officer may not depart from an impartial role and become an advocate for either side.”
(r) A new Discussion section is added immediately after R.C.M. 405(i)(6):
“Counsel for the government shall provide victims with access to, or a copy of, the recording of the proceedings in accordance with such regulations as the Secretary concerned may prescribe.”
(s) A new Discussion section is added immediately after R.C.M. 405(j)(1):
“If practicable, the charges and the report of preliminary hearing should be forwarded to the general court-martial convening authority within 8 days after an accused is ordered into arrest or confinement.
(t) A new Discussion section is added immediately after R.C.M. 405(j)(2)(K):
“The preliminary hearing officer may include any additional matters useful to the convening authority in determining disposition. The preliminary hearing officer may recommend that the charges and specifications be amended or that additional charges be preferred.
(u) A new Discussion section is added immediately after R.C.M. 405(k):
The convening authority who receives an objection may direct that the preliminary hearing be reopened or take other action, as appropriate.”
(v) A new Discussion section is added immediately after R.C.M. 601(g):
“Parallel convening authorities are those convening authorities that possess the same court-martial jurisdiction authority. Examples of permissible transmittal of charges under this rule include the transmittal from a general court-martial convening authority to another general court-martial convening authority, or from one special court-martial convening authority to another special court-martial convening authority. It would be impracticable for an original convening authority to continue exercising authority over the charges, for example, when a command is being decommissioned or inactivated, or when deploying or redeploying and the accused is remaining behind. If charges have been referred, there is no requirement that the charges be withdrawn or dismissed prior to transfer.
(w) A new Discussion section is added immediately after R.C.M. 801(a)(6)(A):
“The rights that a designee may exercise on behalf of a victim include the right to receive notice of public hearings in the case; the right to be reasonably heard at such hearings, if permitted by law; and the right to confer with counsel representing the government at such hearings. The designee may also be the custodial guardian of the child.
When determining whom to appoint under this rule, the military judge may consider the following: the age and maturity, relationship to the victim, and physical proximity of any proposed designee; the costs incurred in effecting the appointment; the willingness of the proposed designee to serve in such a role; the previous appointment of a guardian by another court of competent jurisdiction; the preference of the victim; any potential delay in any proceeding that may be caused by a specific appointment; and any other relevant information.”
(x) A new Discussion section is added immediately after R.C.M. 801(a)(6)(B)(i):
“In the event a case involves multiple victims who are entitled to notice under this rule, each victim is only entitled to notice relating to their own designated representative.”
(y) A new Discussion section is added immediately after R.C.M. 801(a)(6)(D):
“The term “victim of an offense under the UCMJ” means a person who has suffered direct physical, emotional, or pecuniary harm as a result of the commission of an offense under the UCMJ. “Good Cause” means adequate or reasonable grounds to believe that the individual appointed to assume the victim's rights is not acting or does not intend to act in the best interest of the victim.”
(z) The Discussion section following R.C.M. 806(b)(1) is amended to read as follows:
“The military judge must ensure that the dignity and decorum of the proceedings are maintained and that the other rights and interests of the parties and society are protected. Public access to a session may be limited, specific persons excluded from the courtroom, and, under unusual circumstances, a session may be closed.
Exclusion of specific persons, if unreasonable under the circumstances, may violate the accused's right to a public trial, even though other spectators remain. Whenever specific persons or some members of the public are excluded, exclusion must be limited in time and scope to the minimum extent necessary to achieve the purpose for which it is ordered. Prevention of overcrowding or noise may justify limiting access to the courtroom. Disruptive or distracting appearance or conduct may justify excluding specific persons. Specific persons may be excluded when necessary to protect witnesses from harm or intimidation. Access may be reduced when no other means is available to relieve a witness' inability to testify due to embarrassment or extreme nervousness. Witnesses will ordinarily be excluded from the courtroom so that they cannot hear the testimony of other witnesses.
For purposes of this rule, the term “victim of an alleged offense” means a person who has suffered direct, physical, emotional, or pecuniary harm as a result of the commission of an offense under the UCMJ.”
(aa) The discussion section following R.C.M. 906(b)(9) is amended to read as follows:
“A motion for severance is a request that one or more accused against whom charges have been referred to a joint or common trial be tried separately. Such a request should be granted if good cause is shown. For example, a severance may be appropriate when: the moving party wishes to use the testimony of one or more of the coaccused or the spouse of a coaccused; a defense of a coaccused is antagonistic to the moving party; or evidence as to any other accused will improperly prejudice the moving accused.
If a severance is granted by the military judge, the military judge will decide which accused will be tried first.
(bb) A new Discussion section is added immediately after R.C.M. 1103A(b)(3):
“A convening authority who has granted clemency based upon review of sealed materials in the record of trial is not permitted to disclose the contents of the sealed materials when providing a written explanation of the reason for such action, as directed under R.C.M. 1107.”
(cc) The Discussion section following R.C.M. 1106(d)(3) is amended to read as follows:
“The recommendation required by this rule need not include information regarding other recommendations for clemency. It may include a summary of clemency actions authorized under R.C.M. 1107.
(dd) The Discussion section immediately following R.C.M. 1107(c) is deleted.
(ee) A new Discussion section is added immediately after R.C.M. 1107(d)(1)(E)(i):
“The phrase “investigation or prosecution of another person who has committed an offense” includes offenses under the UCMJ or other Federal, State, local, or foreign criminal statutes.”
(ff) The Discussion section immediately following R.C.M. 1107(d)(1) is deleted.
(gg) A new Discussion section is added immediately after R.C.M. 1107(d)(1)(F):
“A sentence adjudged by a court-martial may be approved if it was within the jurisdiction of the court-martial to adjudge (
When mitigating forfeitures, the duration and amounts of forfeiture may be changed as long as the total amount forfeited is not increased and neither the amount nor duration of the forfeitures exceeds the jurisdiction of the court-martial. When mitigating confinement or hard labor without confinement, the convening authority should use the equivalencies at R.C.M. 1003(b)(5)–(6), as appropriate.
Unless prohibited by this rule, the convening authority may disapprove, mitigate or change to a less severe punishment any individual component of a sentence. For example, if an accused is found guilty of assault consummated by a battery and sentenced to a bad-conduct discharge, three months of confinement, and reduction to E–1, without a pre-trial agreement and without being able to apply the substantial assistance exception, the convening authority may disapprove or reduce any part of the sentence except the bad-conduct discharge.”
(hh) The Discussion section following R.C.M. 1107(d)(2) is amended to read as follows:
“In determining what sentence should be approved, the convening authority should consider all relevant and permissible factors including the possibility of rehabilitation, the deterrent effect of the sentence, and all matters relating to clemency, such as pretrial confinement.
When an accused is not serving confinement, the accused should not be deprived of more than two-thirds pay for any month as a result of one or more sentences by court-martial and other stoppages or involuntary deductions, unless requested by the accused. Since court-martial forfeitures constitute a loss of entitlement of the pay concerned, they take precedence over all debts.”
(ii) The Discussion section following R.C.M. 1107(d)(1)(E)(i) is amended to read as follows:
“The phrase “investigation or prosecution of another person who has committed an offense” includes offenses under the UCMJ or other Federal, State, local, or foreign criminal statutes.”
(jj) A new Discussion section is added immediately after R.C.M. 1301(c)(2):
“Pursuant to the National Defense Authorization Act for Fiscal Year 2014, only a general court-martial has jurisdiction to try penetrative sex offenses under Articles 120, 120b, and 125, UCMJ.”
(kk) The Discussion sections to R.C.M. 406(b)(4), R.C.M. 503(a)(1), and 707(c)(1) are amended by changing “investigating officer” to “preliminary hearing officer” for offenses occurring on or after 26 December 2014.
(ll) The Discussion section to R.C.M. 701(a)(6)(c) is amended by changing “report of Article 32 investigation” to “report of Article 32 preliminary hearing” for offenses occurring on or after 26 December 2014.
(mm) The Discussion section to R.C.M. 705(d)(2) and R.C.M. 919(b) are amended by changing “Article 32 investigation” to “Article 32 preliminary hearing” for offenses occurring on or after 26 December 2014.
A new Discussion section is added immediately following Paragraph 16, Article 92—Failure to obey order or regulation, subsection e(3)(d):
“If the dereliction of duty resulted in death, the accused may also be charged under Article 119 or Article 134 (negligent homicide), as applicable.”
The Rules for Courts-Martial in this appendix were revised to implement Sections 1705, and 1706 of the National Defense Authorization Act for Fiscal Year 2014, Public Law 113–66, 26 December 2013. For offenses committed before 24 June 2014, the relevant Rules for Courts-Martial are contained in this appendix and listed below.
(f)
(1)
(A)
(i) Except as otherwise expressly provided, general courts-martial may try any person subject to the code for any offense made punishable under the code. General courts-martial also may try any person for a violation of Article 83, 104, or 106.
(ii) Upon a finding of guilty of an offense made punishable by the code, general courts-martial may, within limits prescribed by this Manual, adjudge any punishment authorized under R.C.M. 1003.
(iii) Notwithstanding any other rule, the death penalty may not be adjudged if:
(a) Not specifically authorized for the offenses by the code and Part IV of this Manual; or
(b) The case has not been referred with a special instruction that the case is to be tried as capital.
(B)
(i) General courts-martial may try any person who by the law of war is subject to trial by military tribunal for any crime or offense against:
(a) The law of war; or
(b) The law of the territory occupied as an incident of war or belligerency whenever the local civil authority is superseded in whole or part by the military authority of the occupying power. The law of the occupied territory includes the local criminal law as adopted or modified by competent authority, and the proclamations, ordinances, regulations, or orders promulgated by competent authority of the occupying power.
Subsection (f)(1)(B)(i)(b) is an exercise of the power of military government.
(ii) When a general court-martial exercises jurisdiction under the law of war, it may adjudge any punishment permitted by the law of war.
Certain limitations on the discretion of military tribunals to adjudge punishment under the law of war are prescribed in international conventions.
(C)
(2)
(A)
(B)
(i) Upon a finding of guilty, special courts-martial may adjudge, under limitations prescribed by this Manual, any punishment authorized under R.C.M. 1003 except death, dishonorable discharge, dismissal, confinement for more than 1 year, hard labor without confinement for more than 3 months, forfeiture of pay exceeding two-thirds pay per month, or any forfeiture of pay for more than 1 year.
(ii) A bad-conduct discharge, confinement for more than six months, or forfeiture of pay for more than six months, may not be adjudged by a special court-martial unless:
(a) Counsel qualified under Article 27(b) is detailed to represent the accused; and
(b) A military judge is detailed to the trial, except in a case in which a military judge could not be detailed because of physical conditions or military exigencies. Physical conditions or military exigencies, as the terms are here used, may exist under rare circumstances, such as on an isolated ship on the high seas or in a unit in an inaccessible area, provided compelling reasons exist why trial must be held at that time and at that place. Mere inconvenience does not constitute a physical condition or military exigency and does not excuse a failure to detail a military judge. If a military judge cannot be detailed because of physical conditions or military exigencies, a bad-conduct discharge, confinement for more
The requirement for counsel is satisfied when counsel qualified under Article 27(b), and not otherwise disqualified, has been detailed and made available, even though the accused may not choose to cooperate with, or use the services of, such detailed counsel.
The physical condition or military exigency exception to the requirement for a military judge does not apply to the requirement for detailing counsel qualified under Article 27(b).
(C)
(i) A capital offense for which there is prescribed a mandatory punishment beyond the punitive power of a special court-martial shall not be referred to such a court-martial.
(ii) An officer exercising general court-martial jurisdiction over the command which includes the accused may permit any capital offense other than one described in subsection (f)(2)(C)(i) of this rule to be referred to a special court-martial for trial.
(iii) The Secretary concerned may authorize, by regulation, officers exercising special court-martial jurisdiction to refer capital offenses, other than those described in subsection (f)(2)(C)(i) of this rule, to trial by special court-martial without first obtaining the consent of the officer exercising general court-martial jurisdiction over the command.
(3)
(b)
(1) The accused may submit to the convening authority any matters that may reasonably tend to affect the convening authority's decision whether to disapprove any findings of guilty or to approve the sentence. The convening authority is only required to consider written submissions.
(2) Submissions are not subject to the Military Rules of Evidence and may include:
(C) Matters in mitigation which were not available for consideration at the court-martial; and
(b)
(1)
The action is taken in the interests of justice, discipline, mission requirements, clemency, and other appropriate reasons. If errors are noticed by the convening authority, the convening authority may take corrective action under this rule.
(2)
(3)
(A)
(i) The result of trial;
(ii) The recommendation of the staff judge advocate or legal officer under R.C.M. 1106, if applicable; and
(iii) Any matters submitted by the accused under R.C.M. 1105 or, if applicable,
(B)
(i) The record of trial;
(ii) The personnel records of the accused; and
(iii) Such other matters as the convening authority deems appropriate. However, if the convening authority considers matters adverse to the accused from outside the record, with knowledge of which the accused is not chargeable, the accused shall be notified and given an opportunity to rebut.
(4)
Commitment of the accused to the custody of the Attorney General for hospitalization is discretionary.
(5)
(c)
(1) Change a finding of guilty to a charge or specification to a finding of guilty to an offense that is a lesser included offense of the offense stated in the charge or specification; or
(2) Set aside any finding of guilty and—
(A) Dismiss the specification and, if appropriate, the charge, or
(B) Direct a rehearing in accordance with subsection (e) of this rule.
The convening authority may for any reason or no reason disapprove a finding of guilty or approve a finding of guilty only of a lesser offense. However,
(d)
(1)
A sentence adjudged by a court-martial may be approved if it was within the jurisdiction of the court-martial to adjudge (
When mitigating forfeitures, the duration and amounts of forfeiture may be changed as long as the total amount forfeited is not increased and neither the amount nor duration of the forfeitures exceeds the
(2)
In determining what sentence should be approved the convening authority should consider all relevant factors including the possibility of rehabilitation, the deterrent effect of the sentence, and all matters relating to clemency, such as pretrial confinement.
When an accused is not serving confinement, the accused should not be deprived of more than two-thirds pay for any month as a result of one or more sentences by court-martial and other stoppages or involuntary deductions, unless requested by the accused. Since court-martial forfeitures constitute a loss of entitlement of the pay concerned, they take precedence over all debts.
(3)
(A) In a case in which a court-martial sentences an accused referred to in subsection (B), below, to confinement, the convening authority may defer service of a sentence to confinement by a court-martial, without the consent of the accused, until after the accused has been permanently released to the armed forces by a state or foreign country.
(B) Subsection (A) applies to an accused who, while in custody of a state or foreign country, is temporarily returned by that state or foreign country to the armed forces for trial by court-martial; and after the court-martial, is returned to that state or foreign country under the authority of a mutual agreement or treaty, as the case may be.
(C) As used in subsection (d)(3), the term “state” means a state of the United States, the District of Columbia, a territory, and a possession of the United States.
The convening authority's decision to postpone service of a court-martial sentence to confinement normally should be reflected in the action.
(4)
(5)
(e)
(1)
(A)
A rehearing may be appropriate when an error substantially affecting the findings or sentence is noticed by the convening authority. The severity of the findings or the sentence of the original court-martial may not be increased at a rehearing unless the sentence prescribed for the offense is mandatory.
(B)
(i) When taking action on the court-martial under this rule;
(ii) In cases subject to review by the Court of Criminal Appeals, before the case is forwarded under R.C.M. 1111(a)(1) or (b)(1), but only as to any sentence which was approved or findings of guilty which were not disapproved in any earlier action. In such a case, a supplemental action disapproving the sentence and some or all of the findings, as appropriate, shall be taken; or
(iii)
A sentence rehearing, rather than a reassessment, may be more appropriate in cases where a significant part of the government's case has been dismissed. The convening authority may not take any actions inconsistent with directives of superior competent authority. Where that directive is unclear, appropriate clarification should be sought from the authority issuing the original directive.
(iv)
(C)
(i)
(ii)
For example, if proof of absence without leave was by improperly authenticated documentary evidence admitted over the objection of the defense, the convening authority may disapprove the findings of guilty and sentence and order a rehearing if there is reason to believe that properly authenticated documentary evidence or other admissible evidence of guilt will be available at the rehearing. On the other hand, if no proof of unauthorized absence was introduced at trial, a rehearing may not be ordered.
(iii)
(D)
(E)
(2)
(f)
(1)
(2)
For purposes of this rule, a record is considered to have been forwarded for review when the convening authority has either delivered it in person or has entrusted it for delivery to a third party over whom the convening authority exercises no lawful control (
(3)
If a rehearing or other trial is not directed, the reasons for disapproval need not be stated in the action, but they may be when appropriate. It may be appropriate to state them when the reasons may affect administrative disposition of the accused; for example, when the finding is disapproved because of the lack of mental responsibility of the accused or the running of the statute of limitations.
No express action is necessary to approve findings of guilty.
(4)
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(5)
(A)
(B)
In approving a sentence not in excess of or more severe than one previously approved (
(b)
(c)
Rule for Courts-Martial 405 in this appendix was revised to implement Section 1702 of the National Defense Authorization Act for Fiscal Year 2014, Public Law 113–66, 26 December 2013.” For offenses committed before 26 December 2014, the relevant R.C.M. 405 is contained in this appendix and listed below:
(a)
The primary purpose of the investigation required by Article 32 and this rule is to inquire into the truth of the matters set forth in the charges, the form of the charges, and to secure information on which to determine what disposition should be made of the case. The investigation also serves as a means of discovery. The function of the investigation is to ascertain and impartially weigh all available facts in arriving at conclusions and recommendations, not to perfect a case against the accused. The investigation should be limited to the issues raised by the charges and necessary to proper disposition of the case. The investigation is not limited to examination of the witnesses and evidence mentioned in the accompanying allied papers.
If at any time after an investigation under this rule the charges are changed to allege a more serious or essentially different offense, further investigation should be directed with respect to the new or different matters alleged.
Failure to comply substantially with the requirements of Article 32, which failure prejudices the accused, may result in delay in disposition of the case or disapproval of the proceedings.
The accused may waive the pretrial investigation.
(b)
An earlier investigation includes courts of inquiry and similar investigations which meet the requirements of this subsection.
(c)
(d)
(1)
The investigating officer should be an officer in the grade of major or lieutenant commander or higher or one with legal training. The investigating officer may seek legal advice concerning the investigating officer's responsibilities from an impartial source, but may not obtain such advice from counsel for any party.
(2)
(A)
(B)
(C)
(3)
(A) Counsel to represent the United States;
(B) A reporter; and
(C) An interpreter.
(e)
The investigation may properly include such inquiry into issues raised directly by the charges as is necessary to make an appropriate recommendation. For example, inquiry into the legality of a search or the
In investigating uncharged misconduct identified during the pretrial investigation, the investigating officer will inform the accused of the general nature of each uncharged offense investigated, and otherwise afford the accused the same opportunity for representation, cross examination, and presentation afforded during the investigation of any charged offense.
(f)
(1) Be informed of the charges under investigation;
(2) Be informed of the identity of the accuser;
(3) Except in circumstances described in R.C.M. 804(c)(2), be present throughout the taking of evidence;
(4) Be represented by counsel;
(5) Be informed of the witnesses and other evidence then known to the investigating officer;
(6) Be informed of the purpose of the investigation;
(7) Be informed of the right against self-incrimination under Article 31;
(8) Cross-examine witnesses who are produced under subsection (g) of this rule;
(9) Have witnesses produced as provided for in subsection (g) of this rule;
(10) Have evidence, including documents or physical evidence, within the control of military authorities produced as provided under subsection (g) of this rule;
(11) Present anything in defense, extenuation, or mitigation for consideration by the investigating officer; and
(12) Make a statement in any form.
(g)
(1)
(A)
A witness located beyond the 100-mile limit is not
(B)
In preparing for the investigation, the investigating officer should consider what evidence will be necessary to prepare a thorough and impartial investigation. The investigating officer should consider, as to potential witnesses, whether their personal appearance will be necessary. Generally, personal appearance is preferred, but the investigating officer should consider whether, in light of the probable importance of a witness' testimony, an alternative to testimony under subsection (g)(4)(A) of this rule would be sufficient.
After making a preliminary determination of what witnesses will be produced and other evidence considered, the investigating officer should notify the defense and inquire whether it requests the production of other witnesses or evidence. In addition to witnesses for the defense, the defense may request production of witnesses whose testimony would favor the prosecution.
Once it is determined what witnesses the investigating officer intends to call it must be determined whether each witness is reasonably available. That determination is a balancing test. The more important the testimony of the witness, the greater the difficulty, expense, delay, or effect on military operations must be to permit nonproduction. For example, the temporary absence of a witness on leave for 10 days would normally justify using an alternative to that witness' personal appearance if the sole reason for the witness' testimony was to impeach the credibility of another witness by reputation evidence, or to establish a mitigating character trait of the accused. On the other hand, if the same witness was the only eyewitness to the offense, personal appearance would be required if the defense requested it and the witness is otherwise reasonably available. The time and place of the investigation may be changed if reasonably necessary to permit the appearance of a witness. Similar considerations apply to the production of evidence.
If the production of witnesses or evidence would entail substantial costs or delay, the investigating officer should inform the commander who directed the investigation.
The provision in (B), requiring the investigating officer to notify the appropriate authorities of requests by the accused for information privileged under Mil. R. Evid. 505 or 506, is for the purpose of placing the appropriate authority on notice that an order, as authorized under subparagraph (g)(6), may be required to protect whatever information the government may decide to release to the accused.
(2)
(A)
The investigating officer may discuss factors affecting reasonable availability with the immediate commander of the requested witness and with others. If the immediate commander determined that the witness is not reasonably available, the reasons for that determination should be provided to the investigating officer.
(B)
The investigating officer should initially determine whether a civilian witness is reasonably available without regard to whether the witness is willing to appear. If the investigating officer determines that a civilian witness is apparently reasonably available, the witness should be invited to attend and when appropriate, informed that necessary expenses will be paid.
If the witness refuses to testify, the witness is not reasonably available because civilian witnesses may not be compelled to attend a pretrial investigation. Under subsection (g)(3) of this rule, civilian witnesses may be paid for travel and associated expenses to testify at a pretrial investigation. Except for use in support of the deposition of a witness under Article 49, UCMJ, and ordered pursuant to R.C.M. 702(b), the investigating officer and any government representative to an Article 32, UCMJ, proceeding does not possess authority to issue a subpoena to compel against his or her will a civilian witness to appear and provide testimony or documents.
(C)
The investigating officer may discuss factors affecting reasonable availability with the custodian and with others. If the custodian determines that the evidence is not reasonably available, the reasons for that determination should be provided to the investigating officer.
(D)
(3)
(4)
(A) Unless the defense objects, an investigating officer may consider, regardless of the availability of the witness:
(i) Sworn statements;
(ii) Statements under oath taken by telephone, radio, or similar means providing each party the opportunity to question the witness under circumstances by which the investigating officer may reasonably conclude that the witness' identity is as claimed;
(iii) Prior testimony under oath;
(iv) Depositions;
(v) Stipulations of fact or expected testimony;
(vi) Unsworn statements; and
(vii) Offers of proof of expected testimony of that witness.
(B) The investigating officer may consider, over objection of the defense, when the witness is not reasonably available:
(i) Sworn statements;
(ii) Statements under oath taken by telephone, radio, or similar means providing each party the opportunity to question the witness under circumstances by which the investigating officer may reasonably conclude that the witness' identity is a claimed;
(iii) Prior testimony under oath; and
(iv) Deposition of that witness; and
(v) In time of war, unsworn statements.
(5)
(A) Unless the defense objects, an investigating officer may consider, regardless of the availability of the evidence:
(i) Testimony describing the evidence;
(ii) An authenticated copy, photograph, or reproduction of similar accuracy of the evidence;
(iii) An alternative to testimony, when permitted under subsection (g)(4)(B) of this rule, in which the evidence is described;
(iv) A stipulation of fact, document's contents, or expected testimony;
(v) An unsworn statement describing the evidence; or
(vi) An offer of proof concerning pertinent characteristics of the evidence.
(B) The investigating officer may consider, over objection of the defense, when the evidence is not reasonably available:
(i) Testimony describing the evidence;
(ii) An authenticated copy, photograph, or reproduction of similar accuracy of the evidence; or
(iii) An alternative to testimony, when permitted under subsection (g)(4)(B) of this rule, in which the evidence is described.
(6)
(h)
(1)
(A)
The following oath may be given to witnesses:
“Do you (swear) (affirm) that the evidence you give shall be the truth, the whole truth, and nothing but the truth (so help you God)?”
The investigating officer is required to include in the report of the investigation a summary of the substance of all testimony.
If the accused testifies, the investigating officer may invite but not require the accused to swear to the truth of a summary of that testimony. If substantially verbatim notes of a testimony or recordings of testimony were taken during the investigation, they should be preserved until the end of trial.
If it appears that material witnesses for either side will not be available at the time anticipated for trial, the investigating officer should notify the commander who directed the investigation so that depositions may be taken if necessary.
If during the investigation any witness subject to the code is suspected of an offense under the code, the investigating officer should comply with the warning requirements of Mil. R. Evid.305(c), (d), and, if necessary, (e).
(B)
(C)
(2)
Although the investigating officer is not required to rule on objections, the investigating officer may take corrective action in response to an objection as to matters relating to the conduct of the proceedings when the investigating officer believes such action is appropriate.
If an objection raises a substantial question about a matter within the authority of the commander who directed the investigation (for example, whether the investigating officer was properly appointed) the investigating officer should promptly inform the commander who directed the investigation.
(3)
(4)
(A) After being notified of the time and place of the proceeding is voluntarily absent (whether or not informed by the investigating officer of the obligation to be present); or
(B) After being warned by the investigating officer that disruptive conduct will cause removal from the proceeding, persists in conduct which is such as to justify exclusion from the proceeding.
(i)
The investigating officer should exercise reasonable control over the scope of the inquiry.
Certain rules relating to the form of testimony which may be considered by the investigating officer appear in subsection (g) of this rule.
(j)
(1)
If practicable, the charges and the report of investigation should be forwarded to the general court-martial convening authority within 8 days after an accused is ordered into arrest or confinement. Article 33.
(2)
(A) A statement of names and organizations or addresses of defense counsel and whether defense counsel was present throughout the taking of evidence, or if not present the reason why;
(B) The substance of the testimony taken on both sides, including any stipulated testimony;
(C) Any other statements, documents, or matters considered by the investigating officer, or recitals of the substance or nature of such evidence;
(D) A statement of any reasonable grounds for belief that the accused was not mentally responsible for the offense or was not competent to participate in the defense during the investigation;
(E) A statement whether the essential witnesses will be available at the time anticipated for trial and the reasons why any essential witness may not then be available;
(F) An explanation of any delays in the investigation;
(G) The investigating officer's conclusion whether the charges and specifications are in proper form;
(H) The investigating officer's conclusion whether reasonable grounds exist to believe that the accused committed the offenses alleged; and
(I) The recommendations of the investigating officer, including disposition.
For example, the investigating officer may recommend that the charges and specifications be amended or that additional charges be preferred.
(3)
(4)
(k)
If the report fails to include reference to objections which were made under subsection (h)(2) of this rule, failure to object to the report will constitute waiver of such objections in the absence of good cause for relief from the waiver.
The commander who receives an objection may direct that the investigation be reopened or take other action, as appropriate.
Even if the accused made a timely objection to failure to produce a witness, a defense request for a deposition may be necessary to preserve the issue for later review.”
Consumer Product Safety Commission.
Final rule.
The Consumer Product Safety Commission (CPSC, Commission, or we) is issuing a rule establishing requirements for magnet sets and individual magnets that are intended or marketed to be used with or as magnet sets. As defined in the rule, magnet sets are aggregations of separable magnetic objects that are marketed or commonly used as a manipulative or construction item for entertainment, such as puzzle working, sculpture building, mental stimulation, or stress relief. Under the rule, if a magnet set contains a magnet that fits within the CPSC's small parts cylinder, each magnet in the magnet set must have a flux index of 50 kG
This rule will become effective on April 1, 2015. The incorporation by reference of the publication listed in this rule is approved by the Director of the
Thomas Lee, Compliance Officer, Office of Compliance and Field Operations, Consumer Product Safety Commission, 4330 East West Highway, Bethesda, MD 20814; telephone: (301) 504–7737, or email:
The Commission is issuing a safety standard under the Consumer Product Safety Act (CPSA) establishing requirements for magnet sets that have been associated with serious injuries and one reported death.
Significant U.S. sales of magnet sets marketed for general entertainment began in 2009. CPSC staff received the first consumer incident report involving magnet sets in February 2010. No injury resulted from this incident. Shortly after receiving this report, CPSC staff collected and evaluated samples of the magnet sets.
In December 2010, we received our first consumer incident report involving the surgical removal of magnets that had been part of a magnet set. During 2011, CPSC staff collected magnet sets marketed to children under 13 years old, and staff evaluated the compliance of these products with ASTM F963–11,
In November 2011, in response to continuing reports of injuries associated with the products, the CPSC, in cooperation with two manufacturers, launched a public awareness campaign, which included a video public service announcement (PSA). The PSA advised children: Not to put magnets from magnet sets into their mouth; described the risk of injury presented by the ingestion of high-powered magnets; and provided tips to avoid magnet ingestion injuries, along with guidance for children who had swallowed magnets and parents who suspect that their child has swallowed magnets. Despite the CPSC's compliance and public awareness activities, reported incidents of magnet ingestion by children increased from 13 in 2010, to 19 in 2011, and 52 in 2012. Likely due to CPSC enforcement and regulatory activity beginning in mid-2012, and because the largest distributor ceased operations at the end of 2012, reported incidents declined to 13 incidents in 2013, including one fatality, and two incidents in 2014. We received an additional magnet ingestion incident report for which there was insufficient information to determine the date of the incident. As of June 24, 2014, 100 ingestion incidents involving, or possibly involving, ingestion of magnets from magnet sets have been reported to CPSC. (As discussed in section C of this preamble, staff's analysis of incidents reported through the National Electronic Injury Surveillance System (NEISS) estimates that 2,900 possible magnet set, emergency department-treated ingestions occurred in the United States from January 1, 2009 through December 31, 2013).
In May 2012, Compliance staff contacted a total of 13 independent importers of magnet sets and asked these importers to provide reports required under Section 15 of the CPSA. Most of the firms agreed to stop selling the products pending the results of staff's evaluation of the products. Given the continued injuries to children, staff negotiated voluntary corrective action plans with 11 of the 13 magnet set importers. These firms agreed to cease importation, distribution, and sales of magnet sets. Two importers did not agree to stop selling the magnets and the Commission initiated an administrative action in July and August 2012 seeking a determination that the magnet sets present a substantial product hazard and an order that the firm cease importation and distribution of the products. The Commission initiated a third administrative action in December 2012 after one of the firms that had agreed to stop sale subsequently resumed selling magnet sets. Two of the three administrative actions have been resolved. In May 2014, the Commission settled the administrative action against Maxfield & Oberton Holdings, LLC, and Craig Zucker, individually, and as an officer of Maxfield & Oberton Holdings, LLC. The settlement established and funded a Recall Trust, which, in accordance with a corrective action plan (CAP), is recalling the firm's magnet sets. In July 2014, the Commission settled the administrative complaint against Star Networks USA, LLC (Star). Under that settlement, Star has agreed to implement a CAP providing for the recall of the firm's magnet sets. The third firm, Zen Magnets, LLC, remains the subject of a CPSC administrative
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The magnet sets covered by this rule typically are comprised of numerous identical, spherical, or cube-shaped magnets, approximately 3 millimeters to 6 millimeters in size, with the majority made from NdFeB (Neodymium-Iron-Boron or NIB). As discussed in section F of this preamble, the rule also covers individual magnets that are marketed or intended for use with or as magnet sets. These magnets exhibit strong magnetic properties. The magnetized neodymium-iron-boron cores are coated with a variety of metals and other materials to make them more attractive to consumers and to protect the brittle magnetic alloy materials from breaking, chipping, and corroding.
The magnets that are part of magnet sets are often referred to as “magnet balls” or “rare earth magnets.” Magnet sets are and have been marketed as: adult desk toys, the “puzzles of the future,” stress relievers, science kits, and educational tools for “brain development.” As shown in product instructions and in videos on related Web sites, magnet sets can be used and reused to make various two- and three-dimensional sculptures and figures, jewelry, and toys, such as spinning tops. Videos also show how these magnets can be used to mimic mouth and tongue piercings.
Magnet sets come with varying numbers of magnets, from as few as 27 magnets, to more than 1,000. Most of the magnets have been sold in sets of 125 balls or sets of 216 to 224 balls. The one firm that is currently marketing magnet sets that would not meet this rule sells one or more balls individually. Based on product information provided by marketers, the most common magnet size is approximately 5 millimeters in diameter, although balls as small as about 3 millimeters have been sold, as have sets of larger magnet balls (perhaps 15 millimeters to 25 millimeters in diameter). In addition to magnetic ball sets, magnet sets comprised of small magnetic cubes have also been sold, as have small magnetic rods. Sets made up of rods, however, have comprised a relatively small share of the market.
Most magnet sets contain magnets that are glossy and highly reflective with the spheres often described as similar in appearance to BBs or ball bearings. Magnet set magnets come in a variety of colors, including silver, blue, yellow, green and orange. The products are packaged in a variety of ways, including fabric pouches, wooden boxes, and metal tins.
The rule defines “magnet set” as: “any aggregation of separable magnetic objects that is a consumer product intended, marketed or commonly used as a manipulative or construction item for general entertainment, such as puzzle working, sculpture, mental stimulation, or stress relief.” As discussed in section F of this preamble, the rule also covers individual magnets marketed or intended for use with magnet sets.
For the NPR, CPSC's Human Factors staff provided an assessment that discusses the appeal and use of magnet sets. Magnet sets have some appeal for virtually all age groups. These types of magnets tend to capture attention because they are shiny and reflect light. They are smooth, which gives the magnets tactile appeal, and these magnets make soft snapping sounds as they are manipulated. These properties or characteristics of magnets are likely to seem magical to younger children and may evoke a degree of awe and amusement among older children and teens. These features are the foundation of the magnet sets' appeal as a challenging puzzle, or as a manipulative, or as jewelry. These magnets may also be used like a stress ball and as a way to hold things in place.
Children, from toddlers through teens, have been exposed to magnet sets in the home setting and elsewhere. As the NPR preamble notes, we have reports of ingestion incidents that involve children 5 years of age and younger. The reports reflect similar scenarios to other ingestion incidents among this age group because mouthing and ingesting non-food items is a normal part of preschool children's exploratory behavior. In a number of reported incidents, the magnets were not in their original containers, and caregivers were unaware that some of the magnets from the set were missing and in the child's possession.
As noted in the NPR preamble, magnet sets also appeal to children of early-to-middle elementary school age. Younger children in this age group are interested in simple three-dimensional puzzles, and older elementary school children are interested in highly complex puzzles. Children in the latter age group also can engage in activities that require the type of meticulous work and attention that would be needed to create the complex patterns and structures found on paper and in video instructions for magnet sets. Additionally, magnets typically are included in science curricula for elementary school children to demonstrate the basic concepts of magnetism.
For all of these reasons, and consistent with reviews on retail Web sites, magnet sets are sometimes purchased for children under the age of 14, despite warnings or labeling to the contrary. For example, approximately one-third of 53 adults reviewing one manufacturer's product on Amazon.com reported purchasing the magnets for children 8 through 11 years of age.
Thus, it is foreseeable that some portion of these products will be purchased for elementary school children and teens. Moreover, given the relatively low cost for some magnet sets, elementary school children and teens may purchase the magnet sets themselves. The incident reports reflect behaviors that are beyond the intended use of the product but that are foreseeable for the groups using them. For example, it is foreseeable that some children will place these magnets in their mouth, even if the manufacturer
Based on information reviewed by staff on product sales, including reports by firms provided to the Office of Compliance and Field Operations, the number of magnet sets that were sold to U.S. consumers from 2009 through mid-2012, may have totaled about 2.7 million sets, with a value of roughly $50 million. This estimate reflects retail sales directly to consumers (through company Web sites and other Internet retail sites) and sales to retailers who market the products. Staff's review of retail prices reported by importers, and observed on Internet sites in 2012, suggested prices of magnets sets typically ranging from about $20 to $45 per set, with an average price of about $25.
To our knowledge, all of the firms that have marketed the products, including the firm that continues to sell individual magnets and magnet sets, import the products packaged and labeled for sale to U.S. consumers. Several Chinese manufacturers have the facilities and production capacity to meet the orders of U.S. importers. Additionally, there are no major barriers to market entry for firms wishing to source products from China for sale in the United States. Firms may have sales arrangements with Internet retailers who hold stock for them and process orders.
We have identified about 25 U.S. firms and individuals who imported magnet sets for sale in the United States in 2012. The combined sales of the top seven firms probably have accounted for the great majority (perhaps more than 90%) of units sold. One firm, Maxfield & Oberton Holdings, LLC, believed to have held a dominant position in the market for magnetic desk sets since the firm entered the market in 2009, ceased operating in December 2012, and is no longer an importer of magnet sets. That now-defunct firm, along with a few larger firms (including a firm based in Canada with a branch office in the United States), marketed their products through accounts with retailers. They have also sold their products directly to consumers via the Internet, using their own Web sites, or other Internet shopping sites. In addition to products offered for sale by U.S. importers, consumers also have the ability to purchase magnetic sets directly from sources in Hong Kong or China that market products through a leading Internet shopping site.
The risk of injury addressed by this rule is damage to intestinal tissue caused when a person ingests more than one magnet from a magnet set (or one magnet and a ferromagnetic object). The magnets are attracted to each other in the digestive system, damaging the intestinal tissue that becomes trapped between the magnets. In rare cases, there can be interaction between magnets in the airways and digestive tract (esophagus). These injuries can be difficult to diagnose and treat because the symptoms of magnet ingestion often appear similar to those of less serious conditions, such as the flu, and because many doctors are unfamiliar with the risks of magnet ingestion. In addition, the limitations of standard diagnostic tools to identify and evaluate the presence of magnets in the body may make magnet ingestion difficult to identify. Serious injury and even death are consequences of ingestion of strong magnets by children.
Since publication of the NPR, the Commission has received reports of additional incidents involving the ingestion of magnets by children between the ages of 1 year and 15 years old, including one report of a fatality associated with the ingestion of small spherical magnets. We have now received reports of a total of 100 incidents involving or possibly involving the ingestion of high-powered, ball-shaped magnets contained in products that meet the definition of “magnet set.” The reports indicate that the incidents occurred between January 1, 2009 and June 24, 2014. Sixty-one of the 100 reported incidents required hospitalization. In 87 of the 100 reported incidents, the magnets were ingested by children younger than 4 years old or between the ages of 4 and 12 years.
Among the 100 reported incidents is one fatality that involved magnets from a magnet set. In August 2013, a 19-
As discussed in the preamble to the proposed rule, the incident reports describe scenarios that are consistent with behaviors of children in the identified age ranges. As noted in the NPR, mouthing of objects, which is common among younger children, develops into less obvious and more socially acceptable oral habits, which may continue through childhood and adolescence and into adulthood (
The preamble to the proposed rule provides summaries of several incident reports that demonstrate a few of the reported hazard scenarios (77 FR at 53785 to 53786). These scenarios include two incidents in which young girls (10 and 13 years of age) swallowed multiple magnet balls while using the magnets to simulate tongue and lip piercings. The girls underwent surgical procedures to remove magnet balls from their intestines. In three other scenarios, magnet balls ingested by children under the age of 3 years had to be removed surgically from the children's stomach and intestines. In three of the five incidents described in the preamble to the proposed rule, the child's parent or caregiver did not realize the child had ingested magnets, which resulted in a delay in treatment and an increase in the severity of the injuries from the magnets, which attached to each other across intestinal tissue.
Multiple factors complicate the diagnosis of injury from magnet ingestion (77 FR 53786). These factors include a lack of awareness by medical professionals of the dangers posed by the ingestion of high-powered magnets; the inability of standard diagnostic tools to demonstrate that the ingested item is a magnet; the similarities between symptoms resulting from magnet ingestion injuries and less serious conditions like the flu; and victims' inability or unwillingness to communicate to their caregivers or medical personnel that they have ingested magnets.
The preamble to the proposed rule discussed the manner in which ingested high-powered magnets can cause harm by compressing intestinal tissue, the specific types of injuries that can result when tissue is trapped between two magnets, and the risks associated with those injuries (77 FR 53786). These injuries include perforations that can result in infection due to leakage of gut contents into the abdominal cavity and obstructions that can lead to intestinal tissue becoming necrotic or rupturing and causing contamination of the abdominal cavity. Surgical procedures often are required to remove magnets from the digestive system. Complications can arise after these procedures, including bleeding, infection, and ileus (temporary paralysis of gut motility). Long-term complications resulting from this type of surgical procedure can include: (1) Adhesions (where bands of intra-abdominal scar tissue form that can interfere with gut movement and can cause obstruction); (2) removal of long sections of injured bowel; and (3) impaired digestive function.
This rulemaking is conducted pursuant to the Consumer Product Safety Act (CPSA). Magnet sets are “consumer products” that can be regulated by the Commission under the authority of the CPSA. 15 U.S.C. 2052(a).
Under section 7 of the CPSA, the Commission is authorized to promulgate a mandatory consumer product safety standard that sets forth performance requirements for a consumer product or that sets forth requirements that a product be marked or accompanied by clear and adequate warnings or instructions. 15 U.S.C. 2056. A performance, warning, or instruction standard must be reasonably necessary to prevent or reduce an unreasonable risk or injury associated with a consumer product.
Section 9 of the CPSA specifies the procedure that the Commission must follow to issue a consumer product safety standard under section 7. In accordance with section 9, the Commission commenced this rulemaking by issuing an NPR on September 4, 2012 (77 FR 53781), including the proposed rule and a preliminary regulatory analysis under section 9(c) of the CPSA. In addition, the Commission requested comments on the risk of injury identified, the regulatory alternatives under consideration, and other possible alternatives for addressing the risk.
Section 9 also requires the Commission to provide interested persons “an opportunity for the oral presentation of data, views, or arguments,” in addition to an opportunity to provide written comments.
With this notice, the Commission issues a final rule, along with a final regulatory analysis.
Pursuant to section 9(f)(3) of the CPSA, to issue a final rule, the Commission must find that the rule is “reasonably necessary to eliminate or reduce an unreasonable risk of injury associated with such product” and find that issuing the rule is in the public interest.
This section summarizes the issues raised by comments on the proposed rule and provides that Commission's responses to those comments.
On October 22, 2013, the Commission provided the public an opportunity to present views on the proposed rule in person before the Commission Presenters at the hearing included representatives from the Consumer Federation of American, Consumers Union, the American Academy of Pediatrics, and the National Association of Pediatric Gastroenterology, Hepatology, and Nutrition. The medical experts reported that the available research most likely reflects an undercount of the true incidence of injuries associated with magnet sets. The doctors also stated there was no evidence suggesting that the victims' caregivers were negligent or otherwise impaired at the time of the ingestion incidents. Rather, the doctors noted that ingestion-related injuries, such as those associated with magnet sets, can be experienced in households with the most caring and well-educated caregivers. The doctors also testified that public education campaigns take a long time to show effects and that those campaigns would not be as effective in reducing magnet ingestion injuries as the proposed rule, which they strongly urged the Commission to finalize.
The preamble to the NPR invited comments concerning all aspects of the proposed rule. We received written comments from more than 5,000 commenters in response to the NPR. Many of the comments contained more than one issue, and many of the comments addressed the same or similar issues. Thus, we organized our responses by issue. All of the comments can be viewed at:
Products that meet the definition of the “magnet sets” that do not comply with this rule would no longer be available for purchase, even if used by individuals to manage their attention deficit disorder or attention deficit hyperactivity disorder (ADD/ADHD) symptoms. However, magnets that are not restricted by the rule would still be available for purchase and perhaps could be used to manage ADD/ADHD symptoms. More generally, magnets are but one of many objects, including various types of stress balls, “worry-beads,” and chiming Baoding hand exercise balls that are available for the uses commenters cite. A variety of other products are marketed specifically as “fidget toys” to help children manage ADD/ADHD symptoms. Staff is aware of one study in which the authors reported successful use of simple stress balls to help sixth graders maintain focus in the classroom (Stalvey & Brasell, Summer 2006). In short, some substitutes for magnet sets are available for management of ADD/ADHD symptoms, and successful use of these substitutes predates the availability of magnet sets.
Magnet sets present the same hazards to children with ADD/ADHD as they do to children who do not have this condition. One comment summarizes a study of 38 cases of magnet ingestion. Among those were two children, a 12-year-old and a 14-year-old with ADHD, who swallowed strong magnets, although of a type different than those typically found in magnet sets. The first child required a laparoscopy; the other child required extensive surgical intervention. One teacher who reported giving magnets to children with ADD/ADHD in his middle school classes commented that he “needed to buy a new set every year,” suggesting the ease with which the pieces are lost over time and the difficulty adults may have maintaining control of the sets.
Similarly, children's magnetic toys provide an example of how magnet sets might be developed that would meet the standard. Children's toy manufacturers have successfully adapted their magnetic construction toys since the adoption of the requirements for toys with magnets in the 2007 edition of ASTM F963, “
Magnet sets that comply with the requirements of the rule would contain magnets that are too large to be swallowed easily or would have very weak attraction forces that would not pose the same ingestion hazards as magnet sets currently on the market. Review of incident data does not indicate that any injuries have been caused by magnets with flux index values below 50 kG
A large share of magnet sets have been sold directly to consumers by importers who used their own Internet Web sites or other Internet shopping sites, but the rule would also affect retailers of the products, whether the products are sold online or physically in stores. However, these retailers are not likely to derive significant proportions of total revenues from sales of affected magnet sets. Accordingly, the impacts on individual firms should be minimal.
The commenters are correct that the rule, by prohibiting the sale of noncompliant magnet sets in the United States, may also result in some job losses. However, the impact on job losses is probably limited because magnetic balls generally are produced outside the United States and are merely packaged and/or distributed by U.S. importers.
Regarding the commenter's assertion that injury costs used in the preliminary regulatory analysis were higher than indicated by the ICM, we note that the commenter fails to take into account updates to the ICM based on new and improved cost databases. The ICM is fully integrated with NEISS and provides estimates of the societal costs of injuries reported through NEISS. The major aggregated components of the ICM include: Medical costs; work losses; and the intangible costs associated with lost quality of life or pain and suffering. The ICM is described further in section H.3.a of the preamble. The commenter also does not
Virtually all comments received from medical professionals express support for a rule eliminating magnet sets of the type that have been involved in incidents. The medical professionals point out that injuries caused by the ingestion of high-powered magnets are often difficult to diagnose because of the inability of standard diagnostic tools to demonstrate that the ingested item is a magnet; there are similarities between symptoms resulting from magnet ingestion injuries and less serious conditions like the flu; and the victims are unable or unwilling to communicate to their caregivers or medical personnel that they have ingested magnets. The medical professional commenters express concern with the rapidly growing number of cases and note that magnet ingestions often result in rapid and severe injuries with devastating and costly long-term consequences.
Furthermore, the benefits of the rule, notwithstanding the public's desire for current magnet sets that do not meet the rule, bear a reasonable relationship to the costs of the rule.
Moreover, caregivers are unlikely to maintain high levels of vigilance, unless they believe that such vigilance is necessary. If caregivers who own magnet sets believe they have properly secured the sets or think that their children are not aware of the sets, caregivers are unlikely to assume that constant supervision is needed. Furthermore, children may be exposed to these magnet sets in locations where caregivers cannot supervise the children or do not have direct control over the amount of supervision required, such as at school or in other households. Adolescents, in particular, are strongly independent, and it is unrealistic to expect caregivers to supervise adolescents constantly.
The Commission's position is not that warnings are uniformly ineffective. However, consumer compliance with warnings depends strongly on the specific circumstances surrounding the hazard. Several factors suggest that compliance with warning labels related to magnet sets is likely to be low because consumers may not notice and attend to the warnings. Exposure to ingestion warnings is likely to be very limited because: (1) The individual magnets are too small to contain on-product warnings; (2) the magnet sets do not inherently require consumers to return the magnets to a storage case or other package after every use, in packaging that might include a warning; and (3) the magnet sets can be manipulated without the necessity of referring to instructions that might include a warning. In addition, the nature of the magnet-ingestion hazard and the resulting injuries can be difficult to convey to consumers; and the resulting injuries have been misunderstood even by medical personnel and by commenters to the NPR, some of whom erroneously identify choking on the magnets as the hazard presented by this product. Without a clear understanding of this information and how magnet ingestions differ from other small-part ingestions, consumers are unlikely to comply with a warning.
We acknowledge that developing understandable warnings aimed at parents and other caregivers may be possible; and we acknowledge that caregivers who receive such warnings may attempt to keep these products out of the hands of young children. However, as noted, consumer compliance with warnings depends strongly on the specific circumstances surrounding the hazard. Several factors suggest that compliance with warning labels related to magnet sets is likely to be low, even if consumers understand the hazard and its consequences. For example, the cost of compliance associated with magnet-ingestion warnings is high. “Cost of compliance” is defined as any cost, such as time, effort, or inconvenience that is required to comply with a warning; compliance is negatively associated with cost. The warnings on the packaging and instructional material for some magnet sets instruct consumers to secure the magnets and keep them away from all children ages 14 years and younger. As evidenced in the comments, many consumers are likely to reject these warnings as lacking credibility. We recognize that caregivers who receive warnings about magnet sets may attempt to keep these products out of young children's hands. However, warnings are likely to be particularly ineffective among caregivers with older children and adolescents because caregivers would not expect these children to mouth toys and other objects as frequently as younger children. Furthermore, even if caregivers attempt to comply with warnings about the magnet-ingestion hazard, preventing a child's access to these magnets still might prove quite difficult. The time and effort to secure the product after every use, and the difficulties associated with trying to identify a suitably secure location to store the product, may deter consumers from heeding the warnings.
Some adolescents have cognitive and motor skills similar to an adult's, making it extremely challenging to keep the product out of adolescents' hands, despite caregivers' efforts. Although adolescents also may be capable of understanding warnings about magnet ingestions, their behavior is influenced strongly by social and peer pressures, and adolescents are known to test limits and bend rules.
Educational programs may offer more opportunities to present the information in varied ways and in greater detail than is possible via a warning label.
Bitterants are least likely to be effective among young children who gain access to high-powered magnets. Despite rejecting bitter substances in testing environments, children in home settings, nevertheless, frequently ingest unpalatable substances, such as gasoline, cleanser, toilet bowl cleaner, and ammonia. Younger children, particularly those under 3 years of age, may swallow a number of magnets at a time before reacting to any aversive agent applied to the magnets.
Aversives may be a more effective deterrent for older children and young teens, presuming these children are aware that the agent has been applied to the magnets and they are familiar with its taste. For older children who are not familiar with the taste of an aversive, the mere presence of the agent would not deter mouthing the magnets or trying to use them to mimic pierced lip or tongue jewelry. Older children and teens may also give magnets to others to try as a prank. Preteens and teens are prone to test what they have been told, particularly when what they have been told involves restrictions of any sort. Thus, warnings that the products taste bad may not prevent children in these age groups from tasting the magnets. (Some proportion of the population, possibly as high as 30 percent, may be insensitive to bitterants such as denatonium benzoate.) However, children are likely to reject magnets treated with bitterants, and the bitterant may indeed deter repeated attempts among most children.
Ingestions could still occur even if a bittering agent is found effective for this purpose. Ingestions may be intentional among the youngest children, but ingestions are likely to be accidental among older groups. The power of the magnetic forces inherent in these products can cause magnets to move erratically as pieces repel or attract, and movement of magnets toward the back of the throat could trigger the reflex to swallow the magnets before the person can remove them.
Although the suggested value of 1.0 millimeter is anatomically valid, it is not particularly meaningful in terms of the injury mechanism. This is because conventional magnets do not “wait” to get within 1 millimeter of each other before they begin to interact, and the gut wall cannot block magnetic forces. Rather, once a pair of magnets comes within a distance where the extent or reach of their magnetic fields allows them to interact, the result is near-instantaneous attraction, with consequent near-instantaneous compression of any trapped tissues. Although the thin wall of the small intestine can be conveniently defined anatomically by its thickness, the tissue offers minimal resistance to the compression forces of the magnet. Thus, the tissue trapped between magnets may be compressed so that the distance between the magnets is much smaller than 1.0 millimeter. The compression forces deprive the tissue of its blood supply, and they also squeeze out the tissue fluids, rapidly reducing the gut wall thickness to micron values, and essentially mummifying the tissue
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The Commission is issuing a rule establishing a standard for magnet sets and individual magnets that are marketed or intended for use with or as magnet sets. This section of the preamble describes the rule, including differences between the proposal and the final rule.
This section of the final rule states that the requirements in 16 CFR part 1240 are intended to reduce or eliminate an unreasonable risk of injury to consumers who ingest magnets that are part of magnet sets and individual magnets that are marketed or intended for use with or as a magnet set. The standard applies to all magnet sets, as defined in § 1240.2, and relevant individual magnets manufactured or imported on or after the date 180 days after publication of the final rule.
Because the proposed rule described the scope of the rule as covering aggregations of magnets, magnets that are sold individually, arguably would not be subject to the requirements of the safety standard under the scope provision, as proposed. Thus, under the proposed scope, firms might be able to circumvent the safety standard requirements simply by pricing and selling magnet spheres individually that are intended to be used as part of an aggregation of magnets as a magnet set. Under the final rule, all magnet spheres intended for use as magnet sets, as defined by the rule, are subject to the requirements of the safety standard, whether they are sold individually or in the aggregate.
This section of the final rule provides definitions for the terms “magnet set” and “individual magnet.” The final rule modifies the proposed definition of “magnet set” to clarify certain aspects of the definition. The Commission does not intend for these modifications to change the scope of the rule from the proposal, but rather, to describe more clearly the products subject to the rule. The final rule also adds a definition for the term “individual magnet.”
• Removing the word “permanent”;
• Replacing the phrase “intended or marketed by the manufacturer primarily” with the phrase “intended, marketed or commonly used”;
• Replacing the word “desk toy” with “item”; and
• Specifying factors that could indicate whether a magnet set meets the definition.
The final rule definition removes the word “permanent” from the phrase “separable, permanent magnetic objects” because the word “permanent” is superfluous. Any magnet, whether it maintains its magnetic strength permanently or not, can cause serious damage to intestinal tissue, if ingested.
The final rule replaces the phrase, “intended or marketed by the manufacturer primarily,” with the phrase: “intended, marketed or commonly used.” The revision seeks to prevent a manufacturer or importer of magnet sets from avoiding the rule by simply stating in marketing and other materials that the magnets are intended for uses other than those specified in the definition. For example, this modification will preclude firms from claiming that their products are intended as science kits to avoid the rule, if, in fact, the products are commonly used as magnet sets (
The final rule definition replaces the term “desk toy” with “item” to prevent excluding magnet sets from the scope of the rule if a particular product is not explicitly labeled or expressly marketed as a desk toy.
The final rule specifies factors that are relevant in determining the intended uses of a magnet set. These are factors that Commission staff may consider in determining whether a product falls under the definition of “magnet set.” Explicitly stating these factors in the rule should provide clearer direction to firms and the public about what products will be covered by the rule. We may consider the manner in which the individual magnet or magnet set is promoted, marketed, and advertised. As part of this inquiry, staff may review the labeling and packaging of the product, information on the firm's Web site about intended uses of the product, information in other promotional materials, and where and how the product is displayed at retail stores or on the Internet. In addition, we may consider the uses for which the product is commonly recognized by consumers. Information provided by consumers and firms, injury reports, and consumers' online reviews or comments for the product are examples of sources that could be useful to determine what consumers consider to be the uses of the product.
In developing this part of the “magnet set” definition, the Commission considered regulatory and statutory provisions that describe factors to be used in determining the intended use of a product. The Commission's small parts regulation specifies factors relevant to a determination of which toys and other articles are intended for use by children under 3 years of age. 15 U.S.C. 1501.2(b). The small parts regulation states: “In determining which toys and other articles are intended for use by children under 3 years (36 months) of age, for purposes of this regulation, the following factors are relevant: the manufacturer's stated intent (such as on a label) if it is a reasonable one; the advertising,
The definition does not include other magnetic products, such as toys intended for children and jewelry. Magnets that are part of a toy intended for children are already covered by the requirements in ASTM F963–11, which is a mandatory CPSC standard. The definition also does not include magnets intended for industrial or commercial applications, such as motor components, magnetic bearings, magnetic couplings, welding clamps, oil filters, disc drives, loudspeakers, headphones, microphones, instrumentation, switches, and relays.
This section sets forth the requirements for magnet sets. If a magnet set contains a magnet that fits within the small parts cylinder that CPSC uses for testing toys, all magnets from that set must have a flux index of 50 kG
The small parts cylinder referenced in the rule is specified in 16 CFR part 1501—Method for Identifying Toys and Other Articles Intended for Use by Children Under 3 Years of Age Which Present Choking, Aspiration, or Ingestion Hazards Because of Small Parts. If an object fits completely within the small parts cylinder, this indicates that the object is small enough to be ingested. If a magnet that is part of a magnet set (or an individual magnet, as defined) is too large to fit within the small parts cylinder, the magnet meets the standard, regardless of the magnet's flux index.
Small magnets (
This section of the rule describes how to determine the flux index of magnets that are part of a magnet set. If the magnet set contains more than one shape or size of magnet, at least one of each shape and size is selected for testing. The flux index of the selected magnets is measured in accordance with the procedure set forth in sections 8.24.1 through 8.24.3 of ASTM F963–11,
In the NPR, we noted that the products at issue are typically aggregations of magnets, rather than individual magnets that often separate from toys. We also observed that when magnets are aggregated, their magnetic strength may increase. We requested comments on whether it may be desirable to develop a method for testing the strength of aggregated magnets in addition to the method for testing the strength of individual magnets. We received no comments proposing methodologies for testing the strength of an aggregation of magnets. Furthermore, because there are no magnet sets currently on the market with magnets that have a 50 kG
In accordance with the requirements of the CPSA, we have made the findings stated in section 9 of the CPSA. The findings are discussed in section N of this preamble.
The Commission has considered alternatives to reduce the risk of injury related to the ingestion of magnets contained in magnet sets. However, as discussed below, the Commission does not believe that any of these alternatives would adequately reduce the risk of injury.
Although most of the companies that manufacture or import magnet sets have voluntarily agreed to stop selling (and in some cases recall) these products, and several retailers have agreed to recall and stop sale, the Commission has been unsuccessful in negotiating voluntary recalls and stop sales with one company that continues to market magnet sets. Pursuing voluntary recalls with current and possibly future manufacturers and importers of magnet sets would be reactive and would entail waiting for new incidents to occur rather than preventing them. Moreover, recalls would not prevent new entrants into the market in the future; a rule will set requirements that all products must meet from the effective date of the rule going forward.
Currently, there is no applicable voluntary standard in effect. Before publication of the NPR, a group of magnet set importers and distributors requested that ASTM International
Moreover, whether such a voluntary standard would be effective in reducing or eliminating the risk of injury associated with magnet sets is questionable. Despite companies' marketing and labeling their products in an attempt to limit children's exposure to magnets, ingestion incidents involving children have continued to occur; and labeling does not change the attractiveness of the product to children or the intrinsic play value of the magnet sets. From March 2010, when the firm with the largest share of the market undertook certain labeling enhancements and marketing restrictions, through June 2012, the Commission learned of 47 additional incidents of ingestion of magnets from magnet sets, 26 of which involved ingestion of that company's magnets. As discussed more fully in the next section of this preamble, we do not believe that warnings would adequately reduce the injuries associated with magnet sets.
We also note that Zen Magnets has announced its own “voluntary standard” for magnet sets requiring that:
• Customers must be 18 years of age or older to purchase magnets and that the sales location must have an age floor for persons 18 and older or 21 and older, or age must be otherwise verified by Government ID; and
• All stores must verbally remind customers to keep magnets away from mouths.
We do not consider a standard issued by one company to be a “voluntary standard” as that term is used in the CPSA. Moreover, the measures that Zen magnets announced would have the same limitations discussed above.
A possible alternative to the rule would be to require warnings with or on magnet sets. As discussed in the NPR preamble and in response to comments set forth in section E of this preamble, it is unlikely that warnings on the packages of magnet sets would significantly reduce the ingestion-related injuries caused by high-powered magnets. Safety and warnings literature consistently identifies warnings as a less effective hazard-control measure than eliminating the hazard through design or guarding the consumer from a hazard. Warnings do not prevent consumer exposure to the hazard but rely on persuading consumers to alter their behavior in some way to avoid the hazard. With this product, warnings are particularly unlikely to reduce or eliminate the ingestion of these magnets. Warnings are especially unlikely to be effective among young children because children may lack the cognitive ability to appraise a hazard or appreciate the consequences of their own actions and may not understand how to avoid hazards effectively.
Although older children are better at appreciating the hazards described in a warning, peer acceptance and social influences can strongly influence adolescent behavior. Because adolescents have a tendency to test limits and bend rules, warnings about keeping the product away from children could have the unintended effect of making the product more appealing to some children. For example, warnings against specific uses, such as mimicking piercings, might actually encourage this behavior among older children. If children repeatedly use the product in this way, without ingesting the magnets, these children most likely will become convinced that the hazard is not especially likely, or is not relevant to them.
In the NPR, we noted that staff generally found the content of warnings accompanying magnet sets to be lacking in several ways. For example, the warnings often did not describe the incident scenarios prevalent among older children and adolescents, whom caregivers may not believe are likely to put magnets into their mouth. Warnings lacked detailed information that would allow consumers to understand how swallowing magnets differs from swallowing other small parts, or how magnets sticking together could pose a hazard because the magnets will not simply pass through the child's system. Without a clear, explicit, and accurate description of the nature of the hazard and its consequences, consumers may find the warning implausible. Moreover, even with enhanced warnings, consumers are unlikely to comply with the action recommended in the warning.
Even if warnings could effectively communicate the ingestion hazard, the consequences of ingesting magnets, and appropriate hazard-avoidance measures, warnings still may not be effective if consumers do not concur with the content of the warning. Warnings are particularly likely to be ineffective among caregivers of older children. Unless caregivers are convinced that their older child is likely to mimic lip, nose, or similar piercings, or perform other activities that might lead these adolescents to place magnets into their mouth or nose, caregivers may doubt that the warnings are relevant to their child, despite the warnings' assertions to the contrary.
As noted in the NPR preamble and in section E of this preamble, even if caregivers believe the warnings, several factors may limit compliance. Caregivers, particularly those with older children, might feel significant social pressure from children who are accustomed to using the magnet sets. Caregivers who own the product and attempt to heed the warnings might find it quite difficult to prevent their child's access to the magnets and still keep the product reasonably accessible for their own use.
The cost of compliance with warnings for these products is high. Caregivers may be reluctant to secure the product from a child after every use. Identifying an appropriate location to store the magnet sets may dissuade consumers from doing so, particularly for a product often marketed to be for “stress relief.” Caregivers may underestimate their child's abilities and place the product in locations that seem secure but that are still accessible to the child. All of these factors may lead caregivers to reject the warning message.
Based on these concerns about the likely ineffectiveness of warnings for magnet sets, we do not believe that warning labels would adequately reduce the risk of injury presented by these products.
Theoretically, magnet sets could be sold with special storage containers to reduce the likelihood that children would access the magnets. Possible storage might include a container that would clearly indicate when a magnet is missing from the set. Such a requirement might prevent injuries resulting from a small number of magnets being separated from a set without the owner being aware. However, many consumers may not use such containers because using them could require time to gather the magnets and put them in the container, or consumers may be reluctant to dismantle a shape or structure that took them time and effort to construct. Thus, the effectiveness of such special containers to reduce ingestions is doubtful. Finally, it is not clear that the
Another alternative might be to require that magnet sets be sold in child-resistant packaging. Child-resistant packaging, also called “special packaging,” is packaging that is significantly difficult for children under five years of age to open or obtain a harmful amount of the substance. 15 U.S.C. 1471(4). The ability of such an approach to reduce ingestion injuries of magnets from magnet sets would be limited. Child-resistant packaging would not prevent teens and adolescents (and even some younger children) from opening the packaging. Additionally, the packaging would have to be secured after each use. According to the Division of Human Factors, it is unlikely that adults would accept child-resistant packaging for a product like the magnet sets because of the level of inconvenience involved in returning the magnets to the package.
Another possible alternative to address the hazard of children ingesting magnets from magnet sets might be to limit the places where magnet sets are sold, keeping magnet sets away from toy stores, children's sections of stores, and other such locations. Sales limitations or requirements for strong warnings might also be required on Web sites that offer magnet sets for sale on the Internet. However, these restrictions are unlikely to reduce ingestions significantly because children can access magnet sets from many sources other than stores. Moreover, sales restrictions are unlikely to deter teens. Finally, the Commission does not have the regulatory authority to impose such sales restrictions by rule.
Another alternative to the rule would be to establish a different set of requirements. For example, such requirements might allow a different flux index for magnet sets, different specifications regarding shapes and sizes of magnets within the scope of the standard, or some other criteria that have yet to be developed (but would not be as stringent as the rule requires). If different requirements would be effective, they could reduce the risk of injury associated with magnet sets, and at the same time, potentially allow the product to maintain the qualities that would facilitate use by adults. It is unclear, however, whether alternative requirements for the sizes and flux index of magnets would eliminate or substantially affect the physical qualities of the products that make them enjoyable for adults.
A competing concern is whether an alternative set of requirements could reasonably be expected to reduce or eliminate the risk of injury associated with magnet sets. Because the hazard presented by these magnet sets is ingestion by children, we are concerned that any requirements that allow magnets with a greater attractive force and permit sizes or shapes that could fit through the small parts cylinder would not address the risk of injury adequately.
As noted in Section E, some commenters suggest that, as an alternative to the rule, the Commission could require manufacturers to add an aversive (bittering) agent to the product. However, as discussed in the response to Comment 18, aversives are unlikely to be effective in deterring initial ingestion by young children because children frequently ingest unpalatable substances.
Another option for the Commission is to take no regulatory action to address the risk of injury posed by magnet sets. As the NPR preamble mentioned, it is possible that, over time, increased awareness of the hazard could result in some reduction in ingestions. The magnitude of any such reduction in incidents is uncertain. The Commission could rely entirely on enforcement activities, rather than regulatory action, to address the risk of injury posed by magnet sets. However, as discussed in the “voluntary recall” section above, several manufacturers/importers of magnet sets have refused to participate in any recall or stop sale of their products; and in any event, recalls and/or stop sales conducted by these companies would not prevent new entrants into the market in the future.
The Commission is issuing this rule under sections 7 and 9 of the CPSA. The CPSA requires that the Commission prepare a final regulatory analysis and publish the final regulatory analysis with the text of the final rule. 15 U.S.C. 2058(f). This section of the preamble presents the final regulatory analysis of the rule.
The CPSC has received information regarding injuries with, and hazards posed by, sets of small, powerful magnets. Some of these injuries have required surgical removal of individual magnets originally contained in the sets and ultimately ingested by children. Reported magnet ingestions have ranged from young children, who put the magnets in their mouths, to adolescents and teens, who experimented with the sensation of magnets (
The final rule establishes a standard limiting the size and strength of magnets in a magnet set. The rule applies to any aggregation of separable, magnetic objects that is a consumer product intended, marketed, or commonly used as a manipulative or construction item for entertainment, such as puzzle working, sculpture building, mental stimulation, or stress relief.
The current designs of magnet sets containing small powerful magnets of the type that are the subject of this regulatory proceeding (which are typically comprised of individual ball-shaped magnets with diameters of 5mm and, based on testing by CPSC staff, having flux index values in the range of 400–500) would not meet the
Staff has identified magnet sets in the market, Liberty Balls, marketed by Assemble, LLC, that would meet the definition of magnet sets, would meet the performance standard, and might serve some of the uses of magnet sets that would not meet the standard. The Liberty Balls magnet sets consist of a set of eight large ball-shaped magnets. The Liberty Balls magnet sets consist of a set of eight large ball-shaped magnets selling for $30 to $40 per set. The Ball of Rights generally consists of a set of two large ball-shaped magnets selling for $10 to $13 per set. The balls in these sets are 33 mm (1.3 inches) in diameter, and consist of ferrite magnets, rather than rare earth materials (See
Even though these products satisfy the performance requirements of the rule, for purposes of the economic analysis, we do not consider any impacts due to the entry of Liberty Balls and Ball of Rights in the market because we do not consider these sets to be good substitutes for the subject magnet sets. To be considered a good or close substitute, we would need to observe that consumers, who would have purchased the subject magnet sets (if they had remained available at historical prices and quantities) are now, to a large degree, purchasing the Liberty Balls sets instead, and the available data suggest otherwise.
Rather than develop a complying alternative that serves the same niche as the subject magnet sets, producers of magnet sets have opted to exit the market altogether. Although Liberty Balls comply with the standard, we base the benefit cost analysis presented below on the disappearance of the noncompliant magnet sets containing small powerful magnets from the market.
Magnet sets that would be affected by the scope of the rule are comprised of small, powerful magnetic balls, cubes, and/or cylinders that can be arranged in many different geometric shapes. These magnet sets were introduced in 2008, but 2009 marked the first year with significant sales to U.S. consumers.
Product information provided by marketers indicates that the most common magnet size is approximately 5 millimeters in diameter; although balls as small as about 3 millimeters have been sold, in addition to sets of larger magnet balls (perhaps 15 millimeters to 25 millimeters in diameter).
Based on information reviewed on product sales, including reports by firms provided to the Office of Compliance and Field Operations, the number of such magnet sets that were sold to U.S. consumers from 2009 through mid-2012 may have totaled about 2.7 million sets, with a value of roughly $50 million. This value reflects a combination of retail sales directly to consumers (through company Web sites and other Internet retail sites) and sales to retailers who marketed the products. A review of retail prices reported by importers, and observed on Internet sites during that period, suggested prices typically ranging from about $20 to $45 per set, with an average price of about $25. Larger sets of more than 1,000 individual magnets reportedly were sold at prices as high as $300, depending on the number of magnets and the type of packaging. Such larger sets only accounted for about 0.5 percent of all sets (and a little over 2 percent of all magnets) sold to consumers during the period from 2009 to mid-2012.
The small, powerful magnets to be affected by the rule are made of alloys of neodymium, iron, boron, or other rare earth metals. This composition has been confirmed in analyses of product samples by CPSC staff from the Directorate for Laboratory Sciences. The magnetized neodymium-iron-boron cores are coated with a variety of metals and other materials to make them more attractive to consumers and to protect the brittle magnetic alloy materials from breaking, chipping, and corroding. Nearly 100 percent of neodymium and other rare earth metals are now mined in China, which also reportedly holds close to a worldwide monopoly on the production of neodymium-iron-boron magnets (Dent, 2012). Based on available information, all of the small magnets used in magnet sets, as well as most of the finished and packaged products that would be subject to CPSC regulation, are produced by manufacturers located in China.
As noted above, none of the magnets found in sets that are within the scope of the rule are produced domestically. Nearly all of the firms that have marketed magnet sets are believed to have imported them packaged and labeled for sale to U.S. consumers. Several Chinese manufacturers have the facilities and production capacity to meet the orders of U.S. importers.
The Directorate for Economic Analysis identified about 25 U.S. firms and individuals who imported magnet sets for sale in the United States in 2012. The combined sales of the top seven firms have probably accounted for
Some of the firms with smaller sales volumes reported to Compliance staff that they mainly marketed products (sourced from manufacturers in China) through Internet sales arrangements with Amazon.com, which held stock for them and processed orders. A review of the product listings of the Internet retailer found that several other firms had similar business models. Other U.S. firms and individuals have sold magnet sets they imported from China through Internet “stores” they maintain on eBay. In addition to products offered for sale by U.S. importers, consumers have also been able to purchase magnet sets directly from sources in Hong Kong or China, many of which marketed products through “stores” on eBay.
CPSC Compliance staff contacted 13 magnet set importers for corrective actions before the Commission published the NPR.
The purpose of the final rule is to prevent serious intestinal injuries that can result when children ingest two or more of the magnets from a subject magnet set (or one magnet and another metallic object). The final rule would establish a standard for magnet sets and individual magnets that are marketed or intended for use as parts of a magnet set. Distributing magnet sets and individual magnets intended for magnet sets that do not meet specified requirements would be prohibited. Therefore, a reduction in injuries would be the resulting benefit of the rule.
Based on a review of incident narratives coded from emergency department medical records for magnet ingestion cases obtained from NEISS hospitals, the Directorate for Epidemiology staff has identified 86 ingestions of high-powered and/or ball-shaped magnets, which occurred from 2009 through June 2012. These incidents were determined to involve, or possibly involve, the magnets of interest. Although manufacturer or brand name information is rarely available in the medical records extracted for NEISS, nine of the 86 NEISS-reported cases (10.5%) mentioned a brand name of magnet sets that are the magnets of interest; 77 cases (89.5%) were determined possibly to have involved the magnets of interest because the case narratives included terms such as “high powered,” “magnetic ball,” “magnetic marble,” “BB size magnet,” or “magnetic beads” (Garland, 2014).
The ICM is fully integrated with NEISS and provides estimates of the societal costs of injuries reported through NEISS. The major aggregated components of the ICM include: medical costs; work losses; and the intangible costs associated with lost quality of life or pain and suffering.
Medical costs include three categories of expenditure: (1) Medical and hospital costs associated with treating the injury victim during the initial recovery period and in the long run, the costs associated with corrective surgery, the treatment of chronic injuries, and rehabilitation services; (2) ancillary costs, such as costs for prescriptions, medical equipment, and ambulance transport; and (3) costs of health insurance claims processing. Cost estimates for these expenditure categories were derived from a number of national and state databases, including the National Healthcare Cost and Utilization Project—National Inpatient Sample and the Medical Expenditure Panel Survey, both sponsored by the Agency for Healthcare Research and Quality.
Work loss estimates, based on information from the National Health Interview Survey and the U.S. Bureau of Labor Statistics, as well as a number of published wage studies, include: (1) The forgone earnings of parents and visitors, including lost wage work and household work, (2) imputed long term work losses of the victim that would be associated with permanent impairment, and (3) employer productivity losses, such as the costs incurred when employers spend time juggling schedules or training replacement workers. The earnings estimates were updated most recently with weekly earnings data from the Current Population Survey conducted by the Bureau of the Census in conjunction with the Bureau of Labor Statistics.
Intangible, or non-economic, costs of injury reflect the physical and emotional trauma of injury as well as the mental anguish of victims and caregivers. Intangible costs are difficult to quantify because they do not represent products or resources traded in the marketplace. Nevertheless, they typically represent the largest component of injury cost and need to be accounted for in any benefit-cost analysis involving health outcomes (Rice et al., 1989). The Injury Cost Model develops a monetary estimate of these intangible costs from jury awards for pain and suffering. While these awards can vary widely on a case-by-case basis, studies have shown them to be systematically related to a number of factors, including economic losses, the type and severity of injury, and the age of the victim (Viscusi, 1988; Rodgers, 1993). Estimates for the Injury Cost Model were derived from a regression analysis of about 2,000 jury awards in nonfatal product liability cases involving consumer products compiled by Jury Verdicts Research, Inc.
In addition to estimating the costs of injuries treated in U.S. hospital emergency departments and reported through NEISS, the Injury Cost Model uses empirical relationships between emergency department injuries and those treated in other settings (
Table 1 below provides
After including the injuries treated outside of hospital emergency departments, there was an estimated annual average of about 929 medically attended injuries involving ingestions of the magnets of interest. Based on the ICM, these injuries resulted in annual societal costs of about $28.6 million (in 2012 dollars) during the 2009 to June 2012 time period. The injury cost estimates differ from those presented in the preliminary regulatory analysis
The average estimated societal costs per injury was about $27,000 for injuries treated in locations other than emergency departments (such as physicians' offices, clinics, ambulatory surgery centers, or direct hospital admissions); about $21,000 for injuries that were treated and released from emergency departments; and about $130,000 for injuries that required admission to the hospital for treatment. Medical costs and work losses (including work losses of caregivers) accounted for about 30 percent of these injury cost estimates, and the less tangible costs of injury associated with pain and suffering accounted for about 70 percent of the estimated injury costs.
On the other hand, in addition to the magnet cases upon which the table was based, there were also 230 NEISS cases (representing about 1,526 emergency department-treated injuries annually), in which the magnet type was classified as “unknown or other.” These cases included narratives that mentioned that a magnet was involved but presented insufficient information to classify the magnet type. Consequently, to the extent that the unknown magnet types involved magnets that would be covered by the rule, the Table 1 results would tend to understate the societal costs associated with the magnets subject to the rule.
As noted above, the benefits of the magnet rule would be the reduction in the societal costs of the injuries that would be prevented. Because the rule will eliminate from the market all magnet sets involved in the ingestion injuries described above, all injuries that would have occurred in the absence of a rule would be prevented. Although no deaths involving magnet sets occurred during the time period covered by our analysis, we know of a magnet set related fatality that occurred in 2013. Thus, we anticipate that the rule would prevent future fatalities as well as injuries. However, if children, adolescents, and teens cannot play with or use the prohibited magnets, they could play with or use substitute products (including high-powered magnets intended for other uses
Both consumers and producers benefit from the production and sale of consumer products. The consuming public obtains the use value or “utility” associated with the consumption of products; producers obtain income and profits from the production and sale of products. Consequently, the costs of a rule that eliminates certain magnetic sets would consist of: (1) The lost use value experienced by consumers who would no longer be able to purchase magnets that do not meet the standard at any price; and (2) the lost income and profits to firms that could not produce and sell non-complying products in the future. The same baseline used in the benefits assessment, 2009 to June 2012, is used for the cost analysis.
First, consider the lost utility to consumers. We cannot estimate in any precise way the use value that consumers receive from these products, but we can describe use value conceptually. In general, use value includes the amount of: (1) Consumer expenditures for the product, plus (2) what is called “consumer surplus.” In the case of the magnet sets, given sales of about 800,000 sets annually during the 2009 to June 2012 time period, and assuming an average retail price of about $25 in 2012, consumer expenditures would amount to about $20 million annually in 2012 dollars. These expenditures represent the minimum value that consumers would expect to get from these products. It is represented by the area of the rectangle OBDE in the standard supply and demand graph below, where B equals $25, and E equals 800,000 units.
The consumer surplus is given by the area of the triangle BCD under the graph's demand function and represents the difference between the market clearing price and the maximum amount consumers would have been willing to pay for the product. This consumer surplus will vary for individual consumers, but it represents a benefit to consumers over and above what they had to pay (McCloskey, 1982).
In general, the use value of the magnet sets obtained by consumers is represented by the area of the trapezoid OCDE. However, the prospective
We have no information regarding aggregate consumer surplus; and hence, no information on the amount of utility that would be lost from a magnet set rule. Although the magnet sets clearly provide “utility” to purchasers, magnet sets are not necessities. Consequently, the demand for magnet sets is probably not price inelastic, a factor that would tend to reduce estimates of utility losses.
Finally, we note that the loss in consumer surplus just described represents the maximum loss of consumer utility from the rule; the actual loss is likely to be lower. This is because consumers are likely to gain some amount of consumer surplus from products that are purchased as an alternative to those magnet sets that would no longer be available because of the rule. If, for example, there were close substitutes for the magnet sets that do not meet the standard (
Some alternative products might serve some of the same uses of the subject magnet sets. For example, consider the Liberty Balls mentioned earlier, which are comprised of large (1.3 inch) ferrite magnetic objects. Their size, weight, and relatively high price per ball make Liberty Balls unsuitable and impractical for use in most sculpturing and other construction activities for which the subject magnet sets are used. They might still be used by some for “fidgeting,” but there does not seem to be any unique attribute of this product that would cause a consumer to purchase Liberty Balls specifically for fidgeting; common objects, such as paper clips or ball bearings, could serve the same fidgeting purpose at a lower price.
Another possible alternative product discussed by the Directorate for Engineering Sciences (Amodeo, 2013) could be magnet sets comprised of individual magnets permanently connected by rods or other means, such that the resulting magnetic objects are not small parts. Such sets are marketed as children's toys because the individual pieces in the set do not fit into the small parts cylinder. Although these products have not been marketed for adults, and we have no evidence that they could be considered a good substitute for the subject magnet sets, if such sets could satisfy some consumers' needs in constructing geometric shapes, then the lost consumer surplus might be reduced.
Notwithstanding the availability of alternatives to the subject magnet sets, the rule will still result in some level of lost utility. By purchasing the products in question, rather than other products, consumers are revealing that they have a preference for the subject magnet sets that they believe are likely to provide them more utility than a substitute purchase.
The lost benefits to firms resulting from a rule that effectively eliminates a product they produce are measured by a loss in what is called producer surplus. Producer surplus is a profit measure that is somewhat analogous to consumer surplus. Whereas consumer surplus is a measure of benefits received by individuals who consume products, net of the cost of purchasing the products, producer surplus is a measure of the benefits accruing to firms that produce and sell products, net of the costs of producing them. More formally, “producer surplus” is defined as the total revenue (TR) of firms selling the magnet sets, less the total variable costs (TVC) of production. Variable costs are costs that vary with the level of output and usually include expenditures for raw materials, wages, distribution of the product, and the like.
In Figure 1, total revenue is given by the area OBDE, which is simply the product of sales and price. The total variable costs of production are given by the area under the supply function, OADE. Consequently, producer surplus is given by the triangle, ABD, which is the area under the market clearing price and above the supply function.
As described earlier, sales of the magnet sets averaged roughly 800,000 sets annually during the 2009 through mid-2012 time period, with an average retail price of about $25 per set in 2012. Thus, total industry revenues averaged about $20 million annually (
The costs of the rule, in terms of reduced benefits for firms and lost utility by consumers, are uncertain. However, based on annual sales estimates available for 2009 through mid-2012, these costs could amount to as much as $6 million in lost producer surplus and some unknown quantity of lost utility. The estimate of lost producer surplus differs from impacts estimated in the NPR (7.5 million, expressed as lost profits) because of a revised estimate of annual sales, and different assumptions regarding profit rates and variable costs.
Implicit in this analysis is the assumption that the expected useful life of the magnet sets is about 1 year. Because this product has only been in widespread consumer use since 2009, this assumption is made without extensive knowledge about the actual use of the magnetic sets by consumers. We consider magnet sets to be novelty products, which means for many consumers, they may lose much of their appeal quite quickly. Accordingly, we chose a one-year rather than a longer useful life even though the magnets may be physically durable products. Even if some of the products remain in homes or offices longer than a year, the risk of ingestion by children may be much higher in the first month or two after the magnet sets are purchased, when the appeal of the product is at its highest and the consumer actively uses or plays with the product frequently. Once novelty products lose their appeal, they are likely to be put away and stored indefinitely or perhaps even discarded.
However, we note that the results of our analysis are not particularly sensitive to this product life assumption. For example, had we assumed that the average product life was about 2 years, rather than 1 year, estimates of the number of sets in use at any given time would approximately double, reducing the estimated annual risk of injury, per magnet set in use (and hence, reduce estimated societal costs per set), by about half. However, this reduced estimate of annual societal costs would be offset by the fact that the sets remain in use for 2 years, rather than 1 year. Thus, annual benefits, per magnet set in use, would be about halved, but the present value of benefits would be accrued over 2 years, rather than 1 year. Consequently, even if we had doubled the assumed product life, the relationship between benefits and costs would have remained roughly the same. Estimated benefits would be slightly lower under a two year useful product life due to discounting second year benefits.
There are several possible alternatives to the rule. We are unable to quantify either the costs or the benefits of these alternatives, in part because the requirements of such alternatives have not been specified. To estimate the potential costs of the alternatives, we would need a precise description of what the requirements would be. Moreover, even with this information, it would still be difficult to determine the expected injury reduction from the various alternatives.
Nevertheless, the costs of each of the alternatives discussed below are expected to be substantially lower than the costs of the rule. This is because, generally speaking, the alternatives would allow consumers and businesses to continue buying, selling, and using the magnet sets that would no longer be available under the rule. Similarly, the benefits of these alternatives, in terms of injury reduction, would also be expected to be lower than the benefits for the rule. This is because, under these alternatives, some children would continue to have access to the magnet sets.
The Commission may not have authority for some of the alternatives discussed. None of the alternatives was chosen because the expected injury reduction from each was believed to address the hazard inadequately. Comments on the NPR did not alter this decision.
As an alternative to the rule, the Commission could consider promulgating an alternative set of requirements that could reduce the risk of injury from magnet sets but not necessarily eliminate the risk. For example, some alternatives to the rule might include: Setting a different flux index for the magnets sold as manipulative desk sets; requiring different specifications for shapes and sizes of magnets within the scope of the standard; or setting forth some other criteria that have not yet been developed (but are not as stringent as in the final rule). If these alternative requirements led to the production of magnet sets with physical characteristics that appealed to consumers, the cost of the rule for both consumers and businesses would be reduced. Businesses would continue to be able to produce and sell magnet sets, and consumers would continue to be able to buy and use them. However, these alternative requirements would likely reduce the benefits of a rule: Magnets that present a risk of harm would still be available and some children would undoubtedly have access to them and be injured by them.
One practical question, however, is whether alternative requirements for the sizes and flux index of magnets would eliminate or substantially affect the physical qualities of the products that make them enjoyable for adults. Regarding the alternative size requirements, consumers can use magnet sets of 216 or more 5mm balls to make a variety of constructions. Larger individual magnets that would meet an alternative (that is smaller than the 1.25-inch diameter specified in the final rule) might be determined to reduce the risk associated with ingestions somewhat, but, depending upon their size, might make them unsuitable for many of the uses of the sets with smaller magnets.
Similarly, allowing a flux index greater than the 50 kG
Another alternative might be to create specifications for the application of bittering agents on the magnets to make them less appealing to young children. However, the effectiveness of bittering agents in reducing magnet ingestions is questionable (Sedney & Smith, 2012).
Neither the costs, nor the benefits of these alternative sets of requirements are quantifiable with available information. The staff is reasonably certain that magnets with a flux index of less than 50 kG
The Commission could require magnet sets to be sold with special storage containers that are fitted to the product so that consumers would be able to determine whether any of the magnets were missing from the sets. Such a requirement might prevent injuries resulting from a small number of magnets being separated from a set without the owner being aware. In reality, however, many consumers may not use such containers because using them could require time to form the magnets into a shape, such as a cube; or consumers might wish to keep the magnets out of their container to preserve a shape or structure that took time and effort to construct.
Alternatively (or in combination), the Commission could require the magnets to be sold in child-resistant packaging. The benefit of such an approach is the potential to reduce ingestion injuries. However, the benefits of this approach would be limited. Child-resistant packaging would not prevent teens and adolescents (and even some younger children) from opening the packaging. Additionally, the packaging would have to be secured after each use. According to the Division of Human Factors, it is unlikely that adults would accept child-resistant packaging for a product like the magnet sets because of the level of inconvenience involved in returning the magnets to the package (Sedney & Smith, 2012). Additionally, for the reasons described above, consumers may leave magnets out of their container.
The costs of this alternative would depend upon the packaging requirements but would be substantially less costly than the rule, which eliminates the subject magnet sets from the marketplace. It seems unlikely that the costs would amount to more than a dollar or so per magnet set, although these costs might be somewhat higher if child-resistant packaging was required. The benefits of requiring safer packaging are unknown, but based on the HF discussion above, the benefits may be relatively small if consumers would not use the packaging containers appropriately.
The Commission could require strong warnings on labels and on-product instructions designed to prevent the use of the magnet sets by children. Based on HF staff's examination, the ingestion warnings that currently accompany magnet sets are generally aimed at adults, but the warnings are deficient in their content. For example, some
HF staff believes that it may be possible to develop warnings that could communicate the ingestion hazard, the consequences of ingestion, and how to avoid the hazard. To the extent that the subject magnets present a “hidden” hazard about which consumers are unaware, explicit and adequate warnings could reduce ingestions and allow adults to continue to enjoy the use of the product.
The costs of such warnings would most likely be small, and consumers could make informed decisions about the purchase and use of magnet sets. However, although HF staff believes warnings could be developed to communicate the hazard, HF staff also believes that injury reduction would be limited. They point out that avoiding the ingestion hazard requires consumers to keep the product away from all children in the incident age group, and while caregivers who read and understand the warnings may attempt to keep this product out of the hands of young children, HF staff doubts that many caregivers are likely to be so diligent about heeding the warning with older children and adolescents (Sedney & Smith, 2012). Also, HF staff doubts that caregivers will think that constant supervision is needed if they believe the sets have been properly secured or that their children are not aware of the sets (Sedney & Smith, 2013). As noted in the NPR (77 FR 53781), a corrective action in 2010, which included stronger warnings combined with provisions for controlling distribution of magnet sets, was found to be inadequate because of a subsequent increase in ingestion injuries involving the products. Consequently, warnings (combined with sales restrictions and other measures) have not been judged to address the risk posed by the subject magnet sets adequately.
Another lower-cost option the Commission could consider is to prohibit sales of magnet sets in toy stores, children's sections of general purpose stores, and near cash registers of stores that sell any children's products. The costs of this option would be lower than the rule because this would allow the magnet sets to be marketed to and used by consumers. Sales limitations or requirements for strong warnings might also be required on Web sites advertising the sale of magnets on the Internet.
The details of developing a set of sales limitations and requirements would need to be worked out, but the idea would be to make sure that magnet sets, to the extent possible, are not sold at locations where children are likely to be present. Sales requirements might also be combined with strong and explicit warnings that HF staff has suggested could be developed.
However, the benefits of this option are probably limited. Some parents would still allow their children (especially older children and adolescents) to play with the magnet sets, despite the warnings.
The Commission could continue to address the hazard through corrective action plans. However, this approach may be inadequate because this approach is reactive and would entail waiting for new incidents to occur rather than preventing them.
The Commission could determine that no rule is reasonably necessary to reduce the risk of ingestion injuries associated with small, powerful magnet sets. Under this alternative, future societal losses would be determined by the numbers of products in use, and other factors that affect the likelihood that young children, adolescents, and teens will ingest the magnets. Although there would be no costs, such a determination would not reduce injuries.
Based on reports to the CPSC, ingestions of small magnets contained in certain magnet sets have caused multiple, high-severity injuries that require surgery to remove the magnets and repair internal damage. Based on the NEISS cases identified by the Directorate for Epidemiology staff as involving high-powered and/or ball-shaped magnet ingestions, the estimated benefits of the rule might amount to about $28.6 million annually.
The costs of the rule consist of the reduced producer surplus for firms and lost utility by consumers, also are uncertain. Based on annual sales estimates available for 2009 through mid-2012, these costs could amount to as much as $6 million in lost producer surplus and some unknown quantity of lost utility.
There are alternative regulatory actions that might allow the magnet sets to continue to be marketed. For example, the Commission, by regulation, could issue alternative requirements; issue requirements for the packaging of the magnet sets (
The rule does not require manufacturers (including importers) to perform testing or require manufacturers or retailers to keep records. For this reason, the rule does not contain “collection of information requirements,” as that term is used in the Paperwork Reduction Act, 44 U.S.C. 3501–3520. Therefore, the rule need not be submitted to the Office of Management and Budget (OMB) in accordance with 44 U.S.C. 3507(d) and implementing regulations codified at 5 CFR 1320.11.
The Regulatory Flexibility Act (RFA) requires that agencies review rules for their potential economic impact on small entities, including small businesses. Section 604 of the RFA calls for agencies to prepare a final regulatory flexibility analysis, describing the impact of the rule on small entities and identifying impact-reducing alternatives. The final regulatory flexibility analysis is to contain:
(1) A statement of the need for, and objectives of, the rule;
(2) a statement of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a statement of the agency's assessment of those issues, and a statement of any changes made to the proposed rule as a result of such comments;
(3) the response of the agency to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule, and a statement of any changes made in the final rule as a result of the comments;
(4) a description of, and where feasible, an estimate of the number of small entities to which the proposed rule will apply;
(5) a description of the projected reporting, recordkeeping, and other compliance requirements of the proposed rule, including an estimate of the classes of small entities that will be subject to the requirement and the types of professional skills necessary for the preparation of the report or record; and
(6) a description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other alternatives to the rule considered by the agency which affect the impact on small entities was rejected.
The rule prohibits the sale or distribution in commerce of magnet sets and individual magnets intended to be used with or as magnet sets that do not meet the specific requirements described in section F of this preamble. The current designs of magnet sets of the type that became popular in recent years would not meet the rule's requirements. The CPSC has received information, described in section C of this preamble, regarding incidents with, and hazards posed by, sets of small, powerful magnets. According to the final regulatory analysis, there was an annual average of about 929 medically attended magnet ingestions that were defined as at least “possibly of interest” during the period from 2009 through June 2012. These ingestions resulted in societal costs of about $28.6 million per year.
The objective of the rule is to eliminate or reduce the risk of injury to consumers from the ingestion of one or more small powerful magnets that comprise the subject consumer products. Because the magnet sets that have been involved in incidents would not meet the rule's requirements, the rule will substantially reduce the future incidence and cost to society of ingestions of magnet sets.
The Commission received comments from more than 5,000 people in response to the NPR. Many of the comments related to issues that have a bearing on the economic impacts of the proposed rule on small businesses. The Commission's responses to comments that address issues that were mentioned in the initial regulatory flexibility analysis (IRFA) are in included in Section E of this notice.
The final rule would impact U.S. importers and retailers of magnet sets comprised of small, powerful magnets of the size and magnetic force proscribed by the rule. None of the magnet sets within the scope of the rule is produced domestically. All of the U.S. firms that have marketed the products are believed to have imported them from manufacturers in China. The one remaining firm that currently imports magnet sets is a small business under U.S. Small Business Administration (SBA) size standards (SBA, 2012).
Based on information reviewed on product sales, including reports by firms to the Office of Compliance and Field Operations, the number of such magnet sets that were sold to U.S. consumers from 2009 through mid-2012 may have totaled about 2.7 million sets, with a value of roughly $50 million in 2012 dollars. This value reflects a combination of retail sales directly to consumers (through company Web sites and other Internet retail sites) and sales to retailers who market the products. A review of retail prices reported by importers and observed on Internet sites suggests prices typically ranged from about $20 to $45, with an average price of about $25 for magnet sets that commonly contain 216 to 224 magnets. Larger sets of more than 1,000 individual magnets have reportedly been sold at prices up to $300, depending on the number of magnets and the type of packaging.
We noted in the IRFA that the economic impact of the rule would be most severe for seven small importing firms, which account for the great majority (perhaps more than 98%) of units sold according to sales information provided to CPSC Compliance staff; and five of these importers reportedly derived most or all of their revenues from the sale of the magnet sets or related products. We judged that these firms could go out of business as a result of the rule. Two of the other leading importers of magnet sets apparently had fairly broad product offerings, which could lessen the severity of the economic impact of a rule. Nevertheless, we noted that the expected impacts of a final rule could also be significant for these small importers.
As discussed in section H.2.b. of this preamble, due to CPSC's enforcement actions, current sales of magnet sets are dramatically smaller than at the time of the enforcement actions. We are aware of only one major importer of magnet sets that remains active in the market. The rule will likely have an adverse impact on this remaining firm. That firm might go out of business, unless the firm successfully markets other products, including magnet sets that would comply.
The rule does not contain any reporting or record keeping requirements.
The Commission could pursue other options, including: Adopting an alternative set of requirements for the flux index or size of the magnets; requiring safer packaging; requiring warnings on the packaging and promotional materials; imposing restrictions on the locations where magnet sets can be sold; addressing the risk of injury presented by magnet sets through corrective actions; and taking no action at all. Each of these alternatives is addressed in Section G of this preamble and in the Final
CPSC rules establishing performance requirements are considered to “have little or no potential for affecting the human environment,” and environmental assessments are not usually prepared for these rules (16 CFR 1021.5 (c)(1)). This rule falls within the categorical exemption.
As required by Executive Order 12988 (February 5, 1996), the CPSC states the preemptive effect of the rule as follows:
The rule is promulgated under authority of the CPSA. 15 U.S.C. 2051–2089. Section 26 of the CPSA provides that “whenever a consumer product safety standard under this Act is in effect and applies to a risk of injury associated with a consumer product, no State or political subdivision of a State shall have any authority either to establish or to continue in effect any provision of a safety standard or regulation which prescribes any requirements as the performance, composition, contents, design, finish, construction, packaging or labeling of such product which are designed to deal with the same risk of injury associated with such consumer product, unless such requirements are identical to the requirements of the Federal Standard.” 15 U.S.C. 2075(a). Upon application to the Commission, a state or local standard may be excepted from this preemptive effect, if the state or local standard: (1) Provides a higher degree of protection from the risk of injury or illness than the CPSA standard, and (2) does not unduly burden interstate commerce. In addition, the federal government, or a state or local government, may establish and continue in effect a nonidentical requirement that provides a higher degree of protection than the CPSA requirement for the hazardous substance for the federal, state, or local government's use. 15 U.S.C. 2075(b).
Thus, with the exceptions noted above, the magnet set requirements would preempt nonidentical state or local requirements for magnet sets designed to protect against the same risk of injury.
The Commission has determined that the rule will become effective 180 days from publication of the final rule in the
The CPSA requires the Commission to make certain findings when issuing a consumer product safety standard. Specifically, the CPSA requires that the Commission consider and make findings about the degree and nature of the risk of injury; the number of consumer products subject to the rule; the need of the public for the rule and the probable effect on utility, cost, and availability of the product; and other means to achieve the objective of the rule, while minimizing the impact on competition, manufacturing, and commercial practices. The CPSA also requires the rule to be reasonably necessary to eliminate or reduce an unreasonable risk of injury associated with the product; and issuing the rule must be in the public interest. 15 U.S.C. 2058(f)(3).
In addition, the Commission must find that: (1) If an applicable voluntary standard has been adopted and implemented, that compliance with the voluntary standard is not likely to adequately reduce the risk of injury, or compliance with the voluntary standard is not likely to be substantial; (2) that benefits expected from the regulation bear a reasonable relationship to the regulation's costs; and (3) that the regulation imposes the least burdensome requirement that would prevent or adequately reduce the risk of injury.
For the reasons stated in this preamble, the Commission concludes that magnet sets and individual magnets that do not meet the requirements specified in this rule present an unreasonable risk of injury.
Consumer protection, Imports, Infants and children, Labeling, Law enforcement, Incorporation by reference.
For the reasons stated in the preamble, the Commission amends Title 16 of the Code of Federal Regulations by adding part 1240 to read as follows:
15 U.S.C. 2056 and 2058.
This part 1240, a consumer product safety standard, prescribes requirements for magnet sets, as defined in § 1240.2, and for individual magnets that are marketed or intended for use with or as magnet sets. These requirements are intended to reduce or eliminate an unreasonable risk of injury to consumers who ingest magnets that are part of magnet sets. This standard takes effect on April 1, 2015 and applies to all magnet sets and individual magnets, as defined in § 1240.2, that are manufactured or imported on or after that date.
(a) The definitions in section 3 of the Consumer Product Safety Act (15 U.S.C. 2052) apply to this part 1240.
(b)
(c)
Each magnet in a magnet set, and any individual magnet, that fits completely within the cylinder described in 16 CFR 1501.4 must have a flux index of 50 kG
(a) Select at least one magnet of each shape and size in the magnet set.
(b) Measure the flux index of each selected magnet in accordance with the procedure in sections 8.24.1 through 8.24.3 of ASTM F963–11,
(a)
(2) Once ingested, these strong magnets begin to interact in the gastrointestinal tract, which can lead to tissue death, perforations, and/or fistulas, and possibly intestinal twisting and obstruction. If left untreated, these injuries can lead to infection of the peritoneal cavity and other life-threatening conditions. The number of magnets swallowed increases the risk of attraction and injury; but as few as two magnets can cause serious internal damage in a very short time. The fact that many medical professionals do not appreciate the health consequences of magnet ingestion increases the severity of the risk because a doctor who is unfamiliar with these strong magnets may send a child home and expect the magnets to pass naturally. There are also health consequences to the treatment and surgery for removal of ingested magnets. There may be a risk of gastrointestinal bleeding; leakage of holes that were repaired; rupturing of resectioned bowels; temporary paralysis of the bowels; use of a colostomy bag; IV feeding initially, or for some longer time period; and compromise of nutrition and digestive function. Long-term health consequences can be severe, as well: loss of intestinal tissue; compromised nutrition absorption; adhesions and scarring of intestines; need for a bowel transplant; and possible impediments to fertility for girls. Even children who pass the magnets naturally and do not require surgery still need close observation by doctors and may undergo sequential x-rays, thus, exposing children to repeated dosages of radiation.
(b)
(c)
(2) Individual magnets that are intended or marketed for use with or as magnet sets also must comply with the requirements of this part. The Commission is aware that firms selling magnet sets have offered individual magnets. To avoid firms circumventing the rule by selling individual magnets that are nevertheless intended or marketed to be used as magnet sets, this part covers such individual magnets. Individual magnets sold for other uses are not subject to this part. Thus, this part does not affect the need for, utility, or availability of individual magnets that are sold for uses other than as magnet sets.
(d)
(2) The Commission has considered other alternatives to reduce the risk from magnet sets: alternative performance requirements, such as setting a different flux limit or requiring bittering agents; safer packaging requirements, such as requiring a specific design for storage containers or requiring child resistant packaging; sales restrictions; continued corrective actions; and taking no action. Some of these alternatives may not be within the Commission's authority. Although each of the alternative actions would have lower costs and less impact on small business, none is likely to significantly reduce the injuries associated with ingestion of magnets from magnet sets.
(e)
(2) For the regulatory analysis, we considered the period of time, 2009 through June 2012, before CPSC's compliance activities affected the market. We identified 86 ingestions of high-powered and/or ball-shaped magnets, which occurred from 2009 through June 2012 reported through NEISS. These incidents were determined to involve, or possibly involve, magnet sets. Based on these 86 incidents, we have determined that an estimated 2,138 ingestions of magnets from magnet sets were treated in emergency departments from January 1, 2009 to June 2012. About 11 percent of the victims of these ingestion incidents required hospitalization, as opposed to victims who were treated and released. The 2009 through June 2012 NEISS estimates suggest an estimated
(3) After including the injuries treated outside of hospital emergency departments, there was an annual average of about 929 medically attended injuries involving ingestions of magnets that were defined as at least “possibly of interest” during the period from 2009 through June 2012. Injuries resulting from such ingestions of magnets can be severe and life threatening. The risk posed by these magnets may not be appreciated by children or caregivers, who may assume, mistakenly, that the consequences of ingesting magnets would be similar to ingesting any other small object. However, once ingested, these strong magnets do not pass naturally. Rather, these magnets are mutually attracted to each other and exert compression forces on the trapped gastrointestinal tissue.
(4) We estimate that these injuries resulted in annual societal costs of about $28.6 million (in 2012 dollars) during the 2009 through June 2012 time period. The average estimated societal costs per injury was about $27,000 for injuries treated in locations other than emergency departments (such as physicians' offices, clinics, ambulatory surgery centers, or direct hospital admissions); about $21,000 for injuries that were treated and released from emergency departments; and about $130,000 for injuries that required admission to the hospital for treatment. Preventing these injuries would be the expected benefit resulting from the rule.
(5) The costs of the rule would consist of the lost producer surplus to firms that produce and sell magnet sets, plus the lost use value that consumers would experience when magnet sets that do not comply with the rule are no longer available. Sales of magnet sets averaged roughly 800,000 sets annually during the 2009 through mid-2012 time period, with an average retail price of about $25 per set in 2012. Thus, total industry revenues averaged about $20 million annually (
(6) Thus, we estimate costs of the rule to be about $6 million in lost producer surplus and some unknown quantity of lost utility. Considering the injuries associated with magnet sets—and the resulting societal costs, balanced against the likely impact that the rule would have on firms producing and selling the product, and on consumers who would lose the utility of the product—we conclude that magnet sets pose an unreasonable risk of injury and that the rule is reasonably necessary to reduce that risk.
(f)
(g)
(h)
(2) The costs of the rule, in terms of reduced profits for firms and lost utility by consumers, also are uncertain. However, based on annual sales estimates available for the 2009 through June, 2012, study period, these costs could amount to about $6 million in lost producer surplus and some unknown quantity of lost utility.
(i)
Fish and Wildlife Service, Interior.
Final rule.
We, the U.S. Fish and Wildlife Service (Service), determine threatened status under the Endangered Species Act of 1973 (Act), as amended, for the western distinct population segment (DPS) of the yellow-billed cuckoo (
This rule is effective November 3, 2014.
This final rule is available on the Internet at
Jennifer Norris, Field Supervisor, Sacramento Fish and Wildlife Office (see
We have determined that the western yellow-billed cuckoo meets the definition of a threatened species and is likely to become endangered throughout its range within the foreseeable future, based on the immediacy, severity, and scope of the threats to its continued existence. These include habitat loss associated with manmade features that alter watercourse hydrology so that the natural processes that sustained riparian habitat in western North America are greatly diminished. Loss and degradation of habitat has also occurred as a result of livestock overgrazing and encroachment from agriculture. These losses are exacerbated by the conversion of native habitat to predominantly nonnative vegetation. Habitat loss results in the additional effects associated with small and widely separated habitat patches such as increased predation and reduced dispersal potential. This threat is particularly persistent where small habitat patches are in proximity to human-altered landscapes, especially agricultural fields, resulting in the potential for pesticides to poison individual western yellow-billed cuckoos and reduce their prey base.
On October 3, 2013, the proposed rule to list the western yellow-billed cuckoo as a threatened species under section 4 of the Act (16 U.S.C. 1531
We proposed critical habitat for the western DPS of the yellow-billed cuckoo on August 15, 2014 (79 FR 48547).
In this section of the final rule, it is our intent to discuss only those topics directly relevant to the listing of the western yellow-billed cuckoo as a threatened species. Please refer to the proposed listing rule for the western yellow-billed cuckoo for detailed background and species information (78 FR 61621; October 3, 2013).
The yellow-billed cuckoo (
Adult yellow-billed cuckoos have a fairly stout and slightly down-curved bill; a slender, elongated body with a long-tailed look; and a narrow yellow ring of colored, bare skin around the eye. The plumage is loose and grayish-brown above and white below, with reddish primary flight feathers. The tail feathers are boldly patterned with black and white below. They are a medium-sized bird about 12 inches (in) (30 centimeters (cm)) in length, and about 2 ounces (oz) (60 grams (g)) in weight. The bill is blue-black with yellow on the basal half of the lower mandible. The legs are short and bluish-gray. All cuckoos have a zygodactyl foot with two toes pointing forwards and two toes pointing backwards. Juvenile yellow-billed cuckoos resemble adults, except the tail patterning is less distinct and the lower bill has little or no yellow. Males and females differ slightly and are indistinguishable in the field (Hughes 1999, pp. 2–3).
Typically a secretive and hard-to-detect bird, adult yellow-billed cuckoos have a distinctive “kowlp” call, which is a loud, nonmusical series of notes that slows down and slurs toward the end. Yellow-billed cuckoos advertise for a mate using a series of soft “cooing” notes, which they give at night as well as during daytime. Both members of a pair use a soft knocking call as a contact or warning call near the nest (Hughes 1999, pp. 8–9). Please refer to the October 3, 2013, proposed listing rule (78 FR 61623–61642) for additional species information.
Recent research on yellow-billed cuckoo genetics using mitochondrial DNA did not find any fixed genetic differences between eastern and western yellow-billed cuckoos (Farrell 2013, pp. 165–170). The author concluded that the separation into distinct subspecies may be too recent to be expressed in a single mitochondrial gene and recommended future studies using next-generation sequencing techniques. Avian geneticist Janice Hughes, Ph.D., a peer reviewer of the proposed listing rule, concluded that close examination of the DNA studies conducted to date on cuckoos infers a deeper genetic divergence between western and eastern cuckoos that with further analysis would likely support division of the yellow-billed cuckoo into two subspecies. She indicated that genetic markers used in all three previously conducted genetics studies evolve too slowly to reveal genetic structure within the species. She recommended that future studies use microsatellite techniques because they would be more informative to a study of DNA at the subspecies level. The existing DNA studies, however, show that western yellow-billed cuckoos have developed unique genetic haplotypes not present in eastern cuckoos and that these are reflected in phenotypic (outwardly visible) divergence that has been observed between eastern and western yellow-billed cuckoos. Please refer to the October 3, 2013, proposed listing rule (78 FR 61624–61645) for a more detailed discussion of information on taxonomy for the species.
Under the Act, we must consider listing any species, subspecies, or, for vertebrates, any DPS of these taxa if there is sufficient information to indicate that such action may be warranted. To implement the measures prescribed by the Act and its Congressional guidance, we (along with the National Marine Fisheries Service) developed policy that addresses the recognition of DPSs for potential listing actions (61 FR 4722; February 7, 1996). The policy allows for more refined application of the Act that better reflects the biological needs of the taxon being considered, and avoids the inclusion of entities that do not require its protective measures.
Before we can evaluate whether a given population segment is a DPS under the Act, we must first determine if any population segments exist for the vertebrate species. As discussed in the
To establish the range of the population segment under consideration, we used the area occupied by the western yellow-billed cuckoo (the subspecies) originally defined by Ridgway (1887, p. 273) and later refined by other researchers (AOU 1957, pp. 269–270; Oberholser and Kincaid 1974, pp. 434–435; Hughes 1999, Figure 1). After careful consideration of other possible population segment configurations, we determined that the Continental Divide (generally the crest of the Rocky Mountains based on watershed boundaries), the watershed divide between the Rio Grande and Pecos River, and the Chihuahuan Desert in Mexico was the best division between eastern and western populations. The area that we are considering occupied by the potential western DPS for the yellow-billed cuckoo is closely aligned with the traditionally defined range of the western yellow-billed cuckoo subspecies as partially described in the July 25, 2001, 12-month finding (66 FR 38611). Our goal is to determine if this western population meets the criteria of a DPS and, if so, whether the range boundaries identified in the literature are appropriate for the boundary of the DPS. This DPS analysis is based solely on the range during the breeding season because the migration route and winter range of western yellow-billed cuckoos are poorly known.
The geographical breeding range of the yellow-billed cuckoo in western North America includes suitable habitat within the low- to moderate-elevation areas west of the crest of the Rocky Mountains in Canada, Mexico, and the United States, including the upper and middle Rio Grande, the Colorado River Basin, the Sacramento and San Joaquin River systems, the Columbia River system, and the Fraser River. In Mexico, the range includes the Cape Region of Baja California Sur, and river systems in the Mexican States of Sonora, Sinaloa, western Chihuahua, and northwestern Durango. Eastern yellow-billed cuckoos (
Under our DPS policy, three elements are considered in a decision regarding the status of a possible DPS as endangered or threatened under the Act. The elements are: (1) Discreteness of the population segment in relation to the remainder of the species to which it belongs; (2) the significance of the population segment to the species to which it belongs; and (3) the population segment's conservation status in relation to the Act's standards for listing. In other words, if we determine that a population segment of a vertebrate species being considered for listing is both discrete and significant, we would conclude that it represents a DPS, and thus a “species” under section 3(16) of the Act, whereupon we would evaluate the level of threat to the DPS based on the five listing factors established under section 4(a)(1) of the Act to determine whether listing the DPS as an “endangered species” or a “threatened species” is warranted.
Below, we evaluate under our DPS policy whether the population segment of yellow-billed cuckoos that occurs in the western United States, northwestern Mexico, and southwestern Canada qualifies as a DPS under the Act.
Under our DPS Policy, a population segment of a vertebrate species may be considered discrete if it satisfies either of the following two conditions: (1) It is markedly separated from other populations of the same taxon as a consequence of physical, physiological, ecological, or behavioral factors (quantitative measures of genetic or morphological discontinuity may provide evidence of this separation); or (2) it is delimited by international governmental boundaries within which significant differences in control of exploitation, management of habitat, conservation status, or regulatory mechanisms exist that are significant in light of section 4(a)(1)(D) of the Act.
The analysis of the population segment of the yellow-billed cuckoo in western North America is based on the first of those two conditions, the marked separation from other populations. From southwest British Columbia along the Canadian border to the southern end of the Sangre de Cristo Mountains in northern New Mexico, nesting yellow-billed cuckoos in western North America are separated from nesting yellow-billed cuckoos in eastern North America by the high-elevation zone of the Rocky Mountains. Yellow-billed cuckoos breed both east and west of the crest of the Rocky Mountains, where suitable habitat occurs (Johnsgard 1986, p. 201). We generally define the crest of the Rocky Mountains and Continental Divide as the high-elevation zone between the drainages flowing west and east in the United States, Canada, and Mexico, although some areas such as near the Sangre de Cristo Range in southern Colorado and northern New Mexico is east of the east-flowing Rio Grande River. The division between the western and eastern population segments spans a distance of about 2,200 miles (mi) (3,540 kilometers (km)) from southwest British Columbia near the Canadian border along the crest of the Rocky Mountains based on watershed boundaries, south along the Rio Grande-Pecos Rivers watershed divide to the United States-Mexico border in the Big Bend area of Texas, then into Mexico along the eastern and southern boundaries of the State of Chihuahua south to the southern border of the State of Durango and to the Pacific Ocean along the southern border of the State of Sinaloa. The distance of separation between breeding yellow-
Yellow-billed cuckoos historically bred at the southern tip of Vancouver Island and in the Fraser River valley north to Kamloops in southwestern British Columbia, Canada (Bent 1940, p. 64; Campbell
In the northern Rocky Mountains and northern Great Plains—from the Canada border south through Colorado—the yellow-billed cuckoo is “extremely rare and local” as a breeding bird both east and west of the Rocky Mountains (Hughes 1999, p. 3). While the species breeds locally in river valleys in southern Idaho, southwestern Wyoming, western Colorado, and in Utah (Hughes 1999, pp. 1–3), it is quite rare or absent within the higher Rocky Mountains (Johnsgard 1986, p. 201). An examination of the distributional records for the Rocky Mountain region indicates that the area has had few records of yellow-billed cuckoos and the species is even scarcer at elevations above approximately 6,000 feet (ft) (1,850 meters (m)), and almost never breeds above 7,000 ft (2,154 m) (Bailey 1928, pp. 307–309; Phillips
The separation of the western yellow-billed cuckoo population segment from yellow-billed cuckoos in the eastern population segment continues south along the crest of the Rockies into southern Colorado and northern New Mexico, then the Rocky Mountains end and the separation is along the watershed boundary between the Rio Grande and the Pecos Rivers in central New Mexico (Sangre de Cristo Mountains), and southwest Texas, terminating at the Rio Grande in the Big Bend National Park. In this region, the eastern and western yellow-billed cuckoo populations are separated by arid basins and isolated mountain ranges that emerge from a high desert plateau. These mountain ranges from north to south include the Sangre de Cristo Mountains and Sacramento Mountains in central and southern New Mexico, the Guadalupe Mountains and Delaware Mountains on the Texas-New Mexico border, and the Davis Mountains, Del Norte Mountains, and Santiago Mountains in western Texas south to the Chisos Mountains in the Big Bend National Park on the border with Mexico.
In southern New Mexico and western Texas where western yellow-billed cuckoos nest along the Rio Grande and eastern yellow-billed cuckoos nest along the Pecos River, the geographical separation is as little as 160 mi (257 km) and even closer along the Rio Grande (50 mi; 80 km). The closer proximity of western and eastern yellow-billed cuckoos in this region may be caused in part by the lower height of the mountain range being a less effective barrier (Hubbard 1978, p. 32; Howe 1986, p. 2). Historically, this gap was wider, because the banks of the Pecos River did not have riparian woodland and the area was not used by the species. Today, the riverine habitat along the Pecos River consists primarily of introduced tamarisk (
South of the United States-Mexico border, yellow-billed cuckoos are separated by extensive areas of desert that lack suitable nesting and foraging habitat. In Mexico, the Chihuahuan Desert widens to 350 mi (563 km), and includes nearly all of the States of Chihuahua and Coahuila. There are very few records of yellow-billed cuckoos for this region, and we are not aware of any nesting records for either State. Suitable breeding habitat or connective riparian corridors are also lacking. Published range maps for the species do not include the eastern three-quarters of Chihuahua or the western three-quarters of Coahuila as part of the species' breeding range (Howell and Webb 1995, p. 347; Hughes 1999, p. 1). There are only 12 records of yellow-billed cuckoos from Chihuahua: 11 specimens from the 1940s to 1960, and a sight observation in 2003. There are only nine records of the species from Coahuila: six specimen and three sight records (1958, 1988, and 2011). Three of the specimens from Coahuila were identified as eastern yellow-billed cuckoos on their museum records, and the others were not identified to subspecies. Seven specimens from Chihuahua were identified to subspecies and six of these were considered the western subspecies. It is likely that many, if not most, of the records from this region are of migrating yellow-billed cuckoos, as 16 are from May to mid-June or from late September, and only 5 are from late June or July, the primary breeding season.
From this information we concluded that the Chihuahua-Coahuila border was the most biologically supportable boundary for the population segment. The boundary then follows the southern border of Chihuahua west to the Continental Divide, then south along the divide through the State of Durango and west along the southern border of Durango and Sinaloa. There are no breeding season records for yellow-billed cuckoos from the State of Nayarit or Jalisco or farther south along the
Eastern and western yellow-billed cuckoos are highly migratory, and the two populations may spend winters in overlapping regions in South America. However, we do not have information to indicate that there is anything more than an extremely low level of interchange (if any at all) between the two populations during the breeding season. This conclusion is supported by differences in habitat use and morphology, which are genetically controlled traits, as discussed in the following sections.
Although the Rocky Mountains and the Chihuahuan Desert may not wholly prevent movement of yellow-billed cuckoos between the east and west, especially in a migratory species that winters far to the south, and moves thousands of miles between its wintering and breeding grounds, the available information indicates that this mountain range and desert substantially separates yellow-billed cuckoo populations during the breeding season, thereby effectively separating them into discrete populations. The separation between yellow-billed cuckoo population segments in the east and west is a physical one that is maintained by their behavioral differences, which we discuss below.
Data collected from publications and other sources demonstrate the existence of behavioral differences between yellow-billed cuckoos in the east and west.
Yellow-billed cuckoo populations in the east and west differ in the timing of arrival on the breeding grounds in the spring. Yellow-billed cuckoos in western North America arrive on the breeding grounds 4 to 8 weeks later than eastern yellow-billed cuckoos at similar latitude (Franzreb and Laymon 1993, pp. 24–25; Hughes 1999, pp. 5–6, 12–13; Laymon 2000,
Information, including timing of migration, indicates that yellow-billed cuckoos from Texas west of the Pecos River (from the Rio Grande upstream of Big Bend) and from northwestern Mexico (Chihuahua, Sonora, Sinaloa, Durango, Baja California Sur) exhibit greater similarity to yellow-billed cuckoos in western North America, and those on the Pecos River in Texas and eastern Mexico (Coahuila, Nuevo Leon, Tamaulipas, San Luis Potosi) are more similar to yellow-billed cuckoos in the east (Wauer 1971, p. 96; Oberholser and Kincaid 1974, pp. 434–435; Franzreb and Laymon 1993, pp. 17–28; Hughes 2000,
Based on migration timing, yellow-billed cuckoos split into two populations. This split occurs along the line that corresponds with the traditional subspecies boundary (see Figure 1, above).
The available information indicates that the yellow-billed cuckoo population segment that occurs west of the Continental Divide (as defined above) in the United States, in southwestern Canada, and in northwestern Mexico is markedly separated from the eastern population segment of yellow-billed cuckoo, including those that nest in eastern North America, eastern Mexico, certain Caribbean Islands, and the Yucatan Peninsula. The distribution of the western populations is markedly separated physically (geographically) during the breeding season from the distribution of other yellow-billed cuckoo populations by high mountains, extensive desert, or nonhabitat areas with the shortest geographical separation occurring across 160 mi (257 km) of desert between the Pecos River and Rio Grande in southern New Mexico and western Texas with the exception of nesting of western yellow-billed cuckoos near Big Bend National Park in Texas. Evidence that this geographical separation between populations has been consistent through time may be found in the differences in the two populations' biology and morphology. Even in this area of closest proximity, information on genetically controlled behavior available in the scientific literature provides evidence of a biological separation between the western populations and eastern populations.
Under our DPS policy, the standard for discreteness does not require absolute separation because this can rarely be demonstrated for any population of organism. For the yellow-billed cuckoo populations in western North America, we have met this standard, and, therefore, we consider the western population segment of the yellow-billed cuckoo from southern British Columbia, Canada south along the Continental Divide (including the Rio Grande basin) in the United States into Mexico, and ending at the coast in the State of Sinaloa, Mexico, to be discrete per our DPS policy. We conclude that the western population segment of the yellow-billed cuckoo is discrete from the remainder of the species because the yellow-billed cuckoo population segment that nests west of the Continental Divide (as defined above) and in northwestern Mexico is markedly separated geographically and behaviorally from all other populations of yellow-billed cuckoo, including those that nest in eastern North America.
Under our DPS policy, once we have determined that a population segment is discrete, we consider its biological and ecological significance to the larger taxon to which it belongs. Our DPS policy provides several potential considerations that may demonstrate the significance of a population segment to the remainder of its taxon, including: (1) Evidence of the persistence of the discrete population segment in an ecological setting unusual or unique for the taxon, (2) evidence that loss of the discrete population segment would result in a significant gap in the range of the taxon, (3) evidence that the population segment represents the only surviving natural occurrence of a taxon that may be more abundant elsewhere as an introduced population outside its historic range, or (4) evidence that the discrete population segment differs markedly from the remainder of the species in its genetic characteristics.
We have found substantial evidence that two of these four significance criteria (numbers 2 and 4) are met by the discrete population segment of yellow-billed cuckoos that occurs west of the Continental Divide (as defined above). We address these significance factors below as they relate to the population segment of western yellow-billed cuckoo. We focus on whether the loss of this population segment would result in a significant gap in the range of the taxon and evidence that the discrete
Loss of the discrete population segment would result in a significant gap in the range of the taxon because an extensive area would be without yellow-billed cuckoos if the western population segment were lost. Seven entire States and substantial portions of five additional States in the United States, and six States in Mexico, that are currently occupied would have no breeding populations of the species. Bird migration experts divide the North American continent into four migratory flyways: The Atlantic, Mississippi, Central, and Pacific. The range of the yellow-billed cuckoo west of the Rocky Mountains covers the entire Pacific flyway and half of the Central flyway. Additionally, the range of the yellow-billed cuckoo west of the Rocky Mountains covers 1,350,000 square (sq) mi (3,496,500 sq km), or approximately 40 percent of the lower 48 States. Even though the actual area occupied by the species in western North America is less than the total area identified above, the potential loss of the western population of the yellow-billed cuckoo would constitute a significant gap in the range of the species in North America.
Data collected from publications and other sources demonstrate the existence of morphological and physiological differences between yellow-billed cuckoos in the east and west. Morphologically, the yellow-billed cuckoos in western North America are generally larger, with significantly longer wings, longer tails, and longer and deeper bills (Franzreb and Laymon 1993, p. 25). Banks, in a review of the species taxonomic status (1988, pp. 473–477), grouped yellow-billed cuckoo specimens into 19 regional groups, 7 in the western United States and western Mexico, 10 in the eastern United States and eastern Mexico, 1 in New Mexico, and 1 in the Caribbean. He found yellow-billed cuckoos in the east to be uniform in measurement throughout their range and yellow-billed cuckoos in the west to be uniform in measurements throughout their range (Banks 1988, p. 475). Banks stated that the change from smaller to larger yellow-billed cuckoos appeared to take place in extreme western New Mexico or extreme eastern Arizona (Banks 1988, p. 476). A subsequent analysis, based on available specimens from New Mexico and western Texas, showed the watershed boundary between the Pecos River and the Rio Grande as the apparent boundary between the smaller eastern and larger western birds, with a majority of yellow-billed cuckoos on the Rio Grande above Big Bend being larger western birds (63 percent, n=19) and the majority of yellow-billed cuckoos on the Pecos River being smaller eastern birds (82 percent, n=11) (Franzreb and Laymon 1993, p. 25). This is the only area where the ranges of the western and eastern population segments are in close proximity; elsewhere the two populations are separated by wide expanses of unsuitable, unoccupied habitat (see Figure 1, above).
One peer reviewer measured 35 cuckoos from the Rio Grande and 25 cuckoos from the Pecos River in the field. With the exception of wing and tail measurements, accurate measurements are hard, if not impossible, to obtain from live birds under field conditions. Male and female cuckoos averaged longer wings and tails on Rio Grande than on the Pecos River, with the difference being more pronounced on male than on female cuckoos. Sample sizes were insufficient to do t-tests to compare the means for the wing and tail data. The bill measurements that the reviewer took in the field were not reliable and therefore could not be compared, and as a result the comparison using the Discriminant Function equations developed by Franzreb and Laymon (1993, pp. 17–28) could not be used reliably on the data.
Other physical and morphological differences exist between yellow-billed cuckoos in the east and west, and provide additional evidence of ecological significance. These include:
• Yellow-billed cuckoos in western North America produce larger eggs (1.2 percent longer, 0.6 percent wider, and 3.2 percent heavier) with thicker eggshells (7.1 percent thicker) (Hughes 1999, p. 14), which is an evolved trait that would help yellow-billed cuckoos in the west to cope with potential higher egg water loss in the hotter, drier conditions of western North America (Hamilton and Hamilton 1965, pp. 426–430; Ar
• Juvenile yellow-billed cuckoos in the east have yellow bills (Oberholser and Kincaid 1974, pp. 434–435), while juvenile yellow-billed cuckoos in the west have all-black bills (Franzreb and Laymon 1993, p. 26).
• Adult yellow-billed cuckoos in the west have a lower mandible that is orange-yellow, while yellow-billed cuckoos in the east have lower mandibles that are bright yellow (Franzreb and Laymon 1993, p. 26; Laymon 2000,
• As noted previously, adult yellow-billed cuckoos in the west are larger and heavier, on average, than adult yellow-billed cuckoos in the east. More than 80 percent of individuals can be assigned to east or west based on morphological measurements (see also Oberholser and Kincaid 1974, pp. 434–435; Banks 1988, pp. 473–477; 1990, p. 538; Franzreb and Laymon 1993, pp. 17–28). The size differences between eastern and western cuckoos are discussed in detail in the
Information, including morphology, indicates that yellow-billed cuckoos from Texas west of the Pecos River (from the Rio Grande upstream of Big Bend) and from northwestern Mexico (Chihuahua, Sonora, Sinaloa, Durango, Baja California Sur) exhibit greater similarity to yellow-billed cuckoos in western North America, and those on the Pecos River in Texas and eastern Mexico (Coahuila, Nuevo Leon, Tamaulipas, San Luis Potosi) are more similar to yellow-billed cuckoos in the east (Wauer 1971, p. 96; Oberholser and Kincaid 1974, pp. 434–435; Franzreb and Laymon 1993, pp. 17–28; Hughes 2000,
Based on morphological measurements, bill color of young and adults, egg size and weight, and migration timing, yellow-billed cuckoos split into two populations. This split occurs along the line that corresponds with the traditional subspecies boundary (see Figure 1, above). Phenotypically or outwardly expressed traits present substantial evidence that the western population segment of yellow-billed cuckoo differs markedly from other populations of the species.
However, the strongest evidence of differences between yellow-billed cuckoos in the western population segment and those of the east in genetic characteristics is the difference in timing of migrations. This difference can only have developed as an evolved trait in response to environmental factors over a long period of time, and thus is genetically linked (Cresswell
The best available information indicates that the discrete yellow-billed cuckoo population segment that nests west of the Continental Divide (as defined above) and in northwestern Mexico is important to the taxon to which it belongs because: (1) Loss of the population segment would leave a significant gap in the species' range (more than one third of the species' range would be vacant); and (2) it differs markedly from other yellow-billed cuckoo populations in morphology (e.g., western yellow-billed cuckoos are larger) Therefore, we conclude that the western population segment of the yellow-billed cuckoo is
Based on the best scientific and commercial data available on distribution as well as behavioral and morphological characteristics of the species, we have determined that the western population segment of the yellow-billed cuckoo is both discrete and significant per our DPS policy. Therefore, we conclude that the western distinct population segment of the yellow-billed cuckoo is a DPS, and thus a “species” under section 3(16) of the Act. Our determination of biological and ecological significance is appropriate because the population segment has a geographical distribution that is biologically meaningful.
The term “distinct population segment” is not commonly used in scientific discourse. As such, and in contrast to taxonomically defined species and subspecies, there is no established name for the western distinct population segment of the yellow-billed cuckoo in the available literature; we will refer to this “species” (DPS) as the western yellow-billed cuckoo. The range of the western yellow-billed cuckoo in Canada includes the area of Vancouver Island and along the Fraser River system upstream to Kamloops to the Rocky Mountains west of the Continental Divide. In the United States the DPS includes the area west of the Continental Divide, south through Montana, Wyoming, Colorado, and along the watershed divide between the upper and middle Rio Grande and Pecos Rivers in New Mexico and Texas, south to Big Bend in southwestern Texas, and extending to the States of the west coast. In Mexico, the DPS is the area west of the eastern and southern border of the State of Chihuahua, west of the Continental Divide in the State of Durango, and the southern border of the State of Sinaloa (Figure 2).
In the proposed rule published on October 3, 2013 (78 FR 61621), we requested that all interested parties submit written comments on the proposal by December 2, 2013. The comment period was reopened on December 26, 2013, and remained open until February 24, 2014 (78 FR 78321). The comment period was reopened again on April 10, 2014, and remained open until April 25, 2014 (79 FR 19860). We also contacted appropriate Federal and State agencies, scientific experts and organizations, and other interested parties and invited them to comment on the proposal. Newspaper notices inviting general public comment were published in the Idaho State Journal (Pocatello, ID), Post Register (Idaho Falls, ID), Idaho Mountain Express (Sun Valley, ID), Idaho Statesman (Boise, ID), Coeur d'Alene Press (Coeur d'Alene, ID), Las Vegas Sun (Las Vegas, NV), Las Vegas Review-Journal (Las Vegas, NV), Reno Gazette-Journal (Reno, NV), The Oregonian (Portland, OR), Yakama Herald, (Yakima, WA), Wenatchee World (Wenatchee, WA), The Olympian (Olympia, WA), The Spokesman Review (Spokane, CA), Bellingham Herald (Bellingham, WA), Salt Lake Tribune (Salt Lake City, UT), Helena Independent Record (Helena, MT), The Missoulian (Missoula, MT), Valley Courier (Alamosa, CO), Craig Daily Press (Craig, CO), (The Daily Sentinel (Grand Junction, CO), El Paso Times (El Paso, TX), Albuquerque Journal (Albuquerque, NM), The Arizona Republic (Phoenix, AZ), The Californian (Bakersfield, CA), and Press-Enterprise (Riverside, CA). We did not receive any requests for a public hearing.
During the comment periods for the proposed rule, we received 34,459 comment letters directly addressing the proposed listing of the western DPS of the yellow-billed cuckoo as a threatened species. The vast majority of these comment letters voiced their support or opposition to the action, but did not provide significant supporting information on the proposed listing. A total of 34,380 letters were in support of the listing, while 54 letters were in opposition to listing, with 25 commenters providing additional information, but took no position on the listing of the species. Approximately 141 of these comment letters provide additional information or comments. All substantive information provided during comment periods has either been incorporated directly into this final determination or is addressed below.
In accordance with our peer review policy published on July 1, 1994 (59 FR 34270), we solicited expert opinion from five knowledgeable individuals with scientific expertise that included familiarity with the yellow-billed cuckoo and its habitat, biological needs, and threats. We received responses from all five of the peer reviewers.
We reviewed all comments we received from the peer reviewers for substantive issues and new information regarding the listing of the western DPS of the yellow-billed cuckoo. The peer reviewers generally concurred with our methods and conclusions, and provided additional information, clarifications, and suggestions to improve the final
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Obtaining accurate survey results are made more difficult because: (1) Western yellow-billed cuckoos often have helper males at the nest; (2) they are only loosely territorial; (3) nests of adjacent pairs can be very close to each other; (4) female western yellow-billed cuckoos often lay a second and third clutch sometimes with different mates; and (5) it is likely that they move from one river system to another between clutches. These unusual behaviors can lead to either an over count or an under count of individuals, pairs, or territories.
Many of the earlier population estimates were made of pairs of western yellow-billed cuckoos. For the reasons listed above, some recent researchers have decided that it is more accurate to use the term territories rather than pairs. An assessment of the methodology used to determine pairs in the older studies and territories in the more recent studies concludes that very similar methodology is used and that the numbers are comparable.
In some cases, we were able to use the original survey data and simply compare the number of survey hours and number of western yellow-billed cuckoos surveyed and compare them from one year to the next and one time period to another. This is a very reliable and accurate method of comparison. In other cases, such as that at the South Fork Kern River Valley in California from 1985 to 2001, when all nesting pairs were either documented by finding a nest or seeing positive nesting behavior (e.g., western yellow-billed cuckoos carrying food to young) the
We have taken all of these difficulties and changes of survey methods and changes of data and behavior interpretation into account in our assessment of survey results and western yellow-billed cuckoo population trends. We have used the best available data and science in determining population estimates and trends. Because we have been aware of the changes in survey methods and have factored that information into our analysis, we are confident that our estimates of breeding populations are accurate.
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During the development of the proposed and this final listing rule, we coordinated with Federal agencies and asked for their input on the information presented and any concerns they may have. We have not included specific comments and responses to Department of the Interior (DOI) agencies in this rule (Bureau of Land Management, Bureau of Reclamation, and National Park Service). We have worked with the DOI agencies during the development of this rule, and their comments and concerns are included in the record materials for this final determination. We have reviewed any DOI comments and information, and have made changes that we determined were appropriate to the final listing of the western yellow-billed cuckoo. A total of seven comment letters were received from five Federal agencies from outside the DOI, and they are outlined below.
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Section 4(i) of the Act states, “the Secretary shall submit to the State agency a written justification for his failure to adopt regulations consistent with the agency's comments or petition.” Comments received from the States regarding the proposal to list as a “threatened species” for the western DPS of the yellow-billed cuckoo are addressed below. We received 17 comment letters from 17 State agencies in 11 States. Of the 17 letters submitted, 9 were from State wildlife agencies. We did not receive comments from the State of Oregon.
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In considering the foreseeable future as it relates to the status of the western yellow-billed cuckoo, we considered the factors acting on the species and looked to see if reliable predictions about the status of the species in response to those factors could be drawn. We considered the historical data to identify any relevant existing trends that might allow for reliable prediction of the future conservation status of the species (in the form of extrapolating the trends). We also considered whether we could reliably predict any future events that might affect the status of the species, recognizing that our ability to make reliable predictions into the future is limited by the variable quantity and quality of available data. Available population information for western yellow-billed cuckoo is limited for determining trends because no long-term rangewide status survey has been completed and the threats facing the species are variable in intensity and scope across the species' range and do not reliably provide a sound basis for specific timeframe predictions. The available data do not allow us to determine a specific timeframe for the foreseeable future for the western yellow-billed cuckoo; therefore, we rely on a qualitative assessment of the foreseeable future, in terms of that period of time over which we can reasonably predict the future population trends and threats to the species, and the likely consequences of those threats and trends for the status of the species. We have discussed the timeframe for when we have determined the threats are acting on the species under each factor in the
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We disagree that the DPS line is arbitrary. The DPS line used to separate the western yellow-billed cuckoo from yellow-billed cuckoos in the east in the vicinity of Utah was the watershed boundaries along the Continental Divide. This boundary does not imply that all areas within the DPS contain suitable habitat. In fact, most areas within the DPS do not contain suitable habitat for the species because the
We received GIS data from the State of Utah and excel spreadsheets with location data apparently derived from surveys and incidental observation within the State. We did not receive the information mentioned in the comment letter (e.g., Beason 2009, additional statewide surveys, and GIS habitat models) from the State. During the development of this proposed rule and in response to the State's comment, we independently obtained a copy of the information cited (Beason 2009, pp. 1–19). The results of that study, which surveyed areas in and around Dinosaur National Park in Utah and Colorado, did not confirm any western yellow-billed cuckoo observations. We contacted the researcher and they confirmed the information.
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While the results of the riparian restoration work on the Lower Colorado River are promising, based on the scientific information available we conclude that it is too soon to tell what effect this planned restoration will have on western yellow-billed cuckoo populations. As population goals for recovery of the western yellow-billed cuckoo have not yet been established, it is not known what the overall effect of an addition of the 40 or so pairs of western yellow-billed cuckoos on the Lower Colorado River will have on the overall status of the yellow-billed cuckoo in the West. In addition, so far it appears that western yellow-billed cuckoos nesting on restoration sites tend to have lower nesting success than western yellow-billed cuckoos nesting in areas still containing healthy native riparian forests (McNeil
We have added citations in this final rule that show that western yellow-billed cuckoos have declined as a result of riparian habitat loss and degradation (see section in Factor A discussion). We have concluded that this is a well-documented pattern in California and Arizona.
To date it is difficult to quantify the benefit of riparian habitat restoration to western yellow-billed cuckoo populations. Most restoration efforts are carried out on a small scale in
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As discussed above in
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We agree that climate change projections and prediction can be difficult due to the availability of information and variability of climate and habitat conditions over time. However, in a study looking at the recent effects of climate change on temperature and precipitation over the past 36+ years (1970–2006), Enquist
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We believe we have used the best scientific and commercial information available in coming to our decision to list the western yellow-billed cuckoo as a threatened species. The western yellow-billed cuckoo has been a candidate for listing since 2001. Although we were litigated to develop a timeframe for moving forward on the review of candidate species, the Act requires us to promptly make our evaluations for species considered candidates. Any settlements reached as a result of litigation took into consideration what was best for conservation and protection of candidate or sensitive species and were not dictated by litigants.
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Controlled and seasonal livestock grazing can occur in a manner that is compatible with the management of western yellow-billed cuckoo habitat, although effective monitoring and management would most likely be needed especially in the more arid regions of the Southwest. Current grazing management practices are less harmful to riparian systems than some past practices. However, especially during droughts, riparian zones can still be grazed in a manner that may degrade riparian habitat attributes and prevent long-term health and persistence of these systems.
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Based upon our review of the public comments, comments from other Federal and State agencies, peer review comments, and any new relevant information that may have become available since the publication of the proposal, we reevaluated our proposed rule and made changes as appropriate. Other than minor clarifications and incorporation of additional information on the species' biology, this final rule has not changed significantly from the proposed rule. Changes to the final rule include: (1) Updates to the life-history information of the species' vocalizations and how these changes may have affected survey results for the species; (2) updates to survey data (though no new populations have been located and no major increases have been noted in the past 2 years); (3) updates to the threats in Factor A; and (4) the addition of threats of neonicotinoid pesticides in Factor E.
We did receive information from the State of Washington regarding habitat use in the Pacific Northwest including western Oregon, western Washington, and southwestern British Columbia. This information updates our
Section 4 of the Act and its implementing regulations (50 CFR 424) set forth the procedures for adding species to the Federal Lists of Endangered and Threatened Wildlife and Plants. A species may be determined to be an endangered or threatened species due to one or more of the five factors described in section 4(a)(1) of the Act: (A) The present or threatened destruction, modification, or
The decline of the western yellow-billed cuckoo is primarily the result of riparian habitat loss and degradation. Within the three States with the highest historical number of western yellow-billed cuckoo pairs, past riparian habitat losses are estimated to be about 90 to 95 percent in Arizona, 90 percent in New Mexico, and 90 to 99 percent in California (Ohmart 1994, pp. 276–281; DOI 1994, p. 215; Noss
Moreover, these impacts are often subtle. As described in the Habitat Use and Needs section in the proposed rule, during the breeding season the habitat of the western yellow-billed cuckoo consists of expansive blocks of riparian vegetation containing trees of various ages, including in particular larger, more mature trees used for nesting and foraging. In order for these areas to remain as viable western yellow-billed cuckoo habitat, the dynamic transitional process of vegetation recruitment and maturity must be maintained. Without such a process of ongoing recruitment, habitat becomes degraded and is eventually lost. In our discussion below, we identify human impacts to riparian vegetation as resulting in current and ongoing destruction and modification of existing and future potential habitat for the western yellow-billed cuckoo.
Past actions by humans have resulted in changes to the landscape, the hydrology, or both such that they prevent the riparian plants that are the basis of the species' habitat from growing at all. The consequences of these past actions may have initially resulted in destruction or modification of then-existing riparian habitat; however, once that habitat is lost, the changed conditions (such as changed hydrologic regime) also prevents riparian habitat from regenerating, even in the absence of other impacts. For example, channelization—through manmade levees or other constructs, or through channel incising as a consequence of other actions—may leave the geographical area where riparian plants once grew (such as the watercourse's floodplain) physically untouched, but the altered hydrology prevents riparian plant species from germinating and growing.
Principal causes of riparian habitat destruction, modification, and degradation in the range of the western yellow-billed cuckoo have occurred from alteration of hydrology due to dams, water diversions, management of riverflow that differs from natural hydrological patterns, channelization, and levees and other forms of bank stabilization that encroach into the floodplain. These losses are further exacerbated by conversion of floodplains for agricultural uses, such as crops and livestock grazing. In combination with altered hydrology, these threats promote the conversion of existing primarily native habitats to monotypic stands of nonnative vegetation, which reduce the suitability of riparian habitat for the western yellow-billed cuckoo. Other threats to riparian habitat include long-term drought and climate change. These threats are summarized in a recent detailed review of the literature on the subject (Poff
Several researchers and scientific organizations including the Service reviewed the following effects of human modification of natural hydrological processes on riparian habitat, including those from dams (Poff
Dam construction has been occurring since the settlement of western North America with its peak in the mid-20th century. These include most major western rivers, many of which have a series of dams, and include, but are not limited to, the Sacramento, Kern, San Joaquin, Mojave, Snake, Gila, Salt, Verde, and Rio Grande, including 25 major reservoirs built on the Colorado and Green Rivers alone between the 1930s and 1970s (Richter
There are now dozens of large dams and scores of smaller dams on rivers throughout the range of the western yellow-billed cuckoo. Today, the rate of building new dams has slowed because most of the highest quality dam sites
While the amount of habitat lost within the construction zone of a dam is relatively small, far greater amounts of habitat are destroyed in the areas of inundation and through the ongoing effects of the amount and timing of water releases through the dam operation, which affects both upstream and downstream habitats. Ongoing downstream effects to riparian habitat from dams include changes in sediment transport due to sediment retention behind the dams so that channels below a dam become increasingly “sediment starved.” This situation causes vertical erosion (downcutting), which can lead to loss of river terraces that sustain riparian vegetation (NAS 2002, pp. 145–150; Poff
Ongoing operations of large dams can also dampen the magnitude of normal high flows, thus preventing cottonwood germination (Howe and Knopf 1991, p. 218), and dewater downstream reaches, causing substantial declines of riparian forests (NAS 2002, pp. 145–150). For example, Groschupf (1987, p. 19) found that almost all cottonwoods and over half of all willow trees were eliminated from one waterway in Arizona that was exposed to repeated large releases of water from a dam. This situation reduced the density of western yellow-billed cuckoos from 13 per 100 ac (40 ha) before the flooding to 3 per 100 ac (40 ha) after the flooding (Groschupf 1987, p. 19). In another example, a study of the San Joaquin River from downstream of the Friant Dam to the Merced River confluence found that, between 1937 and 1993, the area of riparian forest and scrub decreased 28 percent, from 6,787 to 4,914 ac (2,727 to 1,989 ha), and the herbaceous riparian vegetation decreased from 4,076 to 780 ac (1,650 to 316 ha) (Jones and Stokes Associates, Inc. 1998, Chap. 5, pp. 1–2). These losses are most likely attributed to reduced stream flow down the river as a result of water diversions.
In the case of the San Joaquin River, efforts are under way for restoring a more natural functioning hydrologic system and to restore riparian habitat (Reclamation 2012, pp. 7–8). Generally, in the absence of ongoing dam operations, where areas are allowed to flood and deposit sediment, the habitat is likely to regenerate naturally. However, because of the way the majority of dams are operated, the ability for the stream courses to promote natural regeneration and maintenance of riparian habitat has been greatly diminished. These impacts are happening now and are likely to continue without changes to water release strategies and management.
After the completion of the larger dams on the Colorado River system starting in the 1930s, limited pulse flows reached the lower Colorado River in Mexico for nearly 50 years, resulting in the loss of cottonwood–willow forests and the establishment of tamarisk (Glenn
While alteration of hydrology due to dam construction and other water supply projects has been widely implicated in the loss and degradation of downstream riparian habitat for the western yellow-billed cuckoo (Gaines and Laymon 1984, p. 73; Greco 1999, pp. 36–38; Greco 2012, pp. 8–9), some dams have resulted in temporary habitat expansion for the western yellow-billed cuckoo within the immediate upstream influence of the associated reservoirs. For example, one of the largest concentrations of western yellow-billed cuckoo in New Mexico occurs at the inflow to Elephant Butte Reservoir on the middle Río Grande (Sechrist
The threat to the western yellow-billed cuckoo's habitat from fluctuating water levels behind dams is likely to occur elsewhere in the range of the western yellow-billed cuckoo. In California, the State's second largest population of western yellow-billed cuckoos occurs within the inflow delta footprint of Lake Isabella, a dammed reservoir on the Kern River. Breeding western yellow-billed cuckoos are also found at other reservoir inflow deltas, such as Horseshoe Reservoir on the Verde River (Dockens and Ashbeck 2011a, p. 1) and the Tonto Creek and Salt River inflows to Roosevelt Lake in Arizona (Salt River Project 2002, pp. 61–67).
The temporary gain in riparian habitat at the inflow of reservoirs can be beneficial to the western yellow-billed cuckoo by providing large expanses of additional nesting and foraging habitat during a sequence of low-water years. However, the value of such habitat is affected by fluctuating water levels between years. Drastically fluctuating water levels with alternating inundation and desiccation cycles have been associated with fluctuations in populations of western yellow-billed cuckoos that breed in reservoir inflow sites (Laymon and Williams 2002, pp. 12–13; Henneman 2008, pp. 12–13). For example, along the Kern River, western yellow-billed cuckoo numbers increased during low reservoir levels for multiple years when vegetation recolonized the drawdown area (Laymon
The water level continues to remain below capacity at Lake Isabella due to dam safety concerns (Stewart 2012, pers. comm.). Once Lake Isabella fills again to capacity, the riparian habitat that has since formed at the inflow and that supports western yellow-billed cuckoos will become inundated, at least periodically (Whitfield 2012, pers. comm.), thereby impacting the habitat of the western yellow-billed cuckoo. In addition, the USACE and the USFS are developing a proposal and have completed a final environmental impact statement on options to repair dam deficiencies and raise the height of the dam an additional 16 ft (4.9 m) (Isabella Lake Dam Safety Modification Project Environmental Impact Statement Final October 2012). Pursuant to section 7 of the Act, consultation was completed for the proposed action, but the western yellow-billed cuckoo was not a species addressed in the biological opinion.
Lake Isabella is currently managed to minimize incidental take of the southwestern willow flycatcher (flycatcher) (
In Arizona, following the high water levels of 1983–1984 and 1986 on the Bill Williams River Delta, which is influenced by fluctuating water levels from dams in the Colorado River system (Rosenberg
In Sonora, Mexico, large dams exist on the Mayo, Yaqui, and Sonora Rivers (Villaseñor-Gomez 2006, p. 107). We do not have information on the magnitude or frequency of effects, positive or negative, from water management activities, to the western yellow-billed cuckoo in those locations. However, we have no reason to believe that the dams are managed in a substantially different manner in Mexico than dams in the southwestern United States, and the effects to riparian habitat are expected to be similar.
Despite some positive effects of dams on increasing western yellow-billed cuckoo habitat in a few areas, these gains in habitat are only temporary, and overall, the net effect of dams on the species has been negative. As such, dams and their ongoing operations are a threat to the western yellow-billed cuckoo over most of its range. This threat has resulted in substantial historical losses of western yellow-billed cuckoo habitat resulting in a curtailment of the species' range. The ongoing operation of these dams is likely to have minor impacts to the species at any given location, but because so many of the waterways within the range of the species have been dammed, we believe this threat has a substantial cumulative impact on the habitat of the western yellow-billed cuckoo, especially when considered with other threats. Moreover, we expect the operation of these dams will continue in a similar manner for decades to come, and thus we expect this threat to be an ongoing impact to the western yellow-billed cuckoo's habitat.
The areas where the floodplain is still hydrologically connected to the river and has relatively unconstrained riverflow, such as in some areas of California and Sonora, Mexico, support the highest number of western yellow-billed cuckoos (Villaseñor-Gomez 2006, pp. 107–108; Greco 2008, p. 6; Greco 2012, pp. 8–9). For example, the Sacramento River from Red Buff to Colusa has a highly dynamic mosaic of habitat patches of varying ages that form, disappear, and reform in response to active river channel processes that operate over decades (Greco 2008, p. 6; Greco 2012, pp. 8–9). Although this section of the Sacramento River is also affected by altered hydrology, it is far enough below Shasta Dam and below several major undammed tributaries, such as Cottonwood Creek and Battle Creek, that it still has flood events every few years that help support riparian habitat processes (Werner 2012, pers. comm.).
The river provides habitat characteristics that Laymon (1998, p. 4) indicated were important for the western yellow-billed cuckoo in California, such as a meandering system with young riparian habitat that, compared to mature woodlands, provides preferred nesting sites; high productivity of invertebrate prey; and reduced predator abundance (Laymon 1998, p. 4). Another example of relatively intact riparian habitat in the range of the western yellow-billed cuckoo is found in the highlands of central Sonora, Mexico, which supports occupied habitat of the western yellow-billed cuckoo. Villaseñor-Gomez (2006, p. 108) found that the maintenance of the natural flooding regimes due to the limited number of water development structures has allowed riparian vegetation along sections of the Sonora, Moctezuma, and Sahiaripa Rivers to persist in very good condition in some areas. Most of the known occurrences of western yellow-billed cuckoo in central Sonora are associated with these regions.
We conclude that dams continue to affect both the downstream and upstream habitat through alteration of flows. These effects can include widely fluctuating water levels at inflow sites that inundate nesting habitat, limit food resources, and flood or desiccate habitat (Poff
Dams and their flow modifications have ongoing effects to habitat and will likely do so for decades to come, further modifying the habitat of the western yellow-billed cuckoo. Therefore, direct and indirect destruction of riparian habitat resulting from altered hydrology from past dam-building activities continues to contribute to the curtailment of the range of the western yellow-billed cuckoo. Additionally, as a result of future predicted climate change (see Climate Change section below), the climate within the range of the western yellow-billed cuckoo will likely become drier, which will increase the demand for water storage and conveyance systems, which in turn will likely increase the frequency and severity of impacts on western yellow-billed cuckoo habitat (Stromberg
Water extractions, both from surface water diversions and ground water pumping, can negatively affect riparian vegetation (Poff
Adverse effects of excessive ground water extraction on riparian vegetation have been well-documented in the southwestern United States. Case histories on many river systems in Arizona including the Santa Cruz River and on the Owens River in California have documented the connection between overutilization of the ground water, lowering of the water table, and the decline and eventual elimination of riparian vegetation (Zektser
The hydrologic regime (stream flow pattern) and supply of (and interaction between) surface and subsurface water is a driving factor in the long-term maintenance, growth, recycling, and regeneration of western yellow-billed cuckoo habitat (Service 2002, p. 16). As streams reach the lowlands, their gradients typically flatten and surrounding terrain opens into broader floodplains (Service 2002, p. 32). In these geographic settings, the stream-flow patterns (frequency, magnitude, duration, and timing) will provide the necessary stream-channel conditions (wide configuration, high sediment deposition, periodic inundation, recharged aquifers, lateral channel movement, and elevated ground-water tables throughout the floodplain) that result in the development of riparian habitat suitable for use by western yellow-billed cuckoos (Poff
Allowing the river to flow over the width of the floodplain, when overbank flooding occurs, is integral to allow deposition of fine moist soils, water, nutrients, and seeds that provide the essential material for plant germination and growth. An abundance and distribution of fine sediments extending farther laterally across the floodplain and deeper underneath the surface retains much more subsurface water, which in turn supplies water for the development of the vegetation that provides western yellow-billed cuckoo habitat and microhabitat conditions (Service 2002, p. 16). The interconnected interaction between ground water and surface water contributes to the quality of the riparian vegetation community (structure and plant species) and will influence the ability of vegetation to germinate, regenerate, and maintain its foliage density, vigor, and species composition (Arizona Department of Water Resources 1994, pp. 31–32).
In many instances, western yellow-billed cuckoo breeding site occur along streams where human impacts are minimized enough to allow more natural processes to create and maintain the habitat. However, there are also breeding sites that are supported by various types of supplemental water including agricultural and urban runoff, treated water outflow, irrigation or diversion ditches, reservoirs, and dam outflows (Service 2002, p. D–15). Although the waters provided to these habitats might be considered “artificial,” they are often important for maintaining the habitat in appropriate condition for breeding western yellow-billed cuckoos within the existing environment.
Other alterations in river hydrology with ongoing effects on western yellow-billed cuckoo habitat include river channelization, construction of levees, bank stabilization, and placement of any flood control structures that encroach into the river and its floodplain. These actions result in direct loss of habitat from construction and from maintenance activities that remove woody vegetation that has become established on the structures. Furthermore, these structures are effective, by design, at severing the hydrologic connection of the river's main channel and the river's immediate floodplain, thereby preventing overbank flooding. By preventing overbank flooding, levees and other similar structures reduce the amount of water available to riparian vegetation in the floodplain, which results in desiccation and eventual loss and degradation of riparian habitat (Vogl 1980, pp. 84–86; NAS 2002, p. 155; Greco 2012, pp. 8–9). Such effects are less destructive, however, for those levees located farther from the stream system, such as those outside the meander belt of a river (Greco 2012, p. 4).
As an illustrative example, we provide a brief summary of how river channelization, construction of levees close to the river, and rock riprap armoring along the levees have caused destruction and modification of western yellow-billed cuckoo habitat on the Sacramento River, one of the most substantial historical nesting and foraging habitat areas for the western yellow-billed cuckoo. The Sacramento River is now disconnected from ecological processes that both renew and restore riparian and aquatic habitats (Laymon and Halterman 1987a, pp. 11–14; Halterman 1991, pp. 1–2; Greco 2008, p. 6; Greco 2012, pp. 8–9). More than one-half of the Sacramento River's banks within the lowermost 194 mi (312 km) of river have now been rip-rapped by 40 years of bank protection (Service
Channelizing the river and severing the connection to the floodplain has severely altered the natural disturbance regime that would have allowed riparian habitat to regenerate now and in the future (Poff
An additional pervasive threat is the design of open-channel flood control channels with inappropriately smooth roughness coefficients. This creation over-scours the floodplains and requires removal of woody riparian vegetation that regenerates on floodplains, which in turn leads to floodplains with no western yellow-billed cuckoo habitat (Greco 2013, pp. 707–717).
Similarly, transportation systems have directly and indirectly altered a large number of riparian areas in western North America (NAS 2002, p. 182). Road and rail systems are frequently sited along rivers, and often entail removing riparian vegetation for construction of the roadbed, and modifying local hydrology to reroute surface water and ground water. Bridges or culverts require abutments along the bank to provide roadway support. Because abutments and roadbeds physically constrain the stream, future lateral adjustments by the stream, which can affect floodplain dynamics, are effectively eliminated, which reduces and degrades riparian habitat (NAS 2002, p. 182). Such impacts result in additional destruction and modification of habitat for the western yellow-billed cuckoo. In comparison with construction of dams and altered hydrology, this threat, by itself, is less likely to result in severe impacts to riparian habitat. However, this threat is but one of many that, in combination, results in substantial changes to physical and hydrological properties of a watercourse, which in turn contributes to a substantial curtailment in the habitat of the western yellow-billed cuckoo.
Other past and ongoing effects to riparian habitat result from gravel mining (Kondolf
Furthermore, gravel extraction creates a knickpoint (a sharp change in channel slope) that typically erodes upstream in a process known as headcutting, which has the potential to propagate upstream for miles on the main river and its tributaries. As headcuts migrate upstream, the incision propagates upstream (Kondolf
In conclusion, dams, channelization, and other manmade features that alter the watercourse hydrology and encroach into the active channel and floodplain are threats to the habitat of the western yellow-billed cuckoo because they, separately or in combination, significantly reduce and degrade nesting and foraging habitats. The natural processes that sustain riparian habitat in these and similar dammed and channelized river systems in the American West and in northwestern Mexico have been altered, resulting in only fragments or remnants of formerly large tracts of native riparian forests that no longer support breeding western yellow-billed cuckoos or support them in fewer numbers. The multiple effects from altered hydrology comprise the most widespread and greatest magnitude of current threats to habitat that supports the western yellow-billed cuckoo. Such processes continue to modify habitat and further curtail the range of the western yellow-billed cuckoo. Moreover, we expect these alterations in the hydrology to continue to affect habitat of the western yellow-billed cuckoo into the future.
Following the effects from alterations in hydrology in severity, conversion of riparian areas for agricultural crops and livestock grazing has been, and continues to be, a major contributor to
Large areas of cottonwood–willow floodplain vegetation have been converted to agricultural uses, further reducing the extent of habitat available to western yellow-billed cuckoos for breeding (Swift 1984, pp. 225–226; Rosenberg
Although most riparian and thorn scrub habitat losses largely stem from past agricultural clearing, effects from cultivated agricultural lands are ongoing. Agricultural lands continue to dominate much of the remaining riparian landscape, particularly along the Sacramento (Greco 1999, pp. 94, 104, 107), parts of the Gila, and lower Colorado Rivers (Johnson
Accidental fire from farm workers operating machinery or burning weeds sporadically escapes into adjacent riparian habitat. Recent fires on western yellow-billed cuckoo and southwestern willow flycatcher conservation properties occurred in 2011, burning 58 ac (24 ha) and 6 ac (2 ha), respectively, within the Fort Thomas Preserve, on parcels owned by the Salt River Project and U.S. Bureau of Reclamation. Both fires were determined to be human-caused, likely from farm workers burning weeds along irrigation drains (SRP 2011, p. 39).
Other ongoing effects from cultivated agriculture on the western yellow-billed cuckoo are addressed under Factor E. These include fragmentation of habitat into smaller, more widely disjunct patches; ongoing influence of agriculture on riparian bird community composition; and effects from pesticides, which can negatively impact insect prey populations of the western yellow-billed cuckoo.
Domestic livestock grazing is a traditional agricultural land use practice in the southwestern United States since the first Spanish settlement along the Rio Grande in New Mexico in 1598 (Little 1992, p. 88; Clary and Kruse 2004, p. 239). Livestock grazing continues to be a widespread agricultural use of riparian areas in the western United States and is one of the most common sources of past and ongoing riparian habitat degradation (Carothers 1977, p. 3; Rickard and Cushing 1982, pp. 2–4; Cannon and Knopf 1984, p. 236; Klebenow and Oakleaf 1984, p. 202; Swift 1984, pp. 225–226; Clary and Webster 1989, pp. 1–2; Schultz and Leininger 1990, pp. 298–299; Bock
The Service (2002, Appendix G, pp. 5–7) and Krueper
Long-term cumulative effects of livestock grazing involve changes in the structure and composition of riparian vegetation (Service 2002, Appendix G, pp. 5–7), which may affect suitability of habitat for western yellow-billed cuckoo breeding and prey population abundance. The western yellow-billed cuckoo nesting habitat is structurally complex with tall trees, a multistoried vegetative understory, low woody vegetation (Halterman 1991, p. 35) and higher shrub area than sites without western yellow-billed cuckoos (Hammond 2011, p. 48). Livestock grazing alters understory vegetation, reducing height and density or eliminating new growth in riparian areas, and thereby hampering recruitment of woody species that, when mature, provide nest sites. Furthermore, the relatively cool, damp, and shady areas favored by western yellow-billed cuckoos are those favored by livestock over the surrounding drier uplands. This preference can
Removal, reduction, or modification of cattle grazing has resulted in increases in abundance of some riparian bird species. For example, Krueper (1993, pp. 322–323) documented responses of 61 bird species, most of which increased significantly 4 years after removal of livestock grazing in Arizona's San Pedro River Riparian National Conservation Area. The bird species guilds that increased most dramatically were riparian species, open-cup nesters, Neotropical migrants, and insectivores, all species that share characteristics with the western yellow-billed cuckoo. The western yellow-billed cuckoo numbers in the study increased, although not significantly (p=0.13) (Krueper
In another example, livestock grazing was terminated along portions of the South Fork Kern River at the Kern River Preserve in the 1980s, and western yellow-billed cuckoos increased in number in the years following livestock removal. Smith (1996, p. 4) contended that termination of grazing at the Kern River Preserve was responsible for the dramatic increase in riparian vegetation, which was concurrent with the increase in western yellow-billed cuckoo numbers. These examples suggest that even severely degraded riparian systems can recover quickly, in at least some cases, after livestock removal (Krueper
In conclusion, most of the direct loss of habitat from agricultural conversion has occurred in the past, but ongoing agricultural activities, in whole or in combination with other impacts, especially those that result in changes in a watercourse's hydrology, have resulted in the curtailment of nesting and foraging habitat for the western yellow-billed cuckoo by restricting or preventing the growth of riparian plants, and such activities present an ongoing threat. Most of the current impacts from agricultural land uses arise from livestock overgrazing in riparian areas. Riparian vegetation can recover relatively quickly from these effects after livestock removal (Smith 1996, p. 4; Krueper
Throughout most of its range, habitat for the western yellow-billed cuckoo is threatened by the conversion of native riparian woodlands to riparian vegetation dominated by tamarisk and other nonnative vegetation. The major threat from this habitat conversion is the change from vegetation that supplies the western yellow-billed cuckoos with essential food and adequate thermal cover to vegetation that does not provide these necessary components of habitat for the western yellow-billed cuckoo. The establishment and persistence of tamarisk is often, but not always, aided by altered hydrology, as described above. Altered hydrology is not the cause for establishment and persistence of other types of nonnative vegetation; therefore, we present information on nonnative vegetation in this separate section.
Tamarisk is the most widespread nonnative woody plant species found in habitat for the western yellow-billed cuckoo. Glenn and Nagler (2005, pp. 420–423) provide most of the following overview of tamarisk. Tamarisk is present in nearly every southwestern riparian plant community, but varies in dominance from stream to stream. On streams where altered hydrology can no longer support native species, it has replaced native plant communities entirely, but occurs at a low frequency on other streams. Tamarisk was introduced into western North America in the 1800s to serve as ornamental windbreaks, and for erosion control and other purposes. Several species escaped cultivation and have since spread rapidly. The center of tamarisk distribution is currently Arizona, New Mexico, and Utah, and it has spread throughout most of the range of the western yellow-billed cuckoo at least as far north as the Yellowstone River in Montana in the Rockies, and at least as far south as the Yaqui River Valley in Sonora, Mexico. Recent studies in the northwest have located major populations of tamarisk in southwestern Idaho, and eastern Washington and Oregon. Models based on projected climate change predict that this invasive species will become more dominant in this region over the next 100 years (Kerns
Tamarisk also occurs as isolated individuals along sections of the Sonora, Moctezuma, and Sahiaripa Rivers in Sonora, Mexico, where the hydrology has been little altered by human modifications (Villaseñor-Gomez 2006, pp. 107–108). Its presence is highly variable within sections of the Río Conchos in Chihuahua, Mexico, and becomes dominant in some reaches of that river (Kelly and Arias Rojo 2007, pp. 177–178; Cornell
The threshold (in terms of percent tamarisk) for abandonment of a riparian system by western yellow-billed cuckoos is not known. They are not found in areas that are totally dominated by tamarisk with the complete lack of willows or cottonwoods. In California, two native-dominated areas occupied in 1977 by several pairs of western yellow-billed cuckoos had, by 1986, converted to monotypic stands of tamarisk and were found to be uninhabited by western yellow-billed cuckoos. Above Laguna Dam on the Colorado River in 1977, at least three pairs of western yellow-billed cuckoos occupied a 30-ac (12-ha) site that was approximately 20–40 percent willow (Laymon and Halterman 1987a, p. 12). By 1986 no western yellow-billed cuckoos were detected on the site where the dominant vegetation had become tamarisk, with less than 1 percent willow cover. In the vicinity of Picacho State Recreation Area, on the California side of the Colorado River, in 1977, 21 western yellow-billed cuckoos were found in 297 ac (120 ha) of a 230-ft-wide (70-m-wide) willow forest (Gaines and Laymon 1984, p. 72). By 1986, tamarisk and aquatic vegetation dominated this area, and no western yellow-billed cuckoos were found in the 12 ac (5 ha) of scattered willow–cottonwood habitat that remained (Laymon and Halterman 1987a, pp. 12–13).
Human disturbance, such as water diversion, flood control, vegetation clearing, and improper grazing management, often facilitates replacement of native vegetation with tamarisk (Kerpez and Smith 1987, pp.
Tamarisk is also tolerant of high salt levels, which can be present in river systems as a combined result of water diversions that lower the near-surface ground water and irrigation water runoff that contains high levels of dissolved salts (Kerpez and Smith 1987, pp. 1–5; Busch and Smith 1993, pp. 186–194). This higher tolerance to water stress and salt accumulation is a principle mechanism by which tamarisk has become dominant on some regulated western rivers (Glenn and Nagler 2005, p. 439). In addition, tamarisk takes salts from the ground water and exudes them from its leaves, rendering the soil even more unsuitable for germination of native riparian vegetation. This is a significant problem in streams with artificially reduced streamflows where salts accumulate and are not flushed from the system. These factors favor regeneration of tamarisk over native trees and shrubs and are an ongoing threat. Additional areas of native habitat are continuing to be lost to this process. In summary, the persistence and expansion of tamarisk-dominated habitat is the result of multiple forms of ongoing human-related disturbances, which result in degradation of native-dominated riparian habitat, thus reducing its suitability as breeding habitat for the western yellow-billed cuckoo.
Other nonnative tree and shrub species have become established within the range of the western yellow-billed cuckoo. In western Colorado and Utah, Russian olive (
In conclusion, because of the absence or near absence of nesting by western yellow-billed cuckoos in nearly monotypic stands of tamarisk and other nonnative vegetation, the available literature suggests that conversion of native or mixed (native and nonnative) riparian woodlands to nearly monotypic stands of tamarisk and other nonnative vegetation, coupled with the inability of native vegetation to regenerate under altered hydrological conditions, is a significant threat to the western yellow-billed cuckoo now and in the future. Nonnative vegetation, such as tamarisk, occurs across most of the range of the western yellow-billed cuckoo; its establishment can be caused by altered hydrology or other disturbances, which are widespread throughout the range. We expect nonnative vegetation to increasingly modify and curtail habitat for the western yellow-billed cuckoo within a majority of its range in the United States and northern Mexico into the future.
Western yellow-billed cuckoos use habitat with some tamarisk component for nesting in southern California, Arizona, and western New Mexico, but are not found in monotypic stands of tamarisk. Western yellow-billed cuckoo presence in tamarisk-dominated habitats does not necessarily equate to habitat suitability (Sogge
Tamarisk can add to foliar cover that contributes toward reducing temperatures in riparian areas (Paxton
Tamarisk leaf beetle insects (leaf beetles) (
Historically, wildfire was uncommon in native riparian woodlands (Busch and Smith 1993, pp. 186–194). However, the lack of scouring floods on regulated and unregulated rivers has resulted in the accumulation of fuel on the floodplain, which increases fire risk and intensity (Stromberg and Chew 2002, pp. 195–219). Water withdrawal, dams, climate change, drought, and human use also contribute toward an increased fuel load and probability of wildfire occurrence. Most fires today are human-caused (Service 2002, p. L–8). In degraded habitat with tamarisk the threat of fire may be greater. Tamarisk ignites quickly, further increasing the incidence of periodic fires. Exacerbating the immediate loss of native trees from fire, tamarisk recovers more quickly than native trees (Glenn and Nagler 2005, pp. 435–436). Along the Rio Grande River in New Mexico and Texas, wildfire has been documented as destroying, degrading, or setting back
The environmental impact caused by cross border foot traffic has been increasingly occurring in more fragile and remote areas. The number of U.S. Border Patrol apprehensions of border crossers varies annually. Between October 1, 1999, and September 30, 2012, a yearly average of 333,517 border crossers were apprehended by the United States Border Patrol in the Tucson Sector, which does not account for the many others who were not caught (U.S. Border Patrol 2013, p. 1). Impacts associated with border crossings include creation of erosion and watershed degradation, loss of vegetation and wildlife, and human-caused wildfire (Defenders of Wildlife 2006, pp. 1–42). Drainages used by border crossers include the San Pedro River, Santa Cruz River, Cienega Creek, and many remote drainages in the mountain ranges of southeastern Arizona.
Human-caused wildland fires have been particularly damaging to areas of riparian habitat in Arizona, especially within 100 mi (161 km) of the United States-Mexico border where border crossers are known to set fires to divert law enforcement agents. Border crossers are also responsible for campfires that can escape and spread as wildfires. At least 2,467 wildfires began along the Arizona border with Mexico from 2006 to 2010 (Government Accounting Office 2011, p. 1). Federal officials have officially investigated only 77 of those fires. Of the fires investigated, 30 were started by border crossers. The resulting environmental impacts include the expansion of nonnative plant species, degraded endangered species habitat, and soil erosion.
Climate change may be impacting the western yellow-billed cuckoo. Climate change is discussed here under Factor A because, although it may affect the western yellow-billed cuckoo directly by creating physiological stress, the primary impacts of climate change on the species are expected to be through changes in the availability and distribution of western yellow-billed cuckoo habitat.
Our analyses under the Act include consideration of ongoing and projected changes in climate. The terms “climate” and “climate change” are defined by the Intergovernmental Panel on Climate Change (IPCC). The term “climate” refers to the mean and variability of different types of weather conditions over time, with 30 years being a typical period for such measurements (IPCC 2013a, p. 1450). The term “climate change” thus refers to a change in the mean or variability of one or more measures of climate (for example, temperature or precipitation) that persists for an extended period, whether the change is due to natural variability or human activity (IPCC 2013a, p. 1450).
Scientific measurements spanning several decades demonstrate that changes in climate are occurring, and that the rate of change has increased since the 1950s. Examples include warming of the global climate system, and substantial increases in precipitation in some regions of the world and decreases in other regions (for these and other examples, see Solomon
Scientists use a variety of climate models, which include consideration of natural processes and variability, as well as various scenarios of potential levels and timing of GHG emissions, to evaluate the causes of changes already observed and to project future changes in temperature and other climate conditions (Meehl
Various changes in climate may have direct or indirect effects on species. These effects may be positive, neutral, or negative, and they may change over time, depending on the species and other relevant considerations, such as threats in combination and interactions of climate with other variables (for example, habitat fragmentation) (IPCC 2014, pp. 4–11). Identifying likely effects often involves aspects of climate change vulnerability analysis. Vulnerability refers to the degree to which a species (or system) is susceptible to, and unable to cope with, adverse effects of climate change, including climate variability and extremes. Vulnerability is a function of the type, magnitude, and rate of climate change and variation to which a species is exposed, its sensitivity, and its adaptive capacity (Glick
Global climate projections are informative, and, in some cases, the only or the best scientific information available for us to use. However, projected changes in climate and related impacts can vary across and within different regions of the world (IPCC 2013b, pp. 15–16). Therefore, we use “downscaled” projections when they are available and have been developed through appropriate scientific procedures, because such projections provide higher resolution information
The Southwest is already experiencing the impacts of climate change. The region has heated up markedly in recent decades, and the period since 1950 has been hotter than any comparably long period in at least 600 years (Graumlich 1993, pp. 249–255; Salzer and Kipfmueller 2005, pp. 465–487; Millar
There are three predictions for anticipated effects from climate change in the southwestern United States and parts of northwestern Mexico. First, climate change is expected to shorten periods of snowpack accumulation, as well as reduce snowpack levels. With gradually increasing temperatures and reduced snowpack (due to higher spring temperatures and reduced winter-spring precipitation), annual runoff will be reduced (Smith
Precipitation events under most climate change scenarios will decrease in frequency but increase in severity so that, paradoxically, a warmer atmosphere and an intensified water cycle are likely to mean not only a greater likelihood of drought for the Southwest, but also an increased risk of flooding (Karl
Exactly how climate change will affect precipitation from site to site within the range of the western yellow-billed cuckoo in the southwestern United States and northwestern Mexico is uncertain. However, consistent with recent observations of regional effects of climate change, the projections presented for the Southwest predict overall warmer, drier, and more drought-like conditions (Hoerling and Eischeid 2007, p. 19; Seager
Assessments for the Sonoran Desert are few, but the region is also expected to warm (Weiss and Overpeck 2005, pp. 2065–2077; National Park Service 2010, pp. 1–4; Munson
In California, regional downscaled climate change assessments (Point Reyes Bird Observatory (PRBO) Conservation Science 2011, pp. 1–68) indicate changes in precipitation and temperature of varying magnitude across ecoregions. Assessments for areas occupied by the western yellow-billed cuckoo, such as the Sacramento River, Sierra Nevada (southern), and Sonora Desert (lower Colorado River) (PRBO Conservation Science 2011, pp. 25, 28, 48), mostly indicate an overall reduction in precipitation and increase in average temperature, which can alter hydrology and negatively affect habitat for the western yellow-billed cuckoo, as
Regionally downscaled climate models for the Pacific Northwest project higher air temperatures in the next century (Littell
In drier climates overall, there will be increases in riverine system temperatures that are predicted to result in periods of prolonged low flows and stream drying (Stromberg
Increased drought is expected to adversely affect food availability for western yellow-billed cuckoos (Newton 1980, pp. 11–12; Durst 2004, pp. 40–41; Scott
Virtually all future climate scenarios for the Pacific Northwest predict increases in wildfire in western North America, especially east of the Cascades, due to higher summer temperatures, earlier spring snowmelt, and lower summer flows, which can lead to drought stress in trees (Littell
Little is known about the wintering habitat of the western yellow-billed cuckoo in South America, and uncertainty exists about how climate change will affect it there. Regional downscaled models project an increase in wet-season precipitation and a decrease in dry-season precipitation over most of South America (Kitoh
In summary, the available climate change models are predicting altered future environmental conditions across the breeding range of the western yellow-billed cuckoo. In the southwestern United States, northern Mexico, California, Intermountain West, and Pacific Northwest, climate change is generally predicted to result in an overall warmer, drier climate, with periodic episodic precipitation events that, depending on site conditions, are expected to have adverse effects on habitat of the western yellow-billed cuckoo. In rivers that depend on snowmelt, these changes are expected to result in more winter flooding and reduced summer stream flows. The amount of surface ground water available to regenerate and sustain riparian forests is expected to decline overall with persistent drought, favor the spread of tamarisk and other nonnative vegetation, and increase fire frequency. Precipitation events under most climate change scenarios will decrease in frequency and increase in severity. This change may reduce available nesting sites, patch size, and affect prey abundance as a result of lower humidity in riparian areas from reduced moisture retention, and through periods of prolonged desiccation followed by scouring flood events. In addition, evidence shows that climate change may disrupt the synchrony of nesting western yellow-billed cuckoos and their food supply, causing further population decline and curtailment of its occupied range.
Impacts to habitat from climate change exacerbate impacts from impoundments, channelization, and alteration of river flows across the western United States and Mexico, and from conversion of habitat from native to mostly nonnative vegetation. Changing climate is expected to place an added stress on the species and its habitats. While we do not have evidence to suggest that the habitat of the western yellow-billed cuckoo is being substantially affected by climate change at this time, we expect long-term climate trends to have an overall negative effect on the available habitat throughout the breeding range of the western yellow-billed cuckoo. Moreover, a drying trend associated with global climate change may result in more dams, levees, or other activities to
We have identified a number of threats to the habitat of the western yellow-billed cuckoo that have operated in the past, are impacting the species now, and will continue to impact the species in the future. The curtailment and decline in the habitat of the western yellow-billed cuckoo is primarily the result of the long-lasting effects of habitat loss from manmade features that alter watercourse hydrology so that the natural processes that sustained riparian habitat in western North America are greatly diminished. Loss and degradation of habitat has also occurred as a result of livestock overgrazing and encroachment from agriculture. All of these have the potential to promote, and are exacerbated by, the conversion of native habitat to predominantly nonnative vegetation. The curtailment, degradation, fragmentation, and loss of habitat for the western yellow-billed cuckoo is ongoing and, absent changes in the landscape, hydrology, or other factors, it will likely continue to be negatively impacted or lost into the future.
We recognize that climate change is a critical issue with potentially severe wide-ranging effects on the species and its habitat. The available scientific literature suggests that the effects of climate change will likely exacerbate multiple existing threats to the western yellow-billed cuckoo and its habitat. These threats include habitat loss and degradation from altered hydrology, with secondary effects from increases in nonnative vegetation and wildfire. These threats may result in smaller patch sizes of habitat such that many will be no longer occupied by the western yellow-billed cuckoo.
Conservation actions, such as habitat protection and restoration described above, have strong potential to be beneficial to the species by increasing the amount of available habitat and patch size. However, these efforts offset only a small portion of past losses and degradation of riparian habitat in the range of the western yellow-billed cuckoo. Habitat elsewhere in the range continues to be vulnerable to loss and degradation from ongoing alterations in hydrology, nonnative vegetation, and agricultural activities combined with additional or synergistic effects associated with climate change. Moreover, we expect these multiple stressors to continue to affect habitat of the western yellow-billed cuckoo into the future. The amount of time required for willow and cottonwood vegetation to mature and provide habitat for the western yellow-billed cuckoo under optimal hydrologic, environmental, and ecological conditions varies by location but may be as little as between 3 to 5 years (Golet
The exact timeframe for resolving water management and delivery issues and their impact on the western yellow-billed cuckoo and its habitat would vary on the location, resource demands, sensitive habitat or species concerns, stakeholders, and amount of water available. As a result, we would expect that resolving water issues for the various uses (agriculture, urbanization, wildlife, and tribal interests) in the west will be a lengthy ongoing process and not be resolved in the near future (next 20 years) and may take substantially longer considering the increased demands and the effects of climate change.
Our review of the best available scientific and commercial information identified numerous activities or processes that threaten to destroy, modify, or curtail the western yellow-billed cuckoo's habitat or range now or are likely to in the near future in any portion of the western yellow-billed cuckoo range. These include habitat loss from reservoirs and water management, surface and groundwater diversion, flood control activities, gravel mining, agriculture, livestock grazing, invasive nonnative plants and their control, and climate change. We, therefore, conclude that habitat loss under Factor A currently constitutes a threat to the western yellow-billed cuckoo, and we expect these activities to continue and habitat loss to be a threat in the near future.
There are no known threats to the western yellow-billed cuckoo resulting from overutilization for commercial, scientific, or educational purposes. Our review of the best available scientific and commercial information yielded nothing to indicate that overutilization for commercial, recreational, scientific, or educational purposes is occurring at this time or is likely to in the near future in any portion of the western yellow-billed cuckoo range. We, therefore, conclude that such overutilization does not currently constitute a threat to the western yellow-billed cuckoo, nor do we expect it to be a threat in the future.
Little is known about diseases in the western yellow-billed cuckoo. West Nile virus has recently spread throughout portions of the western United States. It poses a potential threat to many bird species. The U.S. Geological Survey's (USGS) National Wildlife Health Center has identified the yellow-billed cuckoo as a species that is subject to the effects of West Nile virus (USGS–National Wildlife Health Center 2005, p. 2). The Centers for Disease Control's (CDC) Vector-Borne Disease Web site reports that West Nile virus has been documented in a dead yellow-billed cuckoo (CDC 2012); however, it is unknown if this yellow-billed cuckoo was from the western DPS. Although the population of the western yellow-billed cuckoo has been in decline over several decades (see Historical and Current Status section, above), no evidence suggests that it has undergone a precipitous decline coincident with the relatively recent arrival of West Nile virus in western North America. Therefore, we conclude, based on the best available scientific and commercial information, which is limited, that the adverse effects of West Nile virus to the western yellow-billed cuckoo are not significant and do not constitute a threat at this time, nor is there any information to suggest that this situation will change into the future.
All bird species, including the yellow-billed cuckoo, are exposed, to some extent, to parasites. Greiner
Predation is a potential threat to the western yellow-billed cuckoo. On the Kern River, red-shouldered hawks (
On the lower Colorado River, McNeil
In summary, western yellow-billed cuckoos, particularly the eggs or young in nests, are vulnerable to predation. Predation may be a significant threat in some localities and in some years, and may be influenced by several factors, such as surrounding land use and size and complexity of riparian habitat. As a result, predation may act periodically in concert with other stressors that contribute to the decline of the species (which we discuss in greater detail under Factor E, below). However, we conclude that predation by itself does not pose a significant threat to the western yellow-billed cuckoo at this time, and we do not have any reason to believe that this situation will change substantially in the future.
We conclude that predation, parasites, and disease are not currently significant threats to the western yellow-billed cuckoo, and are not expected to become significant threats in the near future.
Under this factor, we examine whether existing regulatory mechanisms are inadequate to address the threats to the western yellow-billed cuckoo discussed under other factors. We give strongest weight to statutes and their implementing regulations, and management direction that stems from those laws and regulations. They are nondiscretionary and enforceable, and are considered a regulatory mechanism under this analysis. Examples include State governmental actions enforced under a State statute or constitution, or Federal action under statute.
Some other programs are more voluntary in nature or dependent on available funding; in those cases, we analyze the specific facts for that effort to ascertain its effectiveness at mitigating the threat and the extent to which it can be relied on in the future. Having evaluated the significance of the threat as mitigated by any such conservation efforts, we analyze under Factor D the extent to which existing regulatory mechanisms adequately address the specific threats to the species. Regulatory mechanisms, if they exist, may preclude the need for listing if we determine that such mechanisms adequately address the threats to the species such that listing is not warranted.
We have identified a number of significant threats to the western yellow-billed cuckoo that are impacting the species now and will continue to impact the species in the future. The decline of the western yellow-billed cuckoo is primarily the result of the long-lasting effects of habitat loss and modification from altered hydrology resulting from decades of dam construction, channelization, water extraction, and other activities, as well as impacts associated with climate change. Other threats include loss of habitat to agricultural and other land uses, overgrazing, exposure to pesticides (which is addressed in Factor E, below), wildfire, and conversion of habitat to monotypic stands of nonnative vegetation. Under this factor, we discuss whether the existing regulatory mechanisms adequately address impacts to the western yellow-billed cuckoo described under Factors A and E, based on the best available information.
In the United States, the Migratory Bird Treaty Act (MBTA) (16 U.S.C. Sec. 703–712) is the only current Federal protection provided for the yellow-billed cuckoo. The yellow-billed cuckoo (the entire taxonomically defined species), which includes the western yellow-billed cuckoo, is considered a “migratory bird” under the MBTA. The MBTA prohibits “take” of any migratory bird. Take is defined as: “to pursue, hunt, shoot, wound, kill, trap, capture, or collect, or attempt to pursue, hunt, shoot, wound, kill, trap, capture, or collect.” However, no provisions in the MBTA prevent habitat destruction unless direct mortality or destruction of active nests occurs.
The Federal Land Policy and Management Act of 1976 (FLPMA) (43 U.S.C. 1701
Congress passed the Federal Water Pollution Control Act Amendments of 1972 and the Clean Water Act (CWA) of 1977 (33 U.S.C. 1251
Section 404 prohibits the discharge of dredged or fill material in jurisdictional waters of the United States, unless permitted by USACE under section 404(a) (individual permits) or 404(e) (general permits), or unless the discharge is otherwise exempt from regulation as designated in section 404(r). Some areas of riparian habitat may be considered “waters of the United States,” but many areas of riparian habitat do not meet the term's strict definition. The Service can review permit applications and provide recommendations to the USACE to avoid and minimize impacts and to implement conservation measures for fish and wildlife resources, including the western yellow-billed cuckoo. However, incorporation of Service recommendations into section 404 permits is at the discretion of the USACE.
Furthermore, not all activities in wetlands or streams involve fill, and not all wetlands or streams fall under the jurisdiction of the USACE. For example, in areas where the historical floodplain has been cut off from the river by levees, determining the boundaries of wetlands subject to USACE jurisdiction becomes complex. The areas behind these levees have had their hydrological characteristics altered, soil conditions changed, and riparian vegetation removed. As a result, these former floodplains, which in some cases would be important to protect and restore as habitat for the western yellow-billed cuckoo, fall outside the jurisdiction of the USACE. Additionally, many actions that resulted in adverse hydrological modifications, such as channelization and levees, were implemented in compliance with the CWA.
The National Environmental Policy Act (NEPA) (42 U.S.C. 4321
Through the Fish and Wildlife Coordination Act (FWCA) (16 U.S.C. 661
A majority of dams in the western United States supply hydropower, and their construction and ongoing operation is authorized by the Federal Energy Regulatory Commission (FERC), under the Federal Power Act of 1920, which incorporates by reference the FWCA and NEPA. The remainder of hydropower in the western United States is largely produced by the USACE and Reclamation. Reclamation also oversees water diversion and delivery projects. FERC reconsiders its hydropower licenses every 30 to 50 years. Through the various Federal regulations under which these agencies implement their water projects, the Service has an opportunity to periodically review their permits and relicensing applications and provide its recommendations to avoid and minimize impacts, and implement conservation measures for fish and wildlife resources, including species such as the western yellow-billed cuckoo. Implementation of these recommendations by FERC, USACE, and Reclamation is discretionary for nonlisted species. We continue to see loss and degradation of habitat for the western yellow-billed cuckoo as a result of altered hydrology from operation of dams and other water supply projects, as described under Factor A.
The EPA is responsible for regulating pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act and the Food Quality Protection Act. Before a pesticide can be distributed, sold, and used in the United States, it must first go through a registration process through the EPA. The EPA conducts short- and long-term toxicity tests to evaluate potential adverse effects on humans, wildlife, fish, and plants, including endangered species and nontarget organisms, and evaluates the potential for possible contamination of surface water or ground water from leaching, runoff, and spray drift. The sensitivity of any life stages of the western yellow-billed cuckoo or its prey items to exposure from common agricultural pesticides that could leach, runoff, or migrate from agricultural areas into the habitat of the western yellow-billed cuckoo has not been tested. However the EPA does evaluate the effects of these factors on surrogate species and has determined the use of certain approved pesticides are appropriate in areas used by the western yellow-billed cuckoo. Even if approved application procedures are followed, pesticides could reduce available insect prey for the western yellow-billed cuckoos.
The majority of occupied areas for the western yellow-billed cuckoo north of Mexico occur within California, Arizona, and New Mexico (Hughes 1999, p. 1). Only California classifies the western yellow-billed cuckoo as endangered (CDFW 2011, p. 10). The California Endangered Species Act (CESA) prohibits unpermitted possession, purchase, sale, or take of listed species. However, the CESA definition of take does not include harm, which under the Federal Act can include destruction of habitat that actually kills or injures wildlife by significantly impairing essential behavioral patterns (50 CFR 17.3). CESA does require consultation between the CDFW and other State agencies to ensure that their activities will not jeopardize the continued existence of State-listed species; however, the western yellow-billed cuckoo continues to decline in California despite its status
The State of California has an additional layer of pesticide regulation through the Department of Pesticide Regulation, whose mission is to protect human health and the environment by regulating pesticide sales and use. While concentrating on human health and exposure to pesticides, the agency has a program (Endangered Species Project) that maps sites occupied by federally listed species and candidate species and evaluates pesticide exposure risks to the species at those sites. This project does not include species like the western yellow-billed cuckoo that are listed as endangered by the State but not the Federal Government. In addition, the work was carried out in 1997 prior to the western yellow-billed cuckoo becoming a Federal candidate species. As a result the western yellow-billed cuckoo has not been included in the project.
Washington State's Department of Fish and Wildlife considers the western yellow-billed cuckoo a candidate for listing. The State wildlife agencies in Wyoming, Montana, Colorado, and Texas classify the western yellow-billed cuckoo as a species of concern or a sensitive species. In Utah, the Utah Division of Wildlife Resources (UDWR) has designated the yellow-billed cuckoo as a State-sensitive species and the yellow-billed cuckoo has been a priority for the State's Native Terrestrial Wildlife Program since the late 1990's. For example, in 2009, surveys for the species were conducted on National Park Service and adjacent lands at Cubs Creek and Jones Hole in northeastern Utah (Beason 2009, pp. 1–19). During these surveys no western yellow-billed cuckoos were detected on lands managed by the National Park Service in Dinosaur National Monument or private land in northwestern Colorado. However, suitable habitat is found within Dinosaur National Monument. UDWR has implemented additional survey and monitoring efforts over the past 2 years. This status allows for enhanced attention for the species and potential voluntary conservation, but the status provides no conservation assurances or regulatory oversite.
The western yellow-billed cuckoo is identified as a Species of Greatest Conservation Need in Idaho's Comprehensive Wildlife Conservation Strategy (Idaho Department of Fish and Game 2005, Appendix B, p. 7), and, under Idaho State law, is considered a protected nongame species. It is illegal to intentionally take or possess a protected nongame species, except as provided in sections 36–106(e) and 36–1107, Idaho Code, by Commission rule, or the Idaho Administrative Procedures Act 13.01.10, “Rules Governing the Importation, Possession, Release, Sale, or Salvage of Wildlife,” subsection 100.06.b (Idaho Department of Fish and Game 2005, Appendix B, p. 5). While protected status extends certain protections to the western yellow-billed cuckoo in Idaho, neither this status nor the Species of Greatest Conservation Need designation protects its habitat.
In Nevada, the western yellow-billed cuckoo is identified as critically imperiled due to extreme rarity, imminent threats, or biological factors, but this designation provides no protection for habitat. Western yellow-billed cuckoos have no State status in Oregon because it has not been considered an active breeding species since the 1940s (Oregon Department of Fish and Wildlife 2005, p. 3). State Wildlife Action Plans that include the western yellow-billed cuckoo as a species of conservation concern are: California, Washington, Arizona, Colorado, Montana, Idaho, New Mexico, Utah, Texas, Nevada, and Wyoming. These plans identify conservation needs and actions for a broad range of species and habitats, but their implementation is discretionary.
In summary, where the western yellow-billed cuckoo is State-listed (CA), a State candidate (WA), a species of concern or sensitive species (AZ, ID, WY, MT, CO, TX), or critically imperiled (NV), these designations contain no protection for the western yellow-billed cuckoo from habitat modification or destruction, as described under Factors A and E. Existing State regulatory mechanisms are not specifically designed to protect the western yellow-billed cuckoo from habitat loss and degradation from altered hydrology from upstream dams and surface water and ground water diversions, encroachment into the floodplain by agricultural and other development activities, bank stabilization and levee construction and maintenance activities, overgrazing, pesticide use on adjacent agricultural lands, conversion of habitat to monotypic stands of nonnative vegetation, gravel mining, wildfire, drought, and climate change across the range of the western yellow-billed cuckoo.
The Canadian Government through the Department of the Environment (Environment Canada, which was first established by the Department of the Environment Act of 1971) administers numerous acts to preserve and enhance the quality of Canada's natural environment. Acts identified for conservation of wildlife and plant species or their habitat are identified below.
The yellow-billed cuckoo is not identified as a species that is sensitive, threatened, or endangered under Canadian law. Within the range of the
The Mexican Government, through its Secretaria de Medio Ambiente y Recursos Naturales (SEMARNAT), has authority to designate species as threatened or endangered. The western yellow-billed cuckoo is not listed by the Mexican Government's Official Mexican Norm NOM–059–SEMARNAT–2010, Mexico's threatened species law. The yellow-billed cuckoo is listed under the 1936 Mexico–United States Convention for the Protection of Migratory Birds and Game Mammals (Service 2013b), which encourages voluntary cooperative actions to protect identified migratory birds and mammals.
In 1988, the Mexican Government passed the General Law of Ecological Equilibrium and Environmental Protection, which is similar to NEPA in the United States. This Mexican statute requires an environmental assessment of private or government actions that may affect wildlife or their habitat. Currently, no known regulatory mechanisms or conservation planning are in place that specifically targets the conservation of habitat within the range of the western yellow-billed cuckoo in Mexico. Therefore, we anticipate continued threats in Mexico, with little or no protection to the western yellow-billed cuckoo.
The National Natural Protected Areas (NPAs) system is a Mexican program to protect sensitive habitats and species. NPA designation is supposed to protect areas that have not been significantly altered by human activities and that provide diverse ecosystem services. However, prior to 1994, most NPAs lacked sound and comprehensive management plans. By 2000, approximately 30 percent of new and existing NPAs had developed management plans; however, under the NPA model these plans lacked detailed information, and in many cases could be considered obsolete. NPA goals to promote sustainable natural resources are often unattainable because of conflicting land ownership interests (Valdez
Wildlife management units, or UMAs, were part of a program developed and implemented by SEMARANT in 1997 to promote wildlife management on private property in Mexico (Weber
Current efforts for protecting the western yellow-billed cuckoo in Mexico primarily consist of identifying areas as Important Areas for Bird Conservation (Áreas de Importancia para la Conservación de las Aves), but no specific projects or conservation efforts are focused on the western yellow-billed cuckoo or its habitat (Sánchez-González and Berlanga 2012 in litt.).
Lack of habitat protection for the western yellow-billed cuckoo in northwestern Mexico also impacts the western yellow-billed cuckoo in the United States because individuals are known to make transitory movements up to several hundred miles between the southwestern United States and northern Mexico within a single breeding season (Sechrist
In regard to potential for pesticide exposure south of the U.S. border, Mexico has the second largest pesticide sales in Latin America, behind Brazil, which together account for 78 percent of the volume of pesticides within 11 Latin American countries (Mora 1997, pp. 3–4). While Mexico has laws concerning pesticide use, and import regulations on certain pesticides, there is limited enforcement capacity (Behre 2003, pp. 337–338). The same is true in Paraguay, Bolivia, Brazil, and Argentina, where yellow-billed cuckoos winter. For example, in Paraguay, at the center of the yellow-billed cuckoo's wintering range, importation and use of many pesticides are banned, but it is estimated that the amount of pesticides that are imported illegally are double the amount that are imported legally (Scribano 2013, entire). For additional information on pesticides, see Factor E below.
Based on the best available information, the regulatory mechanisms in Mexico that would protect the western yellow-billed cuckoo from threats described under Factors A and E are either lacking or not being fully implemented. These include water supply projects, water diversions, expansion of agricultural activities and overgrazing, conversion of habitat to nonnative vegetation, climate change (Factor A), and pesticides, as well as the threat of small, isolated patches of western yellow-billed cuckoo habitat (Factor E).
Various Federal, State, and international regulatory mechanisms in
Because the yellow-billed cuckoo is not a protected or sensitive species in Canada, Mexico, or in a majority of the United States, and a variety of factors influence the species and its habitat, we have determined that the current regulatory regime does not adequately address the majority of impacts to the western yellow-billed cuckoo or its habitat. As described under Factor A, one of the primary threats with the greatest severity and magnitude of impact to western yellow-billed cuckoo is the loss of habitat as a result of altered hydrologic functioning of streams in the West. Although some protections currently exist for the species and its habitat as a result of existing regulatory mechanisms at the Federal, State, or local level, our evaluation suggests these protections are inadequate to address the threats associated with the species and its habitat.
As described in the
As a result, the western yellow-billed cuckoo now primarily occurs in smaller, more widely separated populations. Compared to large populations, smaller populations are disproportionately affected by natural and manmade factors. These stressors vary in frequency, timing, and magnitude across the species' range. They are related or correlated to each other or act in combination to result in significant impacts to the western yellow-billed cuckoo within all or portions of its range.
One of the ramifications of smaller, more isolated habitat patches is that the smaller the patch, the more edge it has in proportion to its area, which increases the percentage of the available habitat exposed to the surrounding land uses (Hunter 1996, pp. 186–187). This is a particularly prevalent characteristic of the western yellow-billed cuckoo's remaining disjunct habitat patches, as many patches are in proximity to agricultural and other human-altered landscapes. For example, such land use currently dominates much of the riparian landscape within many regions, particularly along some reaches of the lower Colorado River, Sacramento River, Snake River, Verde River, Gila River, Santa Cruz River, San Pedro River, and Río Grande; and also in parts of northern Mexico in the vicinity of floodplain farming along the Sonora, Magdalena, and Moctezuma Rivers (Villaseñor-Gomez 2006, p. 111).
Agricultural activities on adjacent lands affect riparian bird communities in ways that may result in lower reproductive success, and possible abandonment of the patch, as reviewed by Saab (1999, pp. 136, 147–148). Saab (1999, p. 147) found that bird species, including the western yellow-billed cuckoo, were more likely to occur in riparian habitat along the Snake River, Idaho, in sites surrounded by upland natural vegetation than in habitat adjacent to agricultural lands. Saab found that, compared to habitat patches surrounded by natural habitat, patches near agricultural lands supported more avian nest predators that prosper in human-altered landscapes and have a greater effect on the smaller, fragmented habitats (Saab 1999, p. 147). Increases in these predators can result in more nest losses and discourage western yellow-billed cuckoos from nesting, thus suppressing local western yellow-billed cuckoo population size. Increases in nonnative vegetation can displace or degrade suitable nesting and foraging habitat, thereby leading to lower utilization of such areas by western yellow-billed cuckoos. Together, the effects can lead to western yellow-billed cuckoos abandoning these small habitat patches.
The western yellow-billed cuckoo is currently found in the largest contiguous and least-fragmented remaining habitat patches. For example, in California, sites larger than 198 ac (80 ha) in extent and wider than 950 ft (600 m) provided optimal patch size for western yellow-billed cuckoos (Laymon and Halterman 1989, p. 275). Nesting western yellow-billed cuckoos are sensitive to patch size and seldom use patches smaller than 325 × 975 ft (100 × 300 m) (Hughes 1999, p. 20). This observed preferential use of large patches strongly suggests that the western yellow-billed cuckoo is sensitive to fragmentation and reductions in habitat patch size. Moreover, patch-size reduction combined with the scarcity of larger patches keeps the western yellow-billed cuckoo breeding population size depressed. Such effects prevent the western yellow-billed cuckoo from reversing its long-term decline in population and range (Hunter 1996, pp. 179–187).
Moreover, isolated breeding sites separated by hundreds of miles of nonhabitat also reduce the ease with which dispersing juvenile and returning adult western yellow-billed cuckoos are able to find these sites. This isolation may result in low colonization and reoccupation rates, so that otherwise suitable habitat remains unoccupied or occupied at low densities (Laymon and Halterman 1989, p. 274; Hunter 1996, p. 185). For example, the Sacramento River still appears to have sufficient habitat to maintain a self-sustaining population of western yellow-billed cuckoos, as more than 25,000 ac (10,117 ha) of riparian and associated natural habitat has been protected and other sections are in the
On the Colorado River (between Lake Mead and the Mexico border), habitat restoration efforts are being implemented as a result of the Lower-Colorado River Multi-species Conservation Plan (LCR MSCP). The LCR MSCP permittees are in the process of creating and maintaining up to 4,050 ac (1,639 ha) of western yellow-billed cuckoo habitat, reducing the risk of loss of created habitat to wildfire, replacing created habitat affected by wildfire, and avoiding and minimizing operational and management impacts to western yellow-billed cuckoos over the 50-year life of the permit (2005 to 2055) (Lower Colorado River Multi-Species Conservation Program 2004, pp. 5–30–5–36, Table 5–10, 5–58–5–60). Not all of the habitat has been created, and as a result, the restoration sites are not contiguous along the entire river reach. Monitoring and survey efforts for the western yellow-billed cuckoo have shown an increase in detections, but the majority of detections were confined to only a few of the larger areas (McNeil
In summary, despite efforts to protect and restore riparian habitat along the Sacramento River and Colorado River and elsewhere in the range of the western yellow-billed cuckoo, these efforts offset only a small fraction of historical habitat that has been lost. Therefore, the threats resulting from the species' behavioral response to the multiple, combined effects of small and widely separated habitat patches exacerbate the effect of other threats within a large portion of the range of the western yellow-billed cuckoo. Moreover, because the threats that create small and isolated patches are ongoing (see Factor A) and maturation of regenerated or restored habitat may take several decades to fully provide for the needs of the species, we expect the effects of the species' response to small patch size to continue to adversely impact the western yellow-billed cuckoo into the future.
Exposure to pesticides may also be a threat to western yellow-billed cuckoos because it negatively impacts populations of insect prey (Groschupf 1987, p. 29; Hughes 1999, p. 2). The effects of pesticides on western yellow-billed cuckoos can be from intentional aerial spraying of habitat for mosquito or forest pest control, or from overspray or drift when the species' foraging habitat is located next to agricultural fields. Pesticides can affect western yellow-billed cuckoos foraging for grasshoppers at the field-forest interface or foraging for caterpillars in riparian habitat adjacent to the sprayed fields. Accumulation of chlorinated hydrocarbon pesticides, particularly dichlorodiphenyltrichloroethane (DDT), has affected other bird species, particularly top predators (Robinson and Bolen 1989, pp. 269–275). Pesticides may affect behavior (for example, loss of balance) or cause death by direct contact. Pesticide use may indirectly affect western yellow-billed cuckoos by reducing prey numbers, or by poisoning nestlings if sprayed directly in areas where the birds are nesting (Laymon and Halterman 1987b, p. 23; Lehman and Walker 2001, p. 12).
Western yellow-billed cuckoo prey populations were affected by aerial spraying of larvicides for control of mosquitoes at Caswell State Park in California (Laymon 1998, p. 12) and in Colorado to control an outbreak of caterpillars on box elders near Durango (Colyer 2001, pp. 1–6). The available evidence suggests that a reduction in prey availability results in reduced nesting success (Laymon 1980, p. 27; Hughes 1999, pp. 19–20), and pairs may even forgo breeding in years with inadequate food supplies (Veit and Petersen 1993, pp. 258–259). Therefore, the application of pesticides directly onto areas of riparian habitat may indirectly affect the reproductive success of the western yellow-billed cuckoo, leading to nest failure and lowered population size. Additionally, because breeding site fidelity is in part dependent on previous successful nesting (see the Breeding Site Fidelity section of the proposed rule), western yellow-billed cuckoos may abandon otherwise suitable nest sites where prey availability is limited by pesticide use, resulting in curtailment of its occupied range.
Effects from overspray of pesticides are more pronounced in smaller patches next to agricultural fields (because they have more edges, which allows for increased chances of exposure), but the effects of pesticides could also affect larger habitat patches as well. In many areas riparian habitat borders agricultural lands, such as California's Central Valley, the lower Colorado River, Snake River, Gila River, Río Grande Valley, and rivers in northern Mexico, including the Sonora, Yaqui, Mayo, and Moctezuma, where western yellow-billed cuckoos are vulnerable to pesticide exposure. Laymon (1980, pp. 11–12) reported sublethal poisoning of young western yellow-billed cuckoos caused by spraying active nests in walnut orchards in California.
Although DDT use has been banned in the United States since 1972, and in Mexico since 1999, yellow-billed cuckoos may be exposed to DDT in Mexico or on wintering grounds where DDT is still used despite any bans on its use. The soil half-life for DDT is from 2 to 15 years. However, in some cases, half of the DDT initially present will remain for 20, 30, or more years (U.S. Department of Human Health & Human Services, Agency for Toxic Substances and Disease Registry 1994, pp. 3–4).
For example, yellow-billed cuckoos (most likely of the eastern population) collected during the spring and fall migration in Florida had unusually high concentrations of DDT, suggesting exposure on the wintering grounds in South America (Grocki and Johnston 1974, pp. 186–188). Analysis of two eggs collected in California in 1979 showed very low levels of dichlorodiphenyldichloroethylene (DDE), a stable metabolite of DDT, but eggshell fragments collected in 1985 from three nests along the South Fork Kern River in California averaged 19 percent thinner than pre-DDT era eggshells (Laymon and Halterman 1987b, pp. 22–23). DDT has caused eggshell thinning in other bird species, and this percentage of thinning in other species has allowed eggs to be crushed during incubation, but there is no information showing that western yellow-billed cuckoo eggs have been crushed during incubation because of shell thinning.
A recent study in southern Sonora, Mexico, tested for the presence of a group of agricultural pesticides banned in the United States, known as organochlorine pesticides (beta-hexachlorocyclohexane (BHC), lindane, aldrin, endrin, b-endosulfan, methoxychlor, p, p0–DDE, p, p0-Dichlorodiphenyldichloroethane (DDD), p, p0–DDT). Collectively called OCPs, these pesticides are persistent in the environment. Soil samples collected from 24 localities in the Yaqui and Mayo Valleys of southern Sonora, Mexico, watersheds in which the western yellow-billed cuckoo is known to breed, were found to have higher OCP levels than other regions of the world. The OCPs were predominantly DDT (Cantu-Soto
Neonicotinoid pesticides are systemic chemicals that are taken up through various plant parts and can be distributed through a plant's tissues. These chemicals can be applied to a plant as a seed coating, soil contact, irrigation water, or as a foliar spray. Many of these chemicals are long acting with half-lives up to 2 years. Plant tissues that have been treated are toxic to both sap-sucking (e.g., aphids and true bugs) and foliage-eating insects (e.g., caterpillars, katydids, grasshoppers, and beetles). Many of these foliage-eating insects are potential prey of the western yellow-billed cuckoo. These chemicals have the potential to reduce prey abundance if intentionally or accidentally applied to foliage on which western yellow-billed cuckoos forage. To date no scientific studies have been done on western yellow-billed cuckoos and their prey, but additional reports and research on these chemicals discuss the potential adverse effects (Mineau and Whiteside 2013; Hopwood
In summary, pesticide use is widespread in agricultural areas in the western yellow-billed cuckoo breeding range in the United States and northern Mexico. Yellow-billed cuckoos have been exposed to the effects of pesticides on their wintering grounds, as evidenced by DDT found in their eggs and eggshell thinning in the United States. Because much of the species' habitat is in proximity to agriculture, the potential exists for direct and indirect effects to a large portion of the species in these areas through altered physiological functioning, prey availability, and, therefore, reproductive success, which ultimately results in lower population abundance and curtailment of the occupied range. While agricultural pesticides can kill prey of the yellow-billed cuckoo, and documentation exists of pesticide exposure in the wild, described above, no known data are available to determine specifically how often agricultural chemicals may be affecting yellow-billed cuckoo prey availability, locations where it may be particularly significant, or the extent to which pesticides may be responsible for population-level effects in the western yellow-billed cuckoo. However, based on the close proximity of agricultural areas to where the western yellow-billed cuckoo breeds, the threat is potentially significant.
Yellow-billed cuckoos are vulnerable to collision with communication towers and other tall structures, particularly during their migration. For example, several hundred yellow-billed cuckoo mortalities were documented at a single television tower in Florida over a 29-year period (Crawford and Stevenson 1984, p. 199; Crawford and Engstrom 2001, p. 383), and at an airport ceilometer in the east (Howell
Active and hydrological process-based restoration of riparian habitat on the Colorado, Kern, and Sacramento Rivers and elsewhere will help reduce habitat fragmentation, small patch size, and overall lack of habitat. In some restoration plans, reduction of fragmentation is a stated goal, and restoration sites are planned for sites adjacent to existing habitat. The Colorado River riparian habitat restoration work is just beginning and is part of the Lower Colorado River Multi-Species Conservation Plan. This habitat conservation plan calls for the creation of 5,940 ac (2405 ha) of riparian habitat through active restoration of which 4,050 ac (1,640 ha) will be suitable for western yellow-billed cuckoos (Reclamation 2004, Sec. 5, p. 58). Active restoration work began on the South Fork Kern River in California, in 1986. To date, 340 ac (138 ha) of riparian habitat have been restored (Audubon California 2012, pp. 1–10). Along the Sacramento River, the Sacramento River National Wildlife Refuge has implemented an active riparian restoration program. Riparian habitat restoration activities have been conducted on 4,513 ac (1,826 ha) with 2,400 ac (738 ha) slated for additional restoration (Hammond 2011, p. 14). In Utah, from 2008–2013, the State's Watershed Restoration Initiative (WRI) has invested funding with partners toward collaborative habitat enhancement efforts in lowland riparian habitats. The efforts were distributed across 35 different projects and totaled more than 8,000 ac (3,200 ha).
At present, restoration occurs on a relatively small scale in comparison to the need to reduce habitat fragmentation and increase the overall extent of suitable habitat. Future process-based restoration projects that restore natural river hydrology show great promise for large-scale restoration of riparian habitat for western yellow-billed cuckoos.
To date, conservation efforts, though helpful, have been inadequate to significantly reduce the effects of natural or manmade factors affecting the western yellow-billed cuckoo.
As noted in Factor A, habitat for the western yellow-billed cuckoo has been modified and curtailed, resulting in only remnants of formerly large tracts of native riparian forests, many of which are no longer occupied by western yellow-billed cuckoos. Despite recent efforts to protect existing, and restore additional, riparian habitat in the Sacramento, Kern, and Colorado Rivers, and other rivers in the range of the western yellow-billed cuckoo, these efforts offset only a small fraction of historical habitat that has been lost. Therefore, we expect the threat resulting from the combined effects associated with small and widely separated habitat patches to continue to affect a large portion of the range of the western yellow-billed cuckoo. This threat is particularly persistent where small habitat patches are in proximity to human-altered landscapes, such as near agricultural fields that dominate the landscape in many areas where the
Habitat loss and degradation occurs throughout the range of the western yellow-billed cuckoo (see
This array of Factor A threats, working in combination, creates the situation that then allows threats from the other listing factors to markedly affect the species. These other-factor threats may not be significant in and of themselves, but because they are not occurring in isolation they, in combination, are contributing to the population decline of the species. For example, as discussed in the Small and Widely Separated Habitat Patches section of Factor E, above, small habitat patches (resulting from the effects of Factor A threats) are more likely to have a larger number and a wider range of nest predators (see the Predation section of Factor C, above) because more nest predators occur in ecological edges. Additionally, habitat patches near areas of agricultural or urban development can foster higher densities of potential nest predators. Thus, any western yellow-billed cuckoo nesting in a small habitat patch near development may be subject to higher levels of nest predation and thus lower productivity. Moreover, the mere presence of certain nest predators in a habitat patch may elicit a behavioral response from western yellow-billed cuckoos such that they do not even attempt to nest in such habitat patches, even if other aspects of the habitat would suggest that it is suitable for nesting.
Similarly, riparian habitat patches that occur near urban and agricultural development may be subject to intentional or accidental pesticide spraying, as discussed in the Pesticide section under Factor E. This spraying would be unlikely to occur but for the habitat patch's proximity to development. This development likely occurs close to the riparian habitat through a process similar to the generalized scenario described above (see also specific details under Factor A).
Much of the available habitat is now in small patches with only a relatively few patches regularly occupied by nesting western yellow-billed cuckoos. Thus, the species' intolerance of small patch size in combination with extensive habitat loss has resulted in much less suitable habitat and a greatly reduced western yellow-billed cuckoo population size. In areas at the edge of the western yellow-billed cuckoo's current range (e.g., the Sacramento River), restoration of riparian habitat has not been accompanied by an increase in the species' population indicating that other factors may be limiting the population in those areas. Moreover, large areas of suitable habitat are unlikely to naturally regenerate within the range of the species into the future because western yellow-billed cuckoos need riparian habitat in a range of ages, including older, more structurally diverse areas for nesting, and nearly all of the areas where riparian habitat could grow in western North America are modified by dams, channelization, water extraction, and other activities that disrupt natural processes to allow good-quality riparian habitat to grow in a mosaic of different ages (see Factor A). Climate change is likely to further add to these impacts.
The primary factors threatening the western DPS of the yellow-billed cuckoo are the loss and degradation of habitat for the species from altered watercourse hydrology and natural stream processes, livestock overgrazing, encroachment from agriculture, and conversion of native habitat to predominantly nonnative vegetation as identified in Factor A. Additional threats to the species under Factor E include the effects of climate change, pesticides, wildfire, and small and widely separated habitat patches. The cumulative impact from various threats is also a factor that will exacerbate multiple existing threats to the western yellow-billed cuckoo and its habitat.
Various Federal, State, and international regulatory mechanisms in place provide varying degrees of conservation oversight that may to some degree address the threat of ongoing habitat loss and degradation; however, because the yellow-billed cuckoo is not a protected or sensitive species in a majority of the United States or in Canada and Mexico, the application of these regulatory mechanisms to conserve the western yellow-billed cuckoo or its habitat is unknown and the effectiveness of these regulatory mechanisms is uncertain.
These factors pose current and future threats to the species because they are ongoing and likely to continue in the near future.
We have carefully assessed the best scientific and commercial data available regarding the past, present, and reasonably anticipated future threats to the western yellow-billed cuckoo. In assessing the status of the western yellow-billed cuckoo, we applied the general understanding of “in danger of extinction” discussed in the December 22, 2010, Memorandum to the polar bear listing determination file, “Supplemental Explanation for the Legal Basis of the Department's May 15, 2008, Determination of Threatened Status for the Polar Bear,” signed by then Acting Director Dan Ashe (Service 2010, pp. 1–18). Threats to the western yellow-billed cuckoo exist for two of five threat factors. Threats also occur in combination, resulting in synergistically greater effects.
Factor A threats result from habitat destruction, modification, and degradation from dam construction and operations, water diversions, riverflow management; stream channelization and stabilization; conversion to agricultural uses, such as crops and livestock grazing; urban and transportation infrastructure; and increased incidence of wildfire. Continuing ramifications of actions that caused habitat loss in the past have resulted in ongoing curtailment of the habitat of the western yellow-billed cuckoo throughout its range. These factors also contribute to fragmentation and promote conversion to nonnative plant species, particularly tamarisk. The threats affecting western yellow-billed cuckoo habitat are ongoing and significant and have resulted in curtailment of the range of the species. Loss of riparian habitat leads not only to a direct reduction in western yellow-billed cuckoo numbers but also leaves a highly fragmented landscape, which in combination with other threats (see below), can reduce breeding success through increased predation rates and barriers to dispersal by juvenile and adult western yellow-billed cuckoos.
Factor E threats, including habitat rarity and small and isolated population sizes, cause the remaining western yellow-billed cuckoo populations to be increasingly susceptible to further declines through lack of immigration, reduced populations of prey species (food items), pesticides, and collisions with tall vertical structures during
The threats that affect the western yellow-billed cuckoo are important on a threat-by-threat basis, but are even more significant in combination. Habitat loss has been extensive throughout the range of the western yellow-billed cuckoo. The remaining riparian habitat is fragmented into small patches, which the species does not normally select as breeding habitat. Additionally, western yellow-billed cuckoos need riparian habitat in a range of ages, including older structurally diverse areas for nesting. This diversity of tree ages within the riparian vegetation (western yellow-billed cuckoo's habitat) is largely dependent on disturbances that affect some but not all of the vegetation within that habitat patch at one time. A number of threats, working in combination or individually, prevent such disturbance from happening now and will continue to do so in the future.
For example, dams and other flood control modifications to a watercourse may prevent floods from being severe enough to affect that habitat patch; channelization may restrict floodwaters to a narrow channel, allowing floodwaters to cause too much damage to habitat within the channel and not enough (or no) damage to habitat outside the channel; altered flood regimes may allow dead wood to accumulate, allowing fires, when they occur, to be severe and affect most of the patch; development and other human activities next to habitat patches may allow more wildfires to be ignited; and the reduction in patch size, through neighboring development, alteration of hydrology, or encroachment by nonnative plants, makes it more likely that a larger proportion of that patch will be affected during any given disturbance event. Moreover, nearly all areas where riparian habitat could potentially grow are modified by dams or water withdrawal and disrupted by other activities, often in combination, that prevent the reestablishment of riparian habitat. Patch size, when coupled with habitat loss and Factor C and E threats, including proximity to incompatible land uses, which increases exposure to predators and pesticides, is a significant cumulative threat to the western yellow-billed cuckoo now and in the future.
Per section 4(b)(1)(A) of the Act, prior to making our determination, we must first “[take] into account those efforts, if any, being made by any State or foreign nation, or any political subdivision of a State or foreign nation, to protect such species, whether by predator control, protection of habitat and food supply, or other conservation practices, within any area under its jurisdiction, or on the high seas.” Restoration of riparian habitat on the Colorado, Kern, and Sacramento Rivers and elsewhere will help reduce habitat fragmentation, small patch size, and overall lack of habitat. However, at present, restoration is being done on a relatively small scale in comparison to the need to reduce habitat fragmentation and increase the overall extent of suitable habitat. DDT has been banned in the United States for several decades, but use of DDT continues in Central and South America, thus potentially exposing western yellow-billed cuckoos during migration and winter.
Through our analysis of the best available scientific and commercial information on the species' abundance, life history, current population status and trends, and the response of the species and its habitat to natural and anthropogenic threats, we have determined that the western yellow-billed cuckoo meets the definition of a threatened species under the Act, rather than endangered. The Act defines an endangered species as any species that is “in danger of extinction throughout all or a significant portion of its range” and a threatened species as any species “that is likely to become endangered throughout all or a significant portion of its range within the foreseeable future.”
The geographic extent of the western yellow-billed cuckoo remains rather widespread through much of its historic range, conferring some measure of ecological and geographic redundancy and resilience. Although there is a general decline in the overall population trend and its breeding range has been reduced, the rate of the population decline and contraction of its breeding range is not so severe to indicate extinction is imminent for the western yellow-billed cuckoo. This current downward trend is slow and not expected to increase in the near future. The majority of large-scale habitat losses and conversions through dam building and agricultural development have already occurred, and we are not aware of any large-scale projects that would affect the species to the extent that the current trend of decline would change. Therefore, threats to the species and population declines do not currently reach the level typical of an endangered species.
Because the western yellow-billed cuckoo does not face any known sudden and calamitous threats, it is not a narrowly endemic species vulnerable to extinction from elevated or cumulative threats, is not yet restricted to a critically small range or critically low numbers, and currently does not show any substantial reduction in numbers, it would not meet the definition of “endangered” as determined by the Act. More appropriately, we find that the western yellow-billed cuckoo is likely to become endangered throughout all or a significant portion of its range within the foreseeable future, based on the timing, severity, and scope of the threats described above. Therefore, on the basis of the best available scientific and commercial information, we are listing the western distinct population segment of the yellow-billed cuckoo as a threatened species in accordance with sections 3(6), 3(20), and 4(a)(1) of the Act.
Under the Act and our implementing regulations, a species may warrant listing if it is an endangered or threatened species throughout all or a significant portion of its range. The Act defines “endangered species” as any species which is “in danger of extinction throughout all or a significant portion of its range,” and “threatened species” as any species which is “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” The definition of “species” is also relevant to this discussion. The Act defines “species” as follows: “The term `species' includes any subspecies of fish or wildlife or plants, and any distinct population segment [DPS] of any species of vertebrate fish or wildlife which interbreeds when mature.” The phrase “significant portion of its range” (SPR) is not defined by the statute, and we have never addressed in our regulations: (1) The consequences of a determination that a species is either endangered or likely to become so throughout a significant portion of its range, but not throughout all of its range; or (2) what qualifies a portion of a range as “significant.”
In determining whether a species is threatened or endangered in a significant portion of its range, we first identify any portions of the range of the species that warrant further consideration. The range of a species can theoretically be divided into portions an infinite number of ways. However, there is no purpose to analyzing portions of the range that are not reasonably likely to be both (1) significant and (2) threatened or endangered. To identify only those portions that warrant further consideration, we determine whether
If we identify portions that warrant further consideration, we then determine whether the species is threatened or endangered in these portions of its range. Depending on the biology of the species, its range, and the threats it faces, the Service may address either the significance question or the status question first. Thus, if the Service considers significance first and determines that a portion of the range is not significant, the Service need not determine whether the species is threatened or endangered there. Likewise, if the Service considers status first and determines that the species is not threatened or endangered in a portion of its range, the Service need not determine if that portion is significant. However, if the Service determines that both a portion of the range of a species is significant and the species is threatened or endangered there, the Service will specify that portion of the range as threatened or endangered under section 4(c)(1) of the Act.
We evaluated the current range of the western yellow-billed cuckoo to determine if there is any apparent geographic concentration of threats for the species. The western yellow-billed cuckoos are highly restricted to riparian habitat in their ranges, and the threats occur throughout the species' range. We considered the potential threats due to altered watercourse hydrology and natural stream processes, livestock overgrazing, encroachment from agriculture, conversion of native habitat to predominantly nonnative vegetation, pesticides, wildfire, small and widely separated habitat patches, and the effects of climate change. We found no concentration of threats because of the species' limited and curtailed range, and uniformity of the threats throughout its entire range. Having determined that the western yellow-billed cuckoo is threatened throughout its entire range, we must next consider whether there are any significant portions of the range where the western yellow-billed cuckoo is in danger of extinction or is likely to become endangered in the foreseeable future.
The western yellow-billed cuckoo is highly restricted to riparian habitat, and the threats to the species and its habitat occur throughout its breeding range. Therefore, we assessed the status of the western yellow-billed cuckoo throughout its entire breeding range. The threats to the survival of the species occur throughout the western DPS' breeding range and are not restricted to any particular significant portion of that range. We conclude that what affects the entire breeding portion of the western DPS' range affects the status of the entire western yellow-billed cuckoo throughout its breeding range, including migration corridors and stopover areas. Accordingly, our assessment and proposed determination applies to the western yellow-billed cuckoo throughout its entire breeding range.
We found no portion of the western yellow-billed cuckoo's range where threats are significantly concentrated or substantially greater than in other portions of their range and that factors affecting the species are essentially uniform throughout its range, indicating no portion of the range of the species warrants further consideration of possible endangered or threatened status under the Act. Therefore, we find there is no significant portion of the range of the western yellow-billed cuckoo that may warrant a different status.
Conservation measures provided to species listed as endangered or threatened under the Act include recognition, recovery actions, requirements for Federal protection, and prohibitions against certain practices. Recognition through listing results in public awareness and conservation by Federal, State, and local agencies; private organizations; and individuals. The Act encourages cooperation with the States and requires that recovery actions be carried out for all listed species. The protection measures required of Federal agencies and the prohibitions against certain activities are discussed, in part, below.
The primary purpose of the Act is the conservation of endangered and threatened species and the ecosystems upon which they depend. The ultimate goal of such conservation efforts is the recovery of these listed species, so that they no longer need the protective measures of the Act. Subsection 4(f) of the Act requires the Service to develop and implement recovery plans for the conservation of endangered and threatened species. The recovery planning process involves the identification of actions that are necessary to halt or reverse the species' decline by addressing the threats to its survival and recovery. The goal of this process is to restore listed species to a point where they are secure, self-sustaining, and functioning components of their ecosystems.
Recovery planning includes the development of a recovery outline shortly after a species is listed and preparation of a draft and final recovery plan. The recovery outline guides the immediate implementation of urgent recovery actions and describes the process to be used to develop a recovery plan. Revisions of the plan may be done to address continuing or new threats to the species, as new substantive information becomes available. The recovery plan identifies site-specific management actions that set a trigger for review of the five factors that control whether a species remains endangered or may be downlisted or delisted, and methods for monitoring recovery progress. Recovery plans also establish a framework for agencies to coordinate their recovery efforts and provide estimates of the cost of implementing recovery tasks. Recovery teams (composed of species experts, Federal and State agencies, nongovernmental organizations, and stakeholders) are often established to develop recovery plans. When completed, the recovery outline, draft recovery plan, and the final recovery plan will be available on our Web site (
Implementation of recovery actions generally requires the participation of a broad range of partners, including other Federal agencies, States, Tribal, nongovernmental organizations, businesses, and private landowners. Examples of recovery actions include habitat restoration (e.g., restoration of native vegetation), research, captive propagation and reintroduction, and outreach and education. The recovery of many listed species cannot be accomplished solely on Federal lands because their range may occur primarily or solely on non-Federal lands. To achieve recovery of these species requires cooperative conservation efforts on private, State, and Tribal lands.
Following publication of this final listing rule, funding for recovery actions will be available from a variety of sources, including Federal budgets, State programs, and cost share grants for non-Federal landowners, the academic community, and nongovernmental organizations. In addition, pursuant to
Please let us know if you are interested in participating in recovery efforts for the yellow-billed cuckoo. Additionally, we invite you to submit any new information on this species whenever it becomes available and any information you may have for recovery planning purposes (see
Section 7(a) of the Act requires Federal agencies to evaluate their actions with respect to any species that is proposed or listed as endangered or threatened and with respect to its critical habitat, if any is designated. Regulations implementing this interagency cooperation provision of the Act are codified at 50 CFR 402. Section 7(a)(4) of the Act requires Federal agencies to confer with the Service on any action that is likely to jeopardize the continued existence of a species proposed for listing or result in destruction or adverse modification of proposed critical habitat. If a species is listed subsequently, section 7(a)(2) of the Act requires Federal agencies to ensure that activities they authorize, fund, or carry out are not likely to jeopardize the continued existence of the species or destroy or adversely modify its critical habitat. If a Federal action may affect a listed species or its critical habitat, the responsible Federal agency must enter into formal consultation with the Service.
Federal agency actions within or affecting the species' habitat that may require conference or consultation or both as described in the preceding paragraph include, but are not limited to, projects that will result in removal or degradation of riparian vegetation, altered streamflow or fluvial dynamics, or other habitat-altering activities on Federal lands or as a result of issuance of section 404 CWA permits by the USACE; construction and management of energy and power line rights-of-way by the FERC; construction and maintenance of roads, highways, or bridges by the Federal Highway Administration; grazing leases by the USFS or the BLM; and projects funded through Federal loan programs. Such projects may include, but are not limited to, construction or modification of reservoirs, levees, bank stabilization structures, water diversion and withdrawal projects, roads and bridges, utilities, recreation sites, and other forms of development, and livestock grazing.
Under section 4(d) of the Act, the Service has discretion to issue regulations that we find necessary and advisable to provide for the conservation of threatened species. The Act and its implementing regulations set forth a series of general prohibitions and exceptions that apply to threatened wildlife. The prohibitions of section 9(a)(1) of the Act, as applied to threatened wildlife and codified at 50 CFR 17.31 make it illegal for any person subject to the jurisdiction of the United States to take (which includes harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect; or to attempt any of these) threatened wildlife within the United States or on the high seas. In addition, it is unlawful to import; export; deliver, receive, carry, transport, or ship in interstate or foreign commerce in the course of commercial activity; or sell or offer for sale in interstate or foreign commerce any listed species. It is also illegal to possess, sell, deliver, carry, transport, or ship any such wildlife that has been taken illegally. Certain exceptions apply to employees of the Service, the National Marine Fisheries Service, other Federal land management agencies, and State conservation agencies.
We may issue permits to carry out otherwise prohibited activities involving threatened wildlife under certain circumstances. Regulations governing permits are codified at 50 CFR 17.32. With regard to threatened wildlife, a permit may be issued for the following purposes: For scientific purposes, to enhance the propagation or survival of the species, and for incidental take in connection with otherwise lawful activities. There are also certain statutory exemptions from the prohibitions, which are found in sections 9 and 10 of the Act.
It is our policy, as published in the
Based on the best available information, the following activities may potentially result in a violation of section 9 the Act; this list is not comprehensive: (1) Handling or collecting of the species; (2) destruction/alteration of the species' habitat by discharge of fill material, draining, ditching, tiling, pond construction, stream channelization or diversion, or diversion or alteration of surface or ground water flow; (3) livestock grazing that results in direct or indirect destruction of riparian habitat; (4) activities such as continued presence of cattle and fragmentation of riparian habitat; (5) pesticide applications in violation of label restrictions; and (6) release of biological control agents that modifies or destroys habitat used by the species.
Questions regarding whether specific activities would constitute a violation of section 9 of the Act should be directed to the Sacramento Fish and Wildlife Office (see
We have determined that environmental assessments and environmental impact statements, as defined under the authority of the National Environmental Policy Act of 1969 (42 U.S.C. 4321
In accordance with the President's memorandum of April 29, 1994 (Government-to-Government Relations with Native American Tribal Governments; 59 FR 22951), Executive Order 13175 (Consultation and Coordination With Indian Tribal Governments), and the Department of the Interior's manual at 512 DM 2, we readily acknowledge our responsibility to communicate meaningfully with recognized Federal Tribes on a government-to-government basis. In accordance with Secretarial Order 3206 of June 5, 1997 (American Indian Tribal Rights, Federal-Tribal Trust Responsibilities, and the Endangered
A complete list of all references cited in this rule is available on the Internet at
The primary authors of this final rule are the staff members from the Service's Sacramento Fish and Wildlife Office and the Pacific Southwest Regional Office (Region 8) with assistance from staff from the Pacific Northwest Region (Region 1), the Southwest Region (Region 2), and the Mountain-Prairie Region (Region 6).
Endangered and threatened species, Exports, Imports, Reporting and recordkeeping requirements, Transportation.
Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as follows:
16 U.S.C. 1361–1407; 1531–1544; 4201–4245, unless otherwise noted.
(h) * * *
(1) The authority under section 506(a)(1) of the Foreign Assistance Act of 1961 (FAA) to direct the drawdown of up to $5 million in defense articles and services of the Department of Defense and military education and training to provide immediate military assistance for the Government of Ukraine, to aid their efforts to respond to the current crisis, and to make the determinations required under such section to direct such a drawdown; and
(2) The authority under section 552(c)(2) of the FAA to direct the drawdown of up to $20 million in nonlethal commodities and services from any agency of the United States Government to provide assistance for the Government of Ukraine, and to make the determinations required under such section to direct such a drawdown.