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Federal Aviation Administration (FAA), DOT.
Final rule.
This final rule conforms Federal Aviation Administration regulations to International Civil Aviation Organization standards and the Fair Treatment for Experienced Pilots Act, both of which no longer contain a pilot pairing requirement. Accordingly, this final rule removes the requirement for a pilot in command who has reached age 60 to be paired with a pilot under age 60 in international commercial air transport operations by air carriers conducting flag and supplemental operations, as well as for other pilots serving in certain international operations using civil airplanes on the U.S. registry. The removal of this restriction will allow all pilots serving on airplanes in international commercial air transport with more than one pilot to serve until age 65 without a requirement to be paired with a pilot under age 60.
This action becomes effective June 12, 2015.
For technical questions concerning this document, contact Nancy Lauck Claussen, Air Transportation Division (AFS–200), Flight Standards Service, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone (202) 267–8166; email
For legal questions concerning this document, contact Sara Mikolop, Office of the Chief Counsel (AGC–200), Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone (202) 267–3073; email
The FAA is adopting this final rule without prior notice and public comment effective June 12, 2015. Section 553(b)(B) of the Administrative Procedure Act (APA) (5 U.S.C.) authorizes agencies to dispense with notice and comment procedures for rules when the agency for “good cause” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without seeking comment prior to the rulemaking. Additionally, section 553(d) of the APA provides a “good cause” exception from the requirement to publish a substantive rule at least 30 days before its effective date.
Recent action by the International Civil Aviation Organization (ICAO) to remove the requirement in ICAO Annex 1 (Personnel Licensing), Chapter 2 (Licenses and Ratings for Pilots), Standard 2.1.10.1 to pair a pilot in command (PIC) who has reached age 60 with a pilot under age 60, triggered the sunset of the pilot pairing limitation in 49 U.S.C. 44729(c)(1). Based on this action, as of November 13, 2014, the statutory basis for the pilot pairing requirements in §§ 61.3(j)(2), 61.77(g), and 121.383(d)(2) and (e)(2) of Title 14 of the Code of Federal Regulations (14 CFR) no longer exists and these regulations are contrary to 49 U.S.C. 44729.
The FAA finds that notice and public comment to this immediately adopted final rule are unnecessary and contrary to the public interest because this final rule is limited to conforming 14 CFR parts 61 and 121 with recent changes to statutory requirements pertaining to pilot age limitations. On November 13, 2014, the statutory requirement in 49 U.S.C. 44729(c)(1) for a pilot in command who had reached age 60 to be paired with a pilot under age 60 ceased to be effective, although the regulatory requirements in 14 CFR pertaining to pilot pairing remained in place.
It is contrary to the public interest to allow regulatory requirements pertaining to pilot age limitations to remain in the Code of Federal Regulations when those requirements present a direct conflict with the statutory requirements in the United States Code pertaining to pilot age limitations. Further, under section 553(d)(3) of the APA, the FAA finds that good cause exists for making this rule effective upon publication to minimize any possible confusion between the statutory requirements pertaining to pilot age limitations in 49 U.S.C. 44729 and the regulatory requirements pertaining to pilot age limitations in §§ 61.3(j)(2), 61.77(g), and 121.383(d)(2) and (e)(2) of 14 CFR.
The FAA's authority to issue rules on 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. Additionally, the Fair Treatment for Experienced Pilots Act (Pub. L. 110–135), codified at 49 U.S.C. 44729, establishes requirements pertaining to pilot age limitations.
This rulemaking is promulgated under the authority described in 49 U.S.C. 106(f), which establishes the authority of the Administrator to promulgate regulations and rules and conform FAA requirements pertaining to pilot age limitations with the Fair Treatment for Experienced Pilots Act.
This final rule removes the requirements in §§ 61.3(j)(2), 61.77(g), and 121.383(d)(2) and (e)(2) for a PIC who has reached age 60 to be paired with a pilot under age 60 in international commercial air transport operations conducted under part 121, as well as for pilots relying on a certificate issued under part 61 and serving in certain international operations using civil airplanes on the U.S. registry. The removal of this restriction will allow all pilots serving on airplanes in international commercial air transport with more than one pilot, to serve beyond 60 years of age (until 65 years of age) without a requirement to be paired with a pilot under 60 years of age. This final rule conforms FAA
On December 13, 2007, the Fair Treatment for Experienced Pilots Act (Pub. L. 110–135) amended Title 49 of the United States Code by adding section 44729. Section 44729(a) raised the age limit for pilots serving in operations under part 121
Section 44729(c) provided a pilot pairing limitation for PICs serving on international flights. Specifically, section 44729(c)(1) states, “A pilot who has attained 60 years of age may serve as pilot-in-command in covered operations between the United States and another country only if there is another pilot in the flight deck crew who has not yet attained 60 years of age.” The pilot pairing requirement in section 44729(c)(1) was consistent with the pilot pairing standard in ICAO Annex 1 (Personnel Licensing), Chapter 2 (Licenses and Ratings for Pilots), Standard 2.1.10.1, applicable to multi-pilot crews in effect at the time that section 44729 was added to the United States Code. Until November 13, 2014, Standard 2.1.10.1 stated:
A Contracting State, having issued pilot licences, shall not permit the holders thereof to act as pilot-in-command of an aircraft engaged in international commercial air transport operations if the licence holders have attained their 60th birthday or, in the case of operations with more than one pilot where the other pilot is younger than 60 years of age, their 65th birthday.
The Agency notes that for operations with a single pilot, Standard 2.1.10.1 requires the pilot to be under age 60.
The Fair Treatment for Experienced Pilots Act also provided for a self-executing sunset of the pilot pairing requirement. Specifically, section 44729(c)(2) provides that the pilot pairing requirement in section 44729(c)(1) would cease to be effective on the date that ICAO removed the pilot pairing limitation in Standard 2.1.10.1. Section 44729(c)(2) states that “[p]aragraph [c](1), shall cease to be effective on such date as the Convention on International Civil Aviation provides that a pilot who has attained 60 years of age may serve as pilot-in-command in international commercial operations without regard to whether there is another pilot in the flight deck crew who has not attained age 60.”
On July 15, 2009, the FAA published the “Part 121 Pilot Age Limit” final rule (74 FR 34229) to conform FAA regulations to the statutory requirements in the Fair Treatment for Experienced Pilots Act (codified at 49 U.S.C. 44729). Based on the statutory authority in 49 U.S.C. 44729, the 2009 final rule raised the pilot age limitation from 60 to 65 and added the pilot pairing requirement for pilots conducting part 121 operations and other multi-pilot operations, between or over the territory of more than one country using U.S.-registered airplanes.
In the 2009 final rule preamble, the Agency stated that it believed that the Fair Treatment for Experienced Pilots Act intended to harmonize FAA regulations with the ICAO standard pertaining to pilot age limitations and pilot pairing requirements, which would encompass international operations in addition to the part 121 operations identified by the Act.
Accordingly, to harmonize the Agency's regulations with the ICAO standard and further the intent of the Fair Treatment for Experienced Pilots Act, the 2009 final rule added the pilot age limitations and pilot pairing requirement for pilots conducting operations between two international territories using U.S.-registered airplanes and relying on certificates issued under part 61.
The 2009 final rule did not change the maximum age for pilots serving in international operations covered by § 61.3(j)(1) using a single pilot (
During a meeting of the ICAO Council on March 3, 2014, Council members adopted Amendment 172 to Annex 1, Personnel Licensing. The amendment removed the requirement in Standard 2.1.10.1 to pair a PIC who has reached age 60 with a pilot under age 60, and renumbered the standard as 2.1.10. Without the pairing requirement, all pilots on multi-pilot crews serving in international air transport commercial operations may continue to serve as long as they have not reached 65 years of age.
As previously discussed, 49 U.S.C. 44729(c)(2) states that the pilot pairing requirement in 49 U.S.C. 44729(c)(1) ceases to be effective when ICAO removes the pilot pairing requirement from Annex 1 (Personnel Licensing), Chapter 2 (Licenses and Ratings for Pilots), Standard 2.1.10.1. On November 13, 2014, the revised Standard 2.1.10, that no longer contains the pilot pairing requirement, became applicable. Accordingly, on November 13, 2014, the
The FAA subsequently published a Notice of Policy (79 FR 67346, November 13, 2014) explaining that once the pilot pairing limitation of 49 U.S.C. 44729(c)(1) ceased to be effective, the statutory basis for the pilot pairing requirements in 14 CFR 61.3(j)(2), 61.77(g) and 121.383(d)(2) and (e)(2) would no longer exist, and those regulations would be contrary to 49 U.S.C. 44729. Based on the foregoing, in the Notice of Policy, the FAA further stated that it would no longer enforce the pilot pairing requirements contained in 14 CFR 61.3(j)(2), 61.77(g), and 121.383(d)(2) and (e)(2) as of the date the ICAO amendment became applicable and corresponding sunset of 49 U.S.C. 44729(c)(1). The ICAO amendment became applicable and the sunset of 49 U.S.C. 44729(c)(1) took place on November 13, 2014.
This final rule conforms FAA regulations in Title 14 of the Code of Federal Regulations (14 CFR) with the Fair Treatment for Experienced Pilots Act by removing the current pilot pairing requirements from parts 121 and 61. Specifically, the Agency has amended § 121.383(d) and (e) to allow all pilots serving in part 121 operations of any kind (
This rulemaking provides relieving changes that create the opportunity for scheduling efficiencies because only the maximum pilot age of 65 needs to be considered in bidding for, or flying international flights. All pilots serving in any kind of part 121 operation (
Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 and Executive Order 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96–354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96–39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this final rule.
Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it to be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this final rule. The reasoning for this determination follows:
This final rule is relieving in that it removes the requirement to pair a pilot who has reached age 60 with a pilot who is under age 60 in international operations covered by part 121 and certain other international operations identified in §§ 61.3 and 61.77. The removal of this pilot pairing requirement eases flight scheduling and crew rest requirement costs because, for multi-pilot operations, only the maximum pilot age of 65 needs to be considered in bidding for, or flying international flights covered by part 121 and certain other international operations. The expected outcome will be lower costs. Therefore, a regulatory evaluation was not prepared.
FAA has therefore determined that this final rule is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and it is not “significant” as defined in DOT's regulatory policies and procedures provided in DOT 2100.5.
The Regulatory Flexibility Act of 1980 (Pub. L. 96–354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.
Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.
However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.
The FAA believes that this final rule does not have a significant economic impact on a substantial number of small entities for the following reasons. This final rule removes the age-based pilot pairing requirements from parts 121 and 61. The expected result will be reduced costs or minimal cost for any small entity affected by this rulemaking action. Therefore, as provided in section 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.
The Trade Agreements Act of 1979 (Pub. L. 96–39), as amended by the Uruguay Round Agreements Act (Pub.
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $151 million in lieu of $100 million. This final rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined that there is no new requirement for information collection associated with this immediately adopted final rule.
In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to ICAO Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these proposed regulations.
Executive Order 13609, Promoting International Regulatory Cooperation, (77 FR 26413, May 4, 2012) promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues and reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policy and agency responsibilities of Executive Order 13609, Promoting International Regulatory Cooperation. The FAA has determined that this action would eliminate differences between U.S. aviation standards and those of other civil aviation authorities by conforming FAA regulations to the corresponding ICAO Standards and Recommended Practices.
FAA Order 1050.1E identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 312f and involves no extraordinary circumstances.
The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. The Agency determined that this action will not have a substantial direct effect on the States, or the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government; therefore, this final rule does not have Federalism implications.
The FAA analyzed this final rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). The Agency has determined that it is not a “significant energy action” under the Executive Order, and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
An electronic copy of a rulemaking document may be obtained by using the Internet—
1. Search the Federal eRulemaking Portal
2. Visit the FAA's Regulations and Policies Web page at
3. Access the Government Publishing Office's Web page at:
Copies may also be obtained by sending a request (identified by amendment or docket number of this rulemaking) to the Federal Aviation Administration, Office of Rulemaking, ARM–1, 800 Independence Avenue SW., Washington, DC 20591, or by calling (202) 267–9677.
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. A small entity with questions regarding this document, may contact its local FAA official, or the person listed under the
Airmen, Aviation safety.
Air carriers, Aircraft, Airmen, Aviation safety.
In consideration of the foregoing, the Federal Aviation Administration amends chapter I of Title 14, Code of Federal Regulations as follows:
49 U.S.C. 106(f), 106(g), 40113, 44701–44703, 44707, 44709–44711, 44729, 45102–45103, 45301–45302.
The revision reads as follows:
(j) * * *
(1)
The revision reads as follows:
(e)
49 U.S.C. 106(f), 106(g), 40113, 40119, 41706, 44101, 44701–44702, 44705, 44709–44711, 44713, 44716–44717, 44722, 44729, 44732, 46105; Pub. L. 111–216, 124 Stat. 2348 (49 U.S.C. 44701 note); Pub. L. 112–95, 126 Stat. 62 (49 U.S.C. 44732 note).
(d) No certificate holder may use the services of any person as a pilot on an airplane engaged in operations under this part if that person has reached his or her 65th birthday.
(e) No pilot may serve as a pilot in operations under this part if that person has reached his or her 65th birthday.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E airspace at Tribune, KS. Controlled airspace is necessary to accommodate new Standard Instrument Approach Procedures (SIAPs) at Tribune Municipal Airport. The FAA is taking this action to enhance the safety and management of Instrument Flight Rules (IFR) operations for SIAPs at the airport.
Effective 0901 UTC, August 20, 2015. The Director of the Federal Register approves this incorporation by reference action under title 1, Code of Federal Regulations, part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments.
FAA Order 7400.9Y, Airspace Designations and Reporting Points, and subsequent amendments can be viewed on line at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15. For further information, you can contact the Airspace Policy and ATC Regulations Group, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 29591; telephone: 202–267–8783.
Rebecca Shelby, Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 2601 Meacham Blvd., Fort Worth, TX 76137; telephone: 817–321–7740.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class E airspace at Tribune Municipal Airport, Tribune, KS.
On November 20, 2014, the FAA published in the
Class E airspace designations are published in Paragraphs 6005, of FAA Order 7400.9Y, dated August 6, 2014, and effective September 15, 2014, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.9Y, airspace Designations and Reporting Points, dated August 6, 2014, and effective September 15, 2014. FAA Order 7400.9Y is publicly available as listed in the
This action amends Title 14, Code of Federal Regulations (14 CFR), Part 71 by establishing Class E airspace extending upward from 700 feet above the surface within a 6.5-mile radius of Tribune Municipal Airport, Tribune, KS, to accommodate new Standard Instrument
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1E. “Environmental Impacts: Policies and Procedures,” paragraph 311a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.5-mile radius of Tribune Municipal Airport.
Internal Revenue Service (IRS), Treasury.
Final and temporary regulations.
This document contains final and temporary regulations that prevent a corporate partner from avoiding corporate-level gain through transactions with a partnership involving equity interests of the partner. These regulations affect partnerships and their partners. The text of these temporary regulations serves as the text of proposed regulations (REG–149518–03) published in the Proposed Rules section in this issue of the
Concerning the final and temporary regulations, Kevin I. Babitz, (202) 317–6852.
In
After the enactment of sections 311(b) and 337(d), the Treasury Department and the IRS became aware of transactions in which taxpayers used a partnership to postpone or avoid completely gain generally required to be recognized under section 311(b). In one example of this transaction, a corporation entered into a partnership and contributed appreciated property. The partnership then acquired stock of that corporate partner, and later made a liquidating distribution of this stock to the corporate partner. Under section 731(a), the corporate partner did not recognize gain on the partnership's distribution of its stock. By means of this transaction, the corporation had disposed of the appreciated property it formerly held and had acquired its own stock, permanently avoiding its gain in the appreciated property. If the corporation had directly exchanged the appreciated property for its own stock, section 311(b) would have required the
In response to this type of transaction, the Treasury Department and the IRS issued Notice 89–37, 1989–1 CB 679, on March 9, 1989. Notice 89–37 announced that future regulations under section 337(d) would address the use of partnerships to avoid the repeal of the
On December 15, 1992, the Treasury Department and the IRS published a notice of proposed rulemaking under section 337(d) (PS–91–90, REG–208989–90, 1993–1 CB 919) in the
The 1992 deemed redemption rule addressed pre-distribution transactions involving corporate partner stock owned or acquired by the partnership. The Treasury Department and the IRS believed that certain of these transactions created the economic effect of an exchange of appreciated property for corporate partner stock. The 1992 deemed redemption rule provided that a corporate partner recognizes gain at the time of, and to the extent that, any transaction (or series of transactions) has the economic effect of an exchange by the partner of its interest in appreciated property for an interest in its stock (or the stock of any member of the affiliated group of which such partner is a member) owned, acquired, or distributed by the partnership.
The 1992 distribution rule provided that a partnership's distribution to a partner of the partner's stock is treated as a redemption or an exchange of the stock of the partner for a portion of the partner's partnership interest with a value equal to the distributed stock. Thus, the 1992 distribution rule applied section 311(b) principles to the distribution to trigger gain to the corporate partner, rather than applying section 731, which would not have required gain recognition. The 1992 distribution rule ensured that section 311(b) would apply to any acquisition by the corporate partner of its own stock where the 1992 deemed redemption rule had not applied. The preamble to the 1992 proposed regulations indicated that commenters on the Notice raised concerns that the 1992 distribution rule could duplicate gain recognition and suggested a modified approach. However, the 1992 proposed regulations rejected the modified approach as overly complex.
As noted previously, the 1992 proposed regulations applied to stock of a partner, to stock of a partner's affiliate, and to other equity interests in the partner or affiliate. The 1992 proposed regulations used a modified affiliation standard to determine whether a partner and another corporation were affiliates. The 1992 proposed regulations treated a corporation as an affiliate of a partner at the time of a deemed redemption or distribution by the partnership if, immediately thereafter, the partner and corporation were members of an affiliated group as defined in section 1504(a) without regard to section 1504(b) (section 337(d) affiliation). On January 19, 1993, the Treasury Department and the IRS issued Notice 93–2, 1993–1 CB 292, which stated that the 1992 proposed regulations would be amended to limit the application of the regulations to transactions in which section 337(d) affiliation existed immediately before the deemed redemption or distribution. The Treasury Department and the IRS indicated that further study was required for cases in which section 337(d) affiliation did not exist prior to a distribution of stock by a partnership to a corporate partner, but resulted from the distribution.
The Treasury Department and the IRS received several written comments in response to Notice 89–37, the 1992 proposed regulations, and Notice 93–2. Commenters largely supported the 1992 deemed redemption rule, though some suggested modifications. Some commenters, however, opposed the 1992 distribution rule, asserting that the rule is overly broad and inconsistent with the deemed redemption rule. These comments are discussed in detail in the Explanation of Provisions section of this preamble.
After considering these comment letters, and taking into account subsequent changes in relevant law as described in part 1 of this preamble, the Treasury Department and the IRS are withdrawing the 1992 proposed regulations and simultaneously issuing temporary and final regulations that also serve as the text of new proposed regulations published in the Proposed Rules section of this issue of the
The purpose of these regulations authorized under section 337(d) is to prevent corporate taxpayers from using a partnership to circumvent gain required to be recognized under section 311(b) or section 336(a). These regulations, including the rules governing the amount and timing of recognized gain, must be applied in a manner consistent with, and which reasonably carries out, this purpose.
These regulations apply when a partnership, either directly or indirectly, owns, acquires, or distributes Stock of the Corporate Partner (as defined in part 1 of this preamble). Under these regulations, a Corporate Partner (as defined in part 1 of this preamble) may recognize gain when it is treated as acquiring or increasing its interest in Stock of the Corporate Partner held by a partnership in exchange for appreciated property in a manner that avoids gain recognition under section 311(b) or section 336(a). The regulations also provide exceptions under which a Corporate Partner is not required to recognize gain.
These regulations retain the 1992 deemed redemption rule with the modifications described in part 2 of this preamble. However, these regulations remove the 1992 distribution rule in response to comments. In its place, these regulations apply the deemed redemption rule to partnership distributions of Stock of the Corporate Partner to the Corporate Partner as though the partnership amended its agreement, immediately before the distribution, to allocate 100 percent of the distributed stock to the Corporate Partner.
These regulations apply to certain partnerships that hold stock of a Corporate Partner. For this purpose, a “Corporate Partner” is defined as a
These definitions of Corporate Partner and Stock of the Corporate Partner are consistent with those set forth in the 1992 proposed regulations except for two changes. First, these regulations modify the definition of Stock of the Corporate Partner. Based on changes in the law and comments received, the Treasury Department and the IRS have determined that the scope of the definition of “Stock of a Partner” in the 1992 proposed regulations was too narrow in certain instances and too broad in others. These regulations broaden the definition of Stock of a Corporate Partner to include stock or other equity interests of any corporation that controls the Corporate Partner within the meaning of section 304(c) (section 304(c) control), whereas the 1992 proposed regulations' definition was limited to stock or other equity interests issued by the Corporate Partner and its section 337(d) affiliates. Section 304(c) control generally exists when there is ownership of stock of a corporation possessing at least 50 percent of the total combined voting power of all classes of the corporation's stock that is entitled to vote or at least 50 percent of the value of the shares of all classes of stock of the corporation, while control of a corporation under section 1504(a)(2) requires ownership of stock of the corporation possessing at least 80 percent of the total voting power of the stock of the corporation and at least 80 percent of the total value of the stock of the corporation. The Treasury Department and the IRS believe the lower threshold for control set forth in section 304(c) is the more appropriate standard for this purpose because
Second, these regulations add an exception for certain related-party partners. Under this exception, Stock of the Corporate Partner does not include any stock or other equity interest held or acquired by a partnership if all interests in the partnership's capital and profits are held by members of an affiliated group defined in section 1504(a) that includes the Corporate Partner. Thus, these regulations do not apply if, for example, a domestic corporation and its wholly owned domestic subsidiary (each of which is an includible corporation under section 1504(b)) are the only partners in a partnership and either corporation contributes stock of another affiliate. The Treasury Department and the IRS have determined that this additional exception is appropriate because the purpose of these regulations is not implicated if a partnership is owned entirely by affiliated corporations. The Treasury Department and the IRS invite comments on whether this exception should be extended, for example, to partnerships owned by controlled foreign corporations that are owned entirely by a single affiliated group.
For partnerships that hold Stock of the Corporate Partner, these regulations apply to a transaction (or series of transactions) that is a “Section 337(d) Transaction.” These regulations define a Section 337(d) Transaction as a transaction that has the effect of an exchange by a Corporate Partner of its interest in appreciated property for an interest in Stock of the Corporate Partner owned, acquired, or distributed by a partnership. For example, a Section 337(d) Transaction may occur if: (i) A Corporate Partner contributes appreciated property to a partnership that owns Stock of the Corporate Partner; (ii) a partnership acquires Stock of the Corporate Partner; (iii) a partnership that owns Stock of the Corporate Partner distributes appreciated property to a partner other than the Corporate Partner; (iv) a partnership distributes stock of the Corporate Partner to the Corporate Partner; or (v) a partnership agreement is amended in a manner that increases a Corporate Partner's interest in the Stock of the Corporate Partner (including in connection with a contribution to, or distribution from, a partnership).
If a partnership engages in a Section 337(d) Transaction, the Corporate Partner must recognize gain. The regulations define a “Gain Percentage” that the partnership uses to quantify the amount of gain recognized. The computation of the Gain Percentage is set forth in part 2 of this preamble.
These regulations largely retain the 1992 deemed redemption rule. If a transaction is a Section 337(d) Transaction described in part 1 of this preamble, a Corporate Partner must recognize gain under the deemed redemption rule. To determine the amount of gain, the Corporate Partner must first determine the amount of appreciated property (other than Stock of the Corporate Partner) effectively exchanged for Stock of the Corporate Partner (by value) and then calculate the amount of taxable gain recognized.
These regulations set forth general principles that apply in determining the amount of appreciated property effectively exchanged for Stock of the Corporate Partner. These general principles require that the Corporate Partner's economic interest with respect to both Stock of the Corporate Partner and all other appreciated property of the partnership be determined based on all facts and circumstances, including the allocation and distribution rights set forth in the partnership agreement. The deemed redemption rule applies only to the extent that the transaction has the effect of an exchange by the Corporate Partner of its interest in appreciated property for Stock of the Corporate Partner. Thus, these regulations do not apply to the extent a transaction has the effect of an exchange by a Corporate Partner of non-appreciated property for Stock of the Corporate Partner or has the effect of an exchange by a Corporate Partner of appreciated property for property other than Stock of the Corporate Partner.
A Corporate Partner must recognize gain under these regulations even if the
If the Corporate Partner has an existing interest in the partnership's Stock of the Corporate Partner prior to the Section 337(d) Transaction, the deemed redemption rule applies only with respect to the Corporate Partner's incremental increase in the Stock of the Corporate Partner. For example, changing allocations to increase a Corporate Partner's interest in the Stock of the Corporate Partner from 50 percent to 80 percent and to decrease the Corporate Partner's interest in other appreciated property from 80 percent to 50 percent would have the effect of an exchange by the Corporate Partner of the 30-percent incremental decrease in its interest in the appreciated property for the 30-percent incremental increase in the Stock of the Corporate Partner.
For purposes of recognizing gain under the deemed redemption rule, the Corporate Partner's interest in an identified share of Stock of the Corporate Partner will never be less than the Corporate Partner's largest interest (by value) in that share of Stock of the Corporate Partner that was taken into account when the partnership previously determined whether there had been a Section 337(d) Transaction (regardless of whether the Corporate Partner recognized gain in the earlier transaction).
In certain limited circumstances, a partnership's acquisition of Stock of the Corporate Partner does not have the effect of an exchange of appreciated property for that stock. For example, as one commenter asserted, if a partnership with an operating business uses the cash generated in that business to purchase Stock of the Corporate Partner, the deemed redemption rule should not apply to the stock purchase because the Corporate Partner's share in appreciated property has not been reduced, and thus no exchange has occurred. The Treasury Department and the IRS acknowledge that such stock acquisitions would not contravene the purposes of these regulations. Accordingly, these regulations adopt this comment and do not apply to stock purchases or other transactions that do not have the effect of an exchange of appreciated property for Stock of the Corporate Partner.
If a transaction is a Section 337(d) Transaction, the deemed redemption rule requires the Corporate Partner to recognize a percentage of its total gain in partnership appreciated property equal to a fraction, the numerator of which is the Corporate Partner's interest (by value) in appreciated property effectively exchanged for Stock of the Corporate Partner under the deemed redemption rule, and the denominator of which is the Corporate Partner's interest (by value) in appreciated property immediately before the Section 337(d) Transaction. This fraction is defined in these regulations as the “Gain Percentage.” The Corporate Partner's gain under the deemed redemption rule equals the product of (i) the Corporate Partner's Gain Percentage and (ii) the gain from the appreciated property that is the subject of the exchange that the that the Corporate Partner would recognize if, immediately before the Section 337(d) Transaction, all assets of the partnership and any assets contributed to the partnership in the section 337(d) Transaction were sold in a fully taxable transaction for cash in an amount equal to the fair market value of such property (taking into account section 7701(g)), reduced, but not below zero, by any gain the Corporate Partner is required to recognize with respect to the appreciated property in the Section 337(d) Transaction under any other section of the Code. For example, if a Corporate Partner would be allocated $100x of tax gain on a sale of appreciated partnership property (other than Stock of the Corporate Partner) and the Corporate Partner's interest in that appreciated partnership property (determined under all facts and circumstances) is $500x, and if the partnership engages in a Section 337(d) Transaction that reduces the Corporate Partner's interest in appreciated partnership property by $200x and increases the Corporate Partner's interest in Stock of the Corporate Partner by $200x, then the Corporate Partner's Gain Percentage equals 40% (200x/500x), and the Corporate Partner's gain under the deemed redemption rule is $40x (40% of $100x).
The gain from the hypothetical sale used to compute gain under the deemed redemption rule is determined by applying the principles of section 704(c), which generally requires the partnership to take into account variations between the adjusted tax basis and fair market value of partnership property at the time it is contributed to the partnership and upon certain other events that allow or require the value of partnership property to be redetermined under § 1.704–1(b)(2)(iv)(
These regulations also contain two rules related to the effect of the deemed redemption rule on partner and partnership basis. First, these regulations require the Corporate Partner to increase its basis in its partnership interest by an amount equal to the gain that the Corporate Partner recognizes in a Section 337(d) Transaction. This basis increase is necessary to prevent the Corporate Partner from recognizing gain a second time when the partnership liquidates (or, if property is distributed to the Corporate Partner, when that property is sold).
Second, the regulations require the partnership to increase its adjusted tax basis in the appreciated property that is treated as the subject of a Section 337(d) Transaction by the amount of gain that the Corporate Partner recognized with respect to that property as a result of the Section 337(d) Transaction. This basis
One commenter suggested that when a partnership owns or acquires stock in a Corporate Partner's subsidiary or a sister of the Corporate Partner and the stock is not issued as part of the transaction, the deemed redemption rule should not apply unless and until a subsequent transaction relating to the stock creates tax consequences that are inconsistent with
Another commenter suggested that the deemed redemption rule is no longer necessary. The commenter explained that the acquisition of Stock of the Corporate Partner is not the appropriate time to impose tax and that the 1992 distribution rule and changes in the law since 1989 make it more difficult to exit a partnership tax-free. The Treasury Department and the IRS do not adopt this comment because a Section 337(d) Transaction may create an immediate benefit to the Corporate Partner equivalent to the benefit associated with the redemption of corporate stock in exchange for appreciated property. If the deemed redemption rule does not apply at the time of this exchange, the Corporate Partner can defer paying tax on this economic benefit in a manner that is inconsistent with section 311(b).
The 1992 distribution rule required a Corporate Partner to recognize gain when the partnership distributes Stock of the Corporate Partner to the Corporate Partner. Commenters noted a number of concerns with this rule and recommended eliminating it.
Several commenters noted that the rule was overly broad because it could cause the Corporate Partner to recognize gain in an amount that exceeded the appreciation in property effectively exchanged for the stock. For example, the rule could require a Corporate Partner to recognize gain upon a partnership's distribution of appreciated Stock of the Corporate Partner even though the partnership held no other appreciated property. One commenter stated that the 1992 distribution rule would therefore require the Corporate Partner to recognize gain on appreciation inherent in its partnership interest, even though the distribution does not implicate the repeal of the
The Treasury Department and the IRS agree with these comments and adopt new rules governing the tax consequences of a distribution of Stock of the Corporate Partner to that Corporate Partner. Instead of adopting the 1992 distribution rule, these regulations extend the deemed redemption rule to certain distributions to the Corporate Partner of Stock of the Corporate Partner. These new rules governing distributions apply only if the distributed stock has previously been the subject of a Section 337(d) Transaction or becomes the subject of a Section 337(d) Transaction as a result of the distribution (a section 337(d) distribution). Additionally, these regulations do not apply to a distribution to the Corporate Partner of the Stock of the Corporate Partner to which section 732(f) applies at the time of the distribution. If the deemed redemption rule applies to a distribution, these regulations deem the partnership to amend its agreement immediately before the distribution to allocate 100 percent of the distributed stock to the Corporate Partner and to allocate an appropriately reduced interest in other partnership property away from the Corporate Partner. This deemed allocation is solely for purposes of recognizing gain under these regulations, and no inference is intended with regard to the treatment of such allocations generally.
If a distribution is a section 337(d) distribution, then in addition to any gain recognized under the deemed redemption rule upon the distribution of Stock of the Corporate Partner to the Corporate Partner, these regulations also require the Corporate Partner to recognize gain to the extent that the partnership's basis in the distributed Stock of the Corporate Partner exceeds the Corporate Partner's basis in its partnership interest (as reduced by any cash distributed in the transaction) immediately before the distribution. Recognition of gain in this circumstance is necessary to prevent the Corporate Partner from shifting basis away from its own stock onto other property of the partnership. The regulations provide an exception to this additional gain recognition rule if the gain recognition or basis reduction rules of section 732(f) apply at the time of the distribution. Although this exception generally ensures that gain recognized as a result of these regulations will not be duplicated as a result of section 732(f), duplication may still result in certain circumstances. For example, if a Corporate Partner recognizes gain under section 337(d) on a partnership distribution and section 732(f) does not apply to the distribution because the section 732(f) control requirement is not satisfied at the time of the distribution, but the control requirement is subsequently satisfied triggering section 732(f), then the Corporate Partner could recognize gain under both provisions. The Treasury Department and the IRS invite comments on how the rules in these regulations should be coordinated with section 732(f).
These regulations set forth two rules under sections 337 and 732 to coordinate the effects of the rule requiring gain recognition when the Stock of the Corporate Partner is stepped down on a section 337(d) distribution with existing rules for determining the basis of property upon partnership distributions. The first rule applies for purposes of determining the basis of property distributed to the Corporate Partner (other than the basis of the Corporate Partner in its own stock), the basis of the Corporate Partner's remaining partnership interest, and the partnership's basis in undistributed Stock of the Corporate Partner, and for purposes of computing gain on the distribution. For these purposes, the basis of Stock of the Corporate Partner distributed to the Corporate Partner equals the greater of: (i) The partnership's basis of that distributed Stock of the Corporate Partner immediately before the distribution, or (ii) the fair market value of that distributed Stock of the
A second rule applies when a Corporate Partner receives both Stock of the Corporate Partner and other property in a section 337(d) distribution. Under this rule, the basis to be allocated to the properties distributed under section 732(a) or (b) is allocated first to the Stock of the Corporate Partner before taking into account the distribution of any other property (other than cash). Therefore, before taking into account the distribution of other property, the Corporate Partner will reduce its basis in its partnership interest by the Corporate Partner's basis in the distributed Stock of the Corporate Partner (but not below zero). The Corporate Partner will determine its basis in other distributed partnership property and in its remaining partnership interest after giving effect to this reduction. This rule, which governs the application of sections 732(a) and 732(b), is being promulgated pursuant to the specific statutory grant of authority in section 337(d)(1) to ensure that the purposes of the repeal of the
When a Corporate Partner receives a partnership distribution of its own stock, it is unclear under existing law whether the Corporate Partner has basis in that stock. (
These regulations retain the de minimis and inadvertence exceptions from the 1992 proposed regulations, but make small modifications to the de minimis rule to reduce burden. As set forth in these regulations, the de minimis rule provides that these regulations do not apply to a Corporate Partner if three conditions are satisfied. These conditions are tested upon the occurrence of a Section 337(d) Transaction and upon any subsequent revaluation event described in § 1.704–1(b)(2)(iv)(
The first condition requires that both the Corporate Partner and any persons related to the Corporate Partner under section 267(b) or section 707(b) own, in the aggregate, less than five percent of the partnership. The second condition requires that the partnership hold Stock of the Corporate Partner worth less than two percent of the value of the partnership's gross assets, including Stock of the Corporate Partner. The third condition requires that the partnership has never, at any point in time, held more than $1,000,000 in Stock of the Corporate Partner or more than two percent of any particular class of Stock of the Corporate Partner. The 1992 proposed regulations contained similar conditions, but capped the permissible value of the partnership's Stock of the Corporate Partner at $250,000.
These regulations provide a special rule that applies if the conditions of the de minimis rule are satisfied at the time of a Section 337(d) Transaction, but are not satisfied at the time of a subsequent Section 337(d) Transaction or revaluation event described in § 1.704–1(b)(2)(iv)(
These regulations also contain an inadvertence exception. The inadvertence exception provides that these regulations do not apply to Section 337(d) Transactions in which the partnership satisfies two requirements. First, the partnership must dispose of, by sale or distribution, the Stock of the Corporate Partner before the due date (including extensions) of its federal income tax return for the taxable year in which the partnership acquired the stock (or in which the Corporate Partner joined the partnership, if applicable). Second, the partnership must not have distributed the Stock of the Corporate Partner to the Corporate Partner or a person possessing section 304(c) control of the Corporate Partner. Other than broadening and narrowing the scope of related distributees as a result of the modified definition of Stock of the Corporate Partner, this inadvertence exception is generally unchanged from the 1992 proposed regulations. However, the Treasury Department and the IRS will consider comments with respect to removing the prohibition against distributions of Stock of the Corporate Partner to the Corporate Partner in light of the enactment of section 737, which requires a partner to recognize gain on property with built-in gain contributed to a partnership when the partnership distributes other property to the partner within seven years of the contribution.
The Treasury Department and the IRS are concerned that taxpayers could use tiered partnerships to circumvent these regulations. Therefore, these regulations require taxpayers to apply these regulations to tiered partnerships in a
These regulations apply to transactions occurring on or after June 12, 2015.
It has been determined that this Treasury Decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), refer to the Special Analyses section of the preamble to the cross-referenced notice of proposed rulemaking published in the Proposed Rules section in this issue of the
The principal authors of these regulations are Joseph R. Worst and Kevin I. Babitz, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 7805 * * *
Section 1.337(d)–3T also issued under 26 U.S.C. 337(d). * * *
(a)
(b)
(c)
(1)
(2)
(ii)
(3)
(i) A Corporate Partner contributes appreciated property to a partnership that owns Stock of the Corporate Partner;
(ii) A partnership acquires Stock of the Corporate Partner;
(iii) A partnership that owns Stock of the Corporate Partner distributes appreciated property to a partner other than a Corporate Partner;
(iv) A partnership distributes Stock of the Corporate Partner to the Corporate Partner; or
(v) A partnership agreement is amended in a manner that increases a Corporate Partner's interest in Stock of the Corporate Partner (including in connection with a contribution to, or distribution from, a partnership).
(4)
(d)
(2)
(3)
(4)
(ii)
(e)
(2)
(ii)
(A) The partnership's basis of that distributed Stock of the Corporate Partner immediately before the distribution, or
(B) The fair market value of that distributed Stock of the Corporate Partner immediately before the distribution less the Corporate Partner's allocable share of gain from all of the Stock of the Corporate Partner if the partnership sold all of its assets in a fully taxable transaction for cash in an amount equal to the fair market value of such property (taking into account section 7701(g)) immediately before the distribution.
(3)
(f)
(A) The Corporate Partner and any persons related to the Corporate Partner under section 267(b) or section 707(b) own in the aggregate less than five percent of the partnership;
(B) The partnership holds Stock of the Corporate Partner with a value of less than two percent of the partnership's gross assets (including the Stock of the Corporate Partner); and
(C) The partnership has never, at any point in time, held in the aggregate—
(
(
(ii)
(2)
(i) Is disposed of (by sale or distribution) by the partnership before the due date (including extensions) of its federal income tax return for the taxable year during which the Stock of the Corporate Partner is acquired (or for the taxable year in which the Corporate Partner becomes a partner, whichever is applicable); and
(ii) Is not distributed to the Corporate Partner or a corporation possessing section 304(c) control of the Corporate Partner.
(g)
(h)
(ii) Because A and X are equal partners in AX in all respects, the partnership formation causes X's interest in X stock to increase from $0 to $50 and its interest in Asset 1 to decrease from $100 to $50. Thus, the partnership formation is a Section 337(d) Transaction because the formation has the effect of an exchange by X of $50 of Asset 1 for $50 of X stock.
(iii) X must recognize gain under paragraph (d) of this section with respect to Asset 1 to prevent the circumvention of section 311(b) principles. X's gain equals the product of X's Gain Percentage and the gain from Asset 1 that X would recognize (decreased, but not below zero, by any gain that X recognized with respect to Asset 1 in the Section 337(d) Transaction under any other provision of this chapter) if, immediately before the Section 337(d) Transaction, all assets were sold in a fully taxable transaction for cash in an amount equal to the fair market value of such property. If Asset 1 had been sold in a fully taxable transaction immediately before the formation of partnership AX, X's allocable share of gain would have been $80. X's Gain Percentage is 50% (equal to a fraction, the numerator of which is X's $50 interest in Asset 1 effectively exchanged for X stock, and the denominator of which is X's $100 interest in Asset 1 immediately before the Section 337(d) Transaction). Thus, X recognizes $40 of gain ($80 multiplied by 50%) under the deemed redemption rule in paragraph (d) of this section. Under paragraph (d)(4)(i) of this section, X's basis in its AX partnership interest increases from $20 to $60. Under paragraph (d)(4)(ii) of this section, AX's basis in Asset 1 increases from $20 to $60 because Asset 1 is the appreciated property treated as the subject of the exchange.
(ii) When AX liquidates, X's interests in its stock and in Asset 1 do not change. Thus, the liquidation is not a Section 337(d) Transaction because it does not have the effect of an exchange by X of appreciated property for Stock of the Corporate Partner.
(iii) Paragraph (e) of this section applies because the distributed X stock was the subject of a previous Section 337(d) Transaction and because section 732(f) does not apply. Under § 1.732–1T(c)(1)(iii), the distribution to X of X stock is deemed to immediately precede the distribution of 50% of Asset 1 to X for purposes of determining X's basis in the distributed property. For purposes of determining X's basis in Asset 1 and X's gain on distribution, the basis of the distributed X stock is treated as $50, the greater of $50 (50% of the stock's $100 basis in the hands of the partnership), or $50, the fair market value of that distributed X stock ($100) less X's allocable share of gain from the distributed X stock if AX had sold all of its assets in a fully taxable transaction for cash in an amount equal to the fair market value of such property immediately before the distribution ($50). Thus, X reduces its basis in its partnership interest by $50 prior to the distribution of Asset 1. Accordingly, X's basis in the distributed portion of Asset 1 is $10. Because AX's basis in the distributed X stock immediately before the distribution ($50) does not exceed X's basis in its AX partnership interest immediately before the distribution ($60), X recognizes no gain under paragraph (e)(3) of this section.
(ii) The liquidation of AX causes X's interest in X stock to increase from $100 to $150 and its interest in Asset 1 to decrease from $100 to $50. Thus, AX's liquidating distributions of X stock and Asset 1 to X are a Section 337(d) Transaction because the distributions have the effect of an exchange by X of $50 of Asset 1 for $50 of X stock.
(iii) X must recognize gain with respect to Asset 1 to prevent the circumvention of section 311(b) principles. Under paragraph (e)(1) of this section, paragraph (d) of this section is applied as if X and A amended the AX partnership agreement to allocate to X a 100% interest in the distributed portion of the X stock. X must recognize gain equal to the product of X's Gain Percentage and the gain from Asset 1 that X would have recognized (decreased, but not below zero, by any gain X recognized with respect to Asset 1 in the Section 337(d) Transaction under any other provision of this chapter) if, immediately before the Section 337(d) Transaction, AX had sold all of its assets in a fully taxable transaction for cash in an amount equal to the fair market value of such property.
(iv) If Asset 1 had been sold in a fully taxable transaction immediately before the amendment of the AX partnership agreement, X's allocable share of gain would have been $90, or the sum of X's $40 remaining gain under section 704(c) and $50 of the $100 post-contribution appreciation. X's Gain Percentage is 50% (equal to a fraction, the numerator of which is X's $50 interest in Asset 1 effectively exchanged for X stock, and the denominator of which is X's $100 interest in Asset 1 immediately before the Section 337(d) Transaction). Thus, X recognizes $45 of gain ($90 multiplied by 50%) under the deemed redemption rule in paragraph (d) of this section. Under paragraph (d)(4)(i) of this section, X's basis in its AX partnership interest increases from $60 to $105. Under paragraph (d)(4)(ii) of this section, AX's basis in Asset 1 increases from $60 to $105 because Asset 1 is the appreciated property treated as the subject of the exchange.
(v) Paragraph (e) of this section applies because the distributed X stock was the subject of a previous Section 337(d) Transaction and because section 732(f) does not apply. Under § 1.732–1T(c)(1)(iii), AX is treated as first distributing the X stock to X before the distribution of 25% of Asset 1. For purposes of determining X's basis in Asset 1 and X's gain on distribution, the basis of the distributed X stock is treated as $100, the greater of $75 (75% of the stock's $100 basis in the hands of the partnership) or $100, the fair market value of the distributed X stock ($150) less X's allocable share of gain if the partnership had sold all of the X stock immediately before the distribution for cash in an amount equal to its fair market value ($50). Thus, X will reduce its basis in its partnership interest by $100 prior to the distribution of Asset 1. Accordingly, X's basis in the distributed portion of Asset 1 is $5. Because AX's basis in the distributed X stock immediately before the distribution as computed for purposes of this section ($100) does not exceed X's basis in its AX partnership interest immediately before the distribution ($105), X recognizes no additional gain under paragraph (e)(3) of this section.
(ii) The amendment to the AX partnership agreement causes X's interest in its stock to increase from $100 (50% of the stock value immediately before the amendment of the agreement) to $160 (80% of stock value immediately following amendment of agreement) and its interest in Asset 1 to decrease from $100 to $40. Thus, the amendment of the partnership agreement is a Section 337(d) Transaction because the amendment has the effect of an exchange by X of $60 of Asset 1 for $60 of its stock.
(iii) X must recognize gain equal to the product of X's Gain Percentage and the gain from Asset 1 that X would have recognized (decreased, but not below zero, by any gain X recognized with respect to Asset 1 in the Section 337(d) Transaction under any other provision of this chapter) if, immediately before the Section 337(d) Transaction, AX had sold all of its assets in a fully taxable transaction for cash in an amount equal to the fair market value of such property. If Asset 1 had been sold in a fully taxable transaction immediately before the amendment of the AX partnership agreement, X's allocable share of gain would have been $90, or the sum of X's $40 remaining gain under section 704(c) and 50% of the $100 post-contribution appreciation. X's Gain Percentage is 60% (equal to a fraction, the numerator of which is X's $60 interest in Asset 1 effectively exchanged for X stock, and the denominator of which is X's $100 interest in Asset 1 immediately before the Section 337(d) Transaction). Thus, X recognizes $54 of gain ($90 multiplied by 60%) under the deemed redemption rule in paragraph (d) of this section. Under paragraph (d)(4)(i) of this section, X's basis in its AX partnership interest increases from $60 to $114. Under paragraph (d)(4)(ii) of this section, AX's basis in Asset 1 increases from $60 to $114 because Asset 1 is the appreciated property treated as the subject of the exchange.
(ii) In Year 9, when the values of Asset 1 and the X stock have not changed, the partnership distributes $50 of cash and 50% of Asset 1 (valued at $50) to B in liquidation of B's interest. X and A are equal partners in all respects after the distribution. Upon the liquidation of B's interest, X's interest in Asset 1 decreases from $33.33 to $25, and its interest in X stock increases from $33.33 to $50. AX's liquidation of B's interest has the effect of an exchange by X of appreciated property for X stock, and thus, is a Section 337(d) Transaction.
(iii) Pursuant to paragraph (d)(2) of this section, X's interest in X stock and other appreciated property held by the partnership is determined based on all facts and circumstances, including allocation and distribution rights in the partnership agreement. However, paragraph (d)(2) of this section also requires that X's interest in its stock for purposes of paragraph (d) will never be less than the Corporate Partner's largest interest (by value) in those shares of Stock of the Corporate Partner taken into account when the partnership previously determined whether there had been a Section 337(d) Transaction (regardless of whether the Corporate Partner recognized gain in the earlier transaction). Although X's interest in X stock increases to $50 upon AX's liquidation of B's interest, X's largest interest previously taken into account under paragraph (d)(1) of this section was $50. Thus, X's interest in its stock is not considered to be increased, and X therefore recognizes no gain under paragraph (d) of this section, provided that the transactions did not occur as part of a plan or arrangement to circumvent the purpose of this section.
(ii) Pursuant to paragraph (d)(2) of this section, X's interest in X stock and other appreciated property held by the partnership is determined based on all facts and circumstances, including allocation and distribution rights in the partnership agreement. Generally pursuant to paragraph (d)(2) of this section, X's interest in X stock for purposes of paragraph (d) will never be less than the Corporate Partner's largest interest (by value) in those shares of Stock of the Corporate Partner taken into account when the partnership previously determined whether there had been a Section 337(d) Transaction (regardless of whether the Corporate Partner recognized gain in the earlier transaction). This limitation does not apply, however, if the reduction in X's interest in X's stock occurred as part of a plan or arrangement to circumvent the purpose of this section. Because the transactions described in this example are part of a plan or arrangement to circumvent the purpose of this section, the limitation in paragraph (d)(2) of this section does not apply. Accordingly, the deemed redemption rule under paragraph (d) of this section applies to the transactions with the consequences described in Example 1(iii) of this section, resulting in X recognizing $40 of gain.
(ii) Pursuant to paragraph (g) of this section, the rules of this section shall apply to tiered partnerships in a manner that is consistent with the purpose set forth in paragraph (a) of this section. Pursuant to paragraph (d)(1) of this section, if X is in a partnership that engages in a Section 337(d) Transaction, X must recognize gain at the time, and to the extent, that X's share of appreciated property is reduced in exchange for X stock. The formation of LTP causes X's interest in X stock to increase from $0 to $40 and its interest in Asset 1 to decrease from $64 to $32. Thus, LTP's formation is a Section 337(d) Transaction because the formation has the effect of an exchange by X of $32 of Asset 1 for $32 of X stock.
(iii) X must recognize gain with respect to Asset 1 to prevent the circumvention of section 311(b) principles. X must recognize gain equal to the product of X's Gain Percentage and the gain from Asset 1 (decreased, but not below zero, by any gain X recognized with respect to Asset 1 in the Section 337(d) Transaction under any other provision of this chapter) that X would recognize if, immediately before the Section 337(d) Transaction, all assets were sold in a fully taxable transaction for cash in an amount equal to the fair market value of such property. If Asset 1 had been sold in a fully taxable transaction immediately before LTP's formation, X's allocable share of gain would have been $80 pursuant to section 704(c). X's Gain Percentage is 50% (equal to a fraction, the numerator of which is X's $32 interest in Asset 1 effectively exchanged for X stock, and the denominator of which is X's $64 interest in Asset 1 immediately before the Section 337(d) Transaction). Thus, X recognizes $40 of gain ($80 multiplied by 50%) under the deemed redemption rule in paragraph (d) of this section. Under paragraphs (d)(4)(i) and (d)(4)(ii) of this section, X's basis in its UTP partnership interest increases from $0 to $40, UTP's basis in its LTP partnership interest increases from $20 to $60, and LTP's basis in Asset 1 increases from $0 to $40 pursuant to paragraph (g) of this section.
(i)
(j)
(c) * * * (1) [Reserved]. For further guidance, see § 1.732–1T(c)(1).
(5)
(ii) [Reserved]. For further guidance, see § 1.732–1T(c)(5)(ii).
(a) and (b) [Reserved]. For further guidance, see § 1.732–1(a) and (b).
(c)
(ii)
(iii)
(2) through (5)(i) [Reserved]. For further guidance, see § 1.732–1(c)(2) through (c)(5)(i).
(ii)
(d) and (e) [Reserved]. For further guidance, see § 1.732–1(d) and (e).
(f)
Coast Guard, DHS.
Notice of enforcement of regulation.
At various times throughout the month of July, the Coast Guard will enforce certain safety zones that are codified in regulation. This action is necessary and intended for the safety of life and property on navigable waters during this event. During each enforcement period, no person or vessel may enter the respective safety zone without the permission of the Captain of the Port Buffalo.
The regulations in 33 CFR 165.939(a)(13) will be enforced on July 3, 2015 from 9 p.m. to 10:30 p.m.
If you have questions on this notice, call or email Waterways Management Division, Coast Guard Sector Buffalo, 1 Fuhrmann Blvd. Buffalo, NY 14203; Coast Guard telephone 716–843–9343, email
The Coast Guard will enforce the Safety Zones; Annual Events in the Captain of the Port Buffalo Zone listed in 33 CFR 165.939 for the following events:
Pursuant to 33 CFR 165.23, entry into, transiting, or anchoring within these safety zones during an enforcement period is prohibited unless authorized by the Captain of the Port Buffalo or his designated representative. Those seeking permission to enter one of these safety zones may request permission from the Captain of Port Buffalo via channel 16, VHF–FM. Vessels and persons granted permission to enter one of these safety zones shall obey the directions of the Captain of the Port Buffalo or his designated representative. While within a safety zone, all vessels shall operate at the minimum speed necessary to maintain a safe course.
This notice is issued under authority of 33 CFR 165.939 and 5 U.S.C. 552(a). In addition to this notice in the
Coast Guard, DHS.
Notice of enforcement of regulation.
The Coast Guard will enforce the safety zone in Milwaukee Harbor, Milwaukee, WI for annual fireworks displays in the Captain of the Port Lake Michigan zone at specified times from June 6, 2015 until September 12, 2015. This action is necessary and intended to ensure safety of life on the navigable waters immediately prior to, during, and
The regulations in 33 CFR 165.935 will be enforced at specified times from June 6, 2015 until September 12, 2015.
If you have questions on this document, call or email MST1 Joseph McCollum, Prevention Department, Coast Guard Sector Lake Michigan, Milwaukee, WI at (414) 747–7148, email
The Coast Guard will enforce the safety zone listed in 33 CFR 165.935, Safety Zone, Milwaukee Harbor, Milwaukee, WI, at the following times for the following events:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
This safety zone will encompass the waters of Lake Michigan within Milwaukee Harbor including the Harbor Island Lagoon enclosed by a line connecting the following points: beginning at 43°02′00″ N., 087°53′53″ W.; then south to 43°01′44″ N., 087°53′53″ W.; then east to 43°01′44″ N., 087°53′25″ W.; then north to 43°02′00″ N., 087°53′25″ W.; then west to the point of origin. All vessels must obtain permission from the Captain of the Port Lake Michigan or her on-scene representative to enter, move within, or exit the safety zone. Vessels and persons granted permission to enter the safety zone must obey all lawful orders or directions of the Captain of the Port Lake Michigan or her on-scene representative.
This document is issued under authority of 33 CFR 165.935 Safety Zone, Milwaukee Harbor, Milwaukee, WI and 5 U.S.C. 552(a). In addition to this publication in the
In Title 40 of the Code of Federal Regulations, Part 52 (§§ 52.01 to 52.1018), revised as of July 1, 2014, on page 49, in § 52.21, paragraph (aa)(10)(v) is reinstated to read as follows:
(aa) * * *
(10) * * *
(v) If the compliance date for a State or Federal requirement that applies to the PAL source occurs during the PAL effective period, and if the Administrator has not already adjusted for such requirement, the PAL shall be adjusted at the time of PAL permit renewal or title V permit renewal, whichever occurs first.
Environmental Protection Agency.
Direct final rule.
The Environmental Protection Agency (EPA) is taking direct final action to approve the portions of the state implementation plan (SIP) revisions submitted by the State of South Carolina, through South Carolina Department of Health and Environmental Control (SC DHEC) on August 8, 2014, and August 22, 2014, that address the base year emissions inventory and emissions statements requirements for the State's portion of the bi-state Charlotte-Gastonia-Rock Hill North Carolina-South Carolina 2008 8-hour ozone national ambient air quality standards (NAAQS) nonattainment area (hereinafter referred to as the “bi-state Charlotte Area” or “Area”). Annual emissions reporting (
This direct final rule is effective August 11, 2015 without further notice, unless EPA receives adverse comment by July 13, 2015. If EPA receives such comments, it will publish a timely withdrawal of the direct final rule in the
Submit your comments, identified by Docket ID No. EPA–R04–OAR–2014–0915, by one of the following methods:
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Tiereny Bell, Air Regulatory Management Section, Air Planning and Implementation Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. Ms. Bell can be reached at (404) 562–9088 and via electronic mail at
On March 12, 2008, EPA promulgated a revised 8-hour ozone NAAQS of 0.075 parts per million (ppm).
Upon promulgation of a new or revised NAAQS, the Clean Air Act (CAA or Act) requires EPA to designate as nonattainment any area that is violating the NAAQS based on the three most recent years of ambient air quality data at the conclusion of the designation process. The bi-state Charlotte Area was designated nonattainment for the 2008 8-hour ozone NAAQS on April 30, 2012 (effective July 20, 2012) using 2009–2011 ambient air quality data.
Based on the nonattainment designation, South Carolina was required to develop a SIP revision addressing certain CAA requirements for the Area. Specifically, pursuant to CAA section 182(a)(3)(B) and section 182(a)(1), South Carolina was required to submit a SIP revision addressing the emissions statements and emissions inventory requirements, respectively.
Ground level ozone is not emitted directly into the air, but is created by chemical reactions between oxides of nitrogen (NO
On August 8, 2014, South Carolina submitted a SIP revision that, among
As discussed above, section 182(a)(1) of the CAA requires states to submit a comprehensive, accurate, and current inventory of actual emissions from all sources of the relevant pollutant or pollutants in each ozone non-attainment area. The section 182(a)(1) base year inventory is defined in the SIP Requirements Rule as “a comprehensive, accurate, current inventory of actual emissions from sources of VOC and NO
South Carolina selected 2011 as the base year for the emissions inventory which is the year corresponding with the first triennial inventory under 40 CFR part 51, subpart A. This base year is one of the three years of ambient data used to designate the Area as a nonattainment area and therefore represents emissions associated with nonattainment conditions. The emissions inventory is based on data developed and submitted by SC DHEC to EPA's 2011 National Emissions Inventory (NEI), and it contains data elements consistent with the detail required by 40 CFR part 51, subpart A.
South Carolina's emissions inventory for its portion of the Area provides 2011 typical average summer day emissions data for NO
The emissions reported for York County reflect the emissions for only the nonattainment portion of the county. The inventory contains point source emissions data for facilities located within the South Carolina portion of the Area based on Geographic Information Systems (GIS) mapping. For the remaining emissions categories, emissions from the South Carolina portion of the bi-state Charlotte Area were determined based on the population of the portion of York County that is included in the Area. More detail on the emissions inventory for individual sources categories is provided below and in Appendix A of the State's August 22, 2014 submittal.
Point sources are large, stationary, identifiable sources of emissions that release pollutants into the atmosphere. The point source emissions inventory for South Carolina's portion of the bi-state Charlotte Area was developed from facility-specific emissions data. A detailed account of the point sources can be found in Appendix A of the August 22, 2014, submittal, which is located in the docket for today's action. The point source emissions data meets the point source emissions thresholds of 40 CFR part 51, subpart A.
Area sources are small emission stationary sources which, due to their large number, collectively have significant emissions (
On-road mobile sources include vehicles used on roads for transportation of passengers or freight. South Carolina developed its on-road emissions inventory using EPA's Motor Vehicle Emissions Simulator (MOVES) model for each ozone nonattainment county.
Non-road mobile sources include vehicles, engines, and equipment used for construction, agriculture, recreation, and other purposes that do not use roadways (
SC DEHC included 2011 actual emissions from event sources in its emissions inventory. Events sources in 2011 included wildfires and prescribed fires. Wildfires are unplanned, unwanted wild land fires including unauthorized human-caused fires, escaped prescribed fire projects, or other inadvertent fire situations where the objective is to put the fire out. Prescribed fires are any fires ignited by management actions to meet specific objectives related to the reduction of the biomass potentially available for wildfires. South Carolina calculated actual event source emissions using the 2011 NEI version 1 dataset developed by EPA. A detailed account of the event sources can be found in Appendix A of the August 22, 2014 submittal.
For the reasons discussed above, EPA has determined that South Carolina's emissions inventory meets the requirements under CAA section 182(a)(1) and the SIP Requirements Rule for the 2008 8-hour ozone NAAQS.
Pursuant to section 182(a)(3)(B), states with ozone nonattainment areas must require annual emissions statements from NO
On August 8, 2014, South Carolina submitted a SIP revision to amend portions of Regulation No. 61–62.1,
In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with the requirements of 1 CFR 51.5, EPA is incorporating the following changes to Regulation No. 61–62.1, titled “Definitions and General Requirements”: modification of the title of Section III, addition of a second paragraph to Section III.A defining an “emissions statement,” and addition of Section III.C titled “Emissions Statement Requirements” which were state effective on June 27, 2014. EPA has made, and will continue to make, documents generally available electronically through
EPA is approving the portions of the SIP revisions submitted by South Carolina on August 22, 2014 and August 8, 2014, that relate to the base year emissions inventory and emissions statement requirements,
If EPA receives such comments, then EPA will publish a document withdrawing the final rule and informing the public that the rule will not take effect. All adverse comments received will then be addressed in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period. Parties interested in commenting should do so at this time. If no such comments are received, the public is advised that this rule will be effective on August 11, 2015 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, the Agency may adopt as final those provisions of the rule that are not the subject of an adverse comment.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• 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 direct final rule for the South Carolina portion of the bi-state Charlotte area does not have Tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because it does not have substantial direct effects on an Indian Tribe. The Catawba Indian Nation Reservation is located within the South Carolina portion of the bi-state Charlotte Area. Pursuant to the Catawba Indian Claims Settlement Act, S.C. Code Ann. 27–16–120, “all state and local environmental laws and regulations apply to the [Catawba Indian Nation] and Reservation and are fully enforceable by all relevant state and local agencies and authorities.” EPA notes that today's action will not impose substantial direct costs on Tribal governments or preempt Tribal law.
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 11, 2015. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Therefore, 40 CFR part 52 is amended as follows:
42 U.S.C. 7401
The revisions read as follows:
(c) * * *
(e) * * *
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is approving the State Implementation Plan revision (SIP) submitted by the New York State Department of Environmental Conservation. This revision consists of a change to New York's November 15, 1992 Carbon Monoxide Attainment Demonstration that would remove a reference to a limited off-street parking program as it relates to the New York County portion of the New York-Northern New Jersey-Long Island, NY-NJ-CT Carbon Monoxide attainment area. The EPA is approving this SIP revision because it will not interfere with attainment or maintenance of the national ambient air quality standards (NAAQS) in the affected area or with any other applicable requirement of the Clean Air Act (CAA) and is consistent with EPA rules and guidance.
This rule is effective on July 13, 2015.
The EPA has established a docket for this action under Docket ID Number EPA–R02–OAR–2013–0192. All documents in the docket are listed in the
If you have questions concerning this final action, please contact Henry Feingersh, Air Programs Branch, Environmental Protection Agency, 290 Broadway, 25th Floor, New York, New York 10007–1866, telephone number (212) 637–3382, fax number (212) 637–3901, email
The New York State Department of Environmental Conservation submitted a State Implementation Plan (SIP) revision request to remove a reference from the carbon monoxide (CO) SIP to a limited off-street parking program that only applied in the Manhattan Central Business District of New York City (CBD). The program limits the number of parking spaces permitted in newly constructed buildings. The EPA is approving New York's request to remove a reference to this limited off-street parking program in New York County because this SIP revision will not interfere with any applicable requirement concerning attainment and reasonable further progress (RFP) toward attainment and maintenance of any NAAQS or with any other applicable requirement of the CAA. The EPA has reviewed all the public comments and agrees with the State and City of New York that there is no evidence that removal from the SIP will interfere with attainment or maintenance of the NAAQS in the area or with any other CAA applicable requirement. In addition, New York, in its SIP modeling to support the previously EPA-approved demonstrations of attainment of the various NAAQS, did not take credit for any emission reductions that may be attributed to the limited off-street parking program measures. After removal from the federal SIP, the limited off-street parking program, which is implemented by the New York City Department of City Planning and subject to New York City administrative
Our April 12, 2013 proposed approval of the SIP provided for a public comment period that ran from April 12 through May 13, 2013. We received comments from the City of New York Law Department and from Mr. Daniel Gutman, some of which were timely. The City of New York Law Department submitted a letter dated May 13, 2013. Mr. Gutman provided several comments to the EPA: A May 13, 2013 letter, a June 7, 2013 electronic mail message, a June 11, 2013 electronic mail message and a July 26, 2013 letter. All comments, even those from Mr. Gutman that were received after the close of the public comment period, are included in the docket for this action. Although we are not required to respond to Mr. Gutman's late-submitted comments, we are electing to do so in this final action.
In general, the City of New York supports the EPA's proposed rule to approve New York's SIP request to remove a reference to a limited off-street parking program as it relates to the New York County portion of the New York-Northern New Jersey-Long Island, NY-NJ-CT CO attainment area. Mr. Gutman commented that the EPA should deny New York State's request to revise the SIP and not approve removal of the limited off-street parking program reference in the SIP.
A summary of the comments and the EPA's responses are provided below. Comments from the City of New York Law Department are referred to as “the City of New York” and comments from Mr. Daniel Gutman are referred to as “Mr. Gutman.”
Based on the EPA's review of the “1981 Parking Study,” submitted by Mr. Gutman along with his comments, the Study found that the number of parking spaces was not a limiting factor for drivers deciding to drive into the CBD. The 1981 Parking Study found “[p]olicies based on changing auto trip cost and travel time may be ineffective in reducing auto trips since most of the variations in trip decisions are due to factors other than trip time and cost.” (1981 Parking Study p. i). It also found that “the air quality impact of economically based parking management strategies is minimal.” (1981 Parking Study p. i). Furthermore, “during the peak commuter entry hours there is no area of the CBD where lack of available off-street parking serves to limit auto entries.” (1981 Parking Study p. ii). EPA is aware of another study
No evidence was provided that a growth in the number of parking spaces in the CBD of New York City will lead to renewed growth of traffic, lower traffic speeds and/or higher emissions than assumed in New York's ozone and PM
In evaluating removal of the reference to the parking restrictions, the EPA considered New York's SIP revision request to address all criteria air pollutants whose emissions and/or ambient concentrations may change as a result of the SIP revision. Regarding the air quality aspects of motor vehicle emissions and parking restrictions, increased emissions, if any, from additional motor vehicles in an area would be primarily CO compared to other criteria pollutants in the Manhattan CBD. Therefore, of all the criteria pollutants, CO concentrations would be the pollutant most sensitive to factors associated with the impact from changes to the existing limited off-street parking program that limits the number of parking spaces in permitted new construction.
As presented in our April 12, 2013 proposed rule, CO concentrations in the New York Metropolitan Area have not violated the NAAQS or come close to exceeding the NAAQS since 1992 and have trended downward since that year. Currently, measured CO concentrations show values of approximately 20 percent of the NAAQS. Also, as stated in the April 12, 2013, proposed rule, “This dramatic improvement can be attributed to the Federal Motor Vehicle Control Program along with advanced anti-pollution controls on motor vehicles.” 78 FR 21867, 21869.
A comparison of vehicle emission factors between 1990 and 2014 calculated using EPA's mobile source model, MOVES, shows how the rate of mobile emissions have been reduced. In addition, it also shows how the other pollutants of interest, including ozone and PM
Reviewing the data submitted as part of the CO maintenance plan for the New York Metropolitan Area
Based on traffic data from the New York State Department of Transportation, VMT increased from 1985 to 2006 and declined slightly from 2006 to 2011 (see Figure 3), but this has not affected average vehicle speeds in Manhattan or monitored CO concentrations which have decreased over the current period.
When the EPA proposed to approve New York's 2nd CO maintenance plan on March 25, 2014 (79 FR 16265), the EPA only received comments supporting the proposal. A final rulemaking approving the CO maintenance plan was published on May 30, 2014 (79 FR 31045). Based on the CO maintenance plan, vehicle speeds and VMT in the Manhattan CBD have not shown much change, while vehicle emissions have decreased dramatically.
Therefore, no emission reductions were attributed to this program in the SIP. The reader is reminded that the limited off-street parking program is a limited program implemented by New York City Department of City Planning that applies only in the CBD of Manhattan and applies to new building construction. While this program applies to a portion of only one county, the PM
Mr. Gutman's comments place emphasis on the “permanency” of measures in the SIP, suggesting that once a measure is approved into the SIP, it perpetually remains in the SIP. However, this is not the case. Section 110 of the CAA generally and section 110(l) specifically allow for the State to revise its SIP over time to add or remove control measures, subject to the condition that doing so does not result in interference with attainment and maintenance of any NAAQS or with any other CAA applicable requirement.
New York indicated that it has not relied on any emission reductions that may be attributed to the limited off-street parking program measures in any SIP actions.
Further, the limited off-street parking program's goal was to reduce vehicle entries to the CBD and thereby improve vehicle speeds and lower VMT with the idea that this would ultimately reduce CO emissions from automobiles on the road in the late 1970's and early 1980's. Over the years, VMT has increased and vehicle speeds have been little changed and emission control technology on vehicles has been greatly improved and CO concentrations have decreased dramatically to approximately 20 percent of the NAAQS. This suggests that VMT and vehicle speeds have a negligible effect in the Manhattan CBD but emission control efficiency has a large impact on CO emissions in Manhattan. The other pollutants emitted from automobiles, both in 1990 and 2014, are emitted at rates significantly less than CO and, since vehicle speeds and VMT in the Manhattan CBD have a negligible effect, it is expected that there would be no impact on the other automotive related pollutants. The limited off-street parking program was never included in any other NAAQS SIP. In this action the EPA is approving New York's request to remove a reference in the SIP to a limited off-street parking program that the State has not relied on for any associated emissions reductions.
Mr. Gutman claims that the City of New York's proposed changes to the parking restrictions will violate the SIP because the changes are different than the parking restrictions currently contained in the SIP. However, Mr. Gutman failed to provide any specific references to the traffic levels or emission levels assumed in New York's SIPs. The state can always revise its SIP, consistent with the requirements of the CAA. When submitted as a SIP revision, EPA would be under an obligation to review the SIP revision on its merits and assess how it would affect the applicable SIP and attainment and maintenance of the NAAQS.
If new monitoring data demonstrates exceedances of the NAAQS, EPA would work with the State to bring any exceeding areas back into attainment.
The EPA is approving New York's request to remove a reference to a limited off-street parking program in New York County from the SIP because this SIP revision will not interfere with attainment or maintenance of any NAAQS and will not interfere with any other CAA applicable requirements. In addition, New York did not rely on any emission reductions from this program in its SIP modeling to support the demonstration of attainment of the various NAAQS.
The EPA's review of the materials submitted indicates that New York has revised its SIP in accordance with the requirements of the CAA, 40 CFR part 51 and all of the EPA's technical requirements for a SIP revision. Therefore, the EPA is approving the removal of a reference to a limited off-street parking program in New York County from the SIP.
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 CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and the EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Nitrogen dioxide, Ozone, Particulate matter, Volatile organic compounds.
Part 52, chapter I, title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(e) * * *
In Title 40 of the Code of Federal Regulations, Parts 96 to 99, revised as of July 1, 2014, on page 764, in § 98.153, at the end of paragraph (d) introductory text, the parameter E
(d) * * *
Federal Communications Commission.
Final rule.
This document updates the Federal Communications Commission's (the Commission) radiofrequency (RF) equipment authorization program. The rules adopted by the Commission build on the success realized by our use of
Effective July 13, 2015. The incorporation by reference listed in the rule is approved by the Director of the Federal Register as of July 13, 2015.
Brian Butler, Office of Engineering and Technology, 202–418–2702,
This is a summary of the Commission's Report and Order, ET Docket No. 13–44, FCC 14–208, adopted December 17, 2014, and released December 30, 2014. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY–A257), 445 12th Street SW., Washington, DC 20554. The full text may also be downloaded at:
People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to
1. In the
2. Specifically, the Commission proposed to clarify the obligations of TCBs and to strengthen the Commission's oversight of the TCBs. The Commission also proposed to require accreditation for all laboratories performing equipment authorization compliance tests. The Commission also proposed adopting updates to the measurement procedures used to determine RF equipment compliance.
3. In this Report and Order, the Commission updated its radiofrequency (RF) equipment authorization program. Specifically, it:
• Discontinued FCC acceptance of applications for equipment Certification of RF equipment and instead permitted TCBs to process and grant all applications for Certification;
• Codified a pre-grant approval procedure that TCBs must follow when certifying equipment based on new technology that requires consultation with the FCC;
• Clarified a TCB's responsibilities in performing post-market surveillance of products it has approved;
• Specified steps for addressing instances of deficient TCB performance, including appropriate sanctions for deficiencies that do not warrant rescinding a TCB's authority to issue a grant of Certification;
• Modified the rules to reference new standards used to accredit TCBs that approve RF equipment under part 2 of the Commission's rules and terminal equipment under part 68 of the Commission's rules;
• Required accreditation of all laboratories that test equipment subject to any of the certification procedures under part 2 of the Commission's rules and codify a procedure through which the Commission currently recognizes new laboratory accreditation bodies;
• Updated references to industry measurement procedures in the Commission's rules; and
• Provided greater flexibility under the Office of Engineering and Technology's (OET) existing delegated authority to enable it to address minor technical issues that may be raised when updating to the latest versions of industry standards that are referenced in parts 2, 5, 15, and 18 of the Commission's rules.
4. TCBs currently approve more than 98 percent of the RF equipment subject to the Certification process but are not permitted to certify equipment for which Commission rules or requirements do not exist or for which the application of the rules or requirements are unclear. Currently, OET publishes an “exclusion list” of the types of equipment that a TCB is not allowed to certify on the Commission's Knowledge DataBase (KDB) system. To enable TCBs to certify more types of devices, OET has established a “permit-but-ask” procedure that allows a TCB to review applications for Certification of equipment that would otherwise be excluded from TCB approval, provided that OET guidance on the specific test methods and technical requirements is sought prior to filing the application for Certification. Once a TCB has completed a review of equipment covered by the permit-but-ask procedure, it confirms with OET that appropriate measures have been taken prior to issuing a grant of Certification.
5. The Commission maintains a publicly-available database of all RF equipment certified by the Commission and TCBs (the Equipment Authorization System or “EAS”) that contains copies of applications for and grants of Certification. This database also contains information on all entities recognized by the Commission in the equipment authorization process, thus allowing the Commission to monitor the activities of TCBs and the equipment authorization program in general.
6. The Commission adopted the NPRM proposal to allow TCBs to issue all grants of equipment Certification, and to discontinue OET's acceptance and granting of applications for equipment Certification. Furthermore, the Commission eliminated the exclusion list and replaced it with pre-approval guidance procedures as proposed in the
7. As it adopted the proposals to fully shift application processing to TCBs, the Commission noted its experience that TCBs have generally done an excellent job of reviewing and granting applications and following OET staff guidance on technical matters. The Commission noted that the various actions taken in the order would improve its oversight of the TCBs and ensure that products subject to Certification will comply with FCC rules. The Commission concluded that the adopted measures would continue the successful migration of additional responsibilities to TCBs while maintaining our control over the critical elements of the process, thus addressing National Association of Broadcasters' (NAB) underlying concern that devices with a greater potential for causing harmful interference are properly evaluated before being approved. The Commission also noted that, while ARRL, the National Association for Amateur Radio (ARRL) claims that the current TCB approval process has resulted in numerous incorrect grants of Certification, the group mentioned only one particular instance where an incorrect grant was alleged. The Commission did not find ARRLs arguments against the TCB processing proposals persuasive because ARRL had not provided any specific information to support this claim.
8. The Commission adopted the proposals made in the NPRM to codify existing application filing practice into its rules by modifying § 2.911 to specify how applicants will file with TCBs and modifying § 2.962 to specify that TCBs will file certification application information with the Commission electronically through the Commission's EAS. The Commission adopted its proposal to require TCBs to document via the EAS all information relevant to the processing of an application for certification, including pre-approval guidance inquiries and the dismissal of any applications. The Commission amended various sections of part 2 to reflect the TCB role in the Certification process.
9. The Commission decided to stop accepting applications for it to issue the grant of Certification as of the effective date of the Report and Order. The Commission modified § 1.1103 of the rules to remove the equipment authorization services sections related to Certification, and stated that no fee will be charged by the Commission when a TCB issues a grant of Certification. The Commission determined that it would review any applications that it received prior to the effective date under current procedures.
10. The Commission stated that Grants of certification are legal documents created by the TCB under the authority of the Commission when submitted to EAS, and must not be modified (by, for example, adding a letterhead or additional information) in any way.
11. The Commission agreed with the Hewlett Packard Company (HP) that a TCB may combine the different statements required of applicants—such as the verification of truthfulness and compliance with the Anti-Drug Abuse Act of 1988—into a single document with a single signature set, so long as the applicant makes all necessary certifications. The Commission declined HP's request to require TCB's to accept materials submitted by an applicant in electronic form rather than paper. While the Commission acknowledged that it expected that TCBs would accommodate electronic submissions to promote efficiency and reduce costs, it decided not to not mandate such a requirement because the existence of numerous TCB choices will give applicants the option to select a TCB on a variety of factors, including the convenience or efficiency of their provision of service.
12. The Commission did not adopt Bay Area Compliance Laboratories, Corp.'s (BACL) suggestion that it mandate the use of secure electronic signatures or require a time and date stamp on all documents submitted with the filing. The Commission was not convinced that the use of such requirements would fully resolve the issues of document authenticity, and stated that it expected TCBs to establish appropriate procedures to determine the veracity of documents.
13. The Commission determined, in response to comments of Northwest EMC, Inc., that a TCB confirmation of the authenticity of the test reports that submitted with an application for certification and is necessary. The Commission cited the existing TCB requirement to review submitted tests in a manner that allows it to be “confident that the product meets the relevant requirements before it certifies the product.” and noted that its adoption of an accreditation requirement for all compliance testing laboratories would ensure that the data reviewed by TCBs was based on testing that was performed by a competent organization.
14. The Commission found that Cisco and HP had not provided evidence to support their concern that TCBs could potentially establish higher fees to expedite the processing of applications. The Commission found it was not necessary to codify TCB fee requirements, noting the 36 TCBs recognized by the Commission to provide equipment authorization services and observing that clients can choose their TCB based upon factors most relevant to them, including cost.
15. TCBs are required to be accredited, and accreditation is conditioned on their performance of post-market surveillance on products that it has certified. Section 2.962(g) of the Commission's rules provides general guidance regarding the scope of such post-market surveillance and the actions the TCB shall take in the event of a compliance problem. OET has developed specific procedures, detailed in KDB Publication 610077, that TCBs can use for performing post-market surveillance. The current guidance specifies a sample rate of at least 5 percent.
16. The Commission adopted its proposals to codify the guidelines currently appearing in the KDB for conducting post-market surveillance by placing them into § 2.962 of the Commission's rules as mandatory requirements. The new § 2.962 will address the amount of surveillance required, the responsibilities related to testing, the timing and content of periodic reports required to be submitted to the Commission, and other pertinent requirements.
17. The Commission consolidated all part 2 rules referring to the post-market sampling process into § 2.945, which codifies the current procedure whereby TCBs may request samples of equipment that they have certified directly from the grantee of Certification. Further, the Commission adopted the proposed procedure that permits OET to request the grantee of Certification to submit a sample directly to the TCB that issued the grant of Certification, and stated that failure to comply with a TCB request could lead to Commission enforcement action. The Commission required the TCB to immediately notify the grantee and the Commission if it determines that a device fails to comply with the Commission's rules, established that the grantee will be required to take corrective actions, and required the TCB to submit a follow-up report on these actions to the Commission within 30 days. The Commission also required TCBs to submit periodic reports of their post-market surveillance activities and findings to OET.
18. The Commission also addressed specific process-related issues raised on the record. The Commission found little
19. The Commission found that no commenter that filed in support of modifying the 5 percent sample size requirement provided sufficient evidence to justify either increasing or decreasing this number, and that in its monitoring of the market surveillance performed by TCBs, the Commission has found the vast majority of devices to be compliant. Most OET investigations have found that devices become non-compliant for reasons such as changes to the manufacturing process, and OET has been able to work with the grantee to resolve the matter and ensure compliance with our rules. When it has discovered manufacturers that are willfully non-compliant with our equipment authorization procedures, the Commission has not hesitated to take enforcement action.
20. The Commission rejected the TCB Council's suggestion that permissive changes and changes in FCC IDs not be included in the sampling process on the basis that the request did not include any actual filing totals that would quantify how the proposed change would affect the post-market surveillance burden of a given TCB; because it is not apparent that excluding a wide segment of applications would further improve the compliance process, since many products are updated via permissive changes; and because the inappropriate use of a permissive change or an FCC ID change presents the opportunity for the introduction of non-compliant equipment that needs to be monitored by inclusion in the sampling activity.
21. The Commission noted that, while the TCBs will continue to directly request samples from grantees, it intended to add a process to the EAS that allows TCBs to initiate a sample request from the Commission's EAS. This will allow the FCC to oversee the process, follow up directly with non-responsive grantees and improve the responsiveness of grantees.
22. The Commission observed that the requirements placed upon both the TCBs and the grantees should be sufficient to ensure that equipment samples are submitted and processed in a manner that ensures valid post-market surveillance, and that samples provided for testing will be appropriately representative of the marketed device. Thus, the Commission did not adopt suggestions in the record to implement additional compliance measures such as criminal sanctions or consumer refunds.
23. The Commission adopted the requirement that grantees, upon request, must provide a voucher to the Commission or the TCB authorizing the TCB to obtain a sample of the product from the marketplace at no cost to the Commission or TCB. As an alternative to providing a voucher, the grantee can allow the Commission or TCB to select a product randomly from the manufacturing or warehousing location. Furthermore, if special software or specialized mechanisms, methods, or modifications are required to test such unmodified production devices, the manufacturer must make these available (at no cost) along with any necessary instructions to the Commission or TCB upon request. In the case of expensive devices manufactured in limited numbers, the responsible party can negotiate with the TCB or the Commission for alternative means of providing a sample or providing a testing opportunity. The Commission agreed with commenters that such steps would help ensure that devices being post-market tested are representative of the devices being marketed.
24. An entity seeking recognition from the Commission as a TCB entitled by the FCC to issue grants of Certification must first be accredited by a Commission-recognized accreditation body as meeting applicable international standards and any additional Commission requirements. Subsequent to accreditation, the TCB would then apply to a recognized Designating Authority in its country that would designate it to the Commission for recognition. The Designating Authority evaluates the qualifications of prospective TCBs to ensure that they comply with all of the Commission's TCB requirements, and then designates them to the Commission via the EAS. TCBs outside the United States must be accredited and designated by an authority recognized by the Commission under the terms of a Mutual Recognition Agreement. For both foreign and domestic TCBs, once the Commission receives the Designating Authority's designation, the Commission performs a review of the TCB's qualifications and recognizes those that it determines meet the requirements. A recognized TCB will then be included on the Commission's publicly- available recognized TCB list. The NPRM included several proposals to clarify and codify this process.
25. All comments made in this regard supported the Commission's proposals, and the Commission revised §§ 2.960(b) and 68.160(b) of the rules to state with clarity that NIST is the recognized Designating Authority for TCBs within the United States (consistent with existing practice). NIST will continue to have authority to recognize other organizations to accredit TCBs. The Commission adopted the proposals codifying the requirement that an organization designated by NIST as a TCB would have to be recognized by the Commission before it could function as a TCB, and that the Commission could withdraw its recognition of a TCB designated by NIST that does not operate in accordance with the rules. The Commission made the designation and recognition requirements for domestic and foreign TCBs more consistent by modifying § 2.962 to clearly specify the recognition requirements for both foreign and domestic TCBs and address disputes over the recognition of foreign TCBs.
26. Currently, the rules state that the Commission will withdraw recognition of a domestic TCB if the TCB's accreditation or designation is withdrawn, if the Commission determines there is just cause for withdrawing the recognition, or if the TCB no longer wants the recognition. The rules do not specify any action less severe than the withdrawal of the designation or recognition of a TCB if the Commission has concerns about the performance of a TCB. In the
27. The Commission adopted the proposed procedures for addressing TCB performance issues: Initially, OET would send the TCB a notification to correct any apparent deficiencies. While it awaits response, OET may choose to monitor all grants, setting aside any that
28. For a TCB that continues to exhibit performance deficiencies after a Commission request for corrective action, the Commission could refer the case to the Designating Authority and accreditation body for investigation and identification of any necessary corrective actions. For such instances, the Commission will act based on the Designating Authority's and/or the accrediting body's response by, for example, limiting the scope of equipment that a TCB could approve or withdrawing its recognition of the TCB. For a foreign TCB recognized pursuant to the terms of a Mutual Recognition Agreement (MRA), the Commission will take similar actions, under the terms of the pertinent MRA. Any equipment Certifications previously approved by the TCB would remain valid unless specifically set aside or revoked by the Commission.
29. In adopting new procedures to address TCB performance issues, the Commission did not adopt American Association for Laboratory Accreditation's (A2LA) suggestion that the 60-day notice given to a TCB by the Commission when it intends to withdraw recognition be reduced routinely to 30 days, but the Commission did adopt the proposal permitting the reduction of the notice period if circumstances so warrant. The Commission identified other sanctions, including requiring the TCB to follow the pre-approval guidance procedure for all applications for certification before they can be granted, as well as an immediate suspension of recognition, if necessary. The Commission concluded that the procedures set forth are a clear indication of the Commission's willingness to address TCB performance issues, and address AFTRCC's concerns in this regard. The Commission noted that any finding that a TCB is non-compliant will be displayed on the Commission's Web site. Additionally, OET participates in workshops where TCBs are also required to attend in which OET presents changes and updates in the Commission rules; equipment authorization process and procedures; and updates to technical interpretations or guidance issued by the staff. Because these presentations are publicly available at the Commission's Web site, they include Commission guidance related to new or clarified TCB processes and procedures, and much of this guidance is the result of observations that OET derives from TCB audits and other information, the Commission concluded such processes are sufficient to address comments NAB raised regarding the overall transparency of the TCB process.
30. The rules currently require that TCBs that approve either RF equipment under part 2 or terminal equipment under part 68 of the Commission's rules meet the accreditation standards in specific ISO/IEC standards. Subsequent to the adoption of the rules specifying these requirements, several ISO/IEC guides were updated. In the
31. The Certification and DoC processes specify the type of testing facility in which a product shall be tested for compliance with the Commission's technical standards. Devices authorized under the DoC process must be tested at a testing laboratory that OET recognizes as “accredited.” Devices authorized under the Certification process for operation under that operates under part 15 or 18 of the Commission's rules must be tested in a facility that is either accredited or has been recognized by OET as having met the requirements of § 2.948 of the Commission's rules (“Section 2.948-listed”).
32. Laboratory accreditation is a rigorous process involving an extensive review of documentation and onsite visits by representative(s) of the accrediting body, a process repeated at intervals not to exceed two years. A testing laboratory may be recognized by the OET as accredited if it is assessed to the ISO/IEC 17025 standard in accordance with the requirements in § 2.948 of the Commission's rules. The accreditation of a foreign-based testing laboratory is considered acceptable under only one of the following conditions: (1) It is based on the terms of an applicable government-to-government MRA with the United States; or (2) the laboratory is accredited by an organization that has entered into an arrangement between accrediting organizations that is recognized by the Commission. On the other hand, a testing laboratory may be recognized as 2.948-listed of our rules based upon OET review of the information specified by § 2.948(b).
33. The Commission adopted the NPRM proposal to require that all laboratories that test equipment subject to Certification or to DoC under any rule part be accredited to ISO/IEC 17025, thus ending the “2.948-listing” program for unaccredited labs to test equipment to be certified under parts 15 and 18 of the rules. The Commission retained the requirement that accredited testing laboratories must be reassessed at least every two years to ensure continued compliance with the accreditation requirements to provide confidence that equipment testing done in support of Certification applications is conducted in accordance with the applicable standard and to maintain the reliability of and confidence in our certification program in the face of increasingly complex technology and devices. The Commission found little evidence in the record that the accreditation requirement represents a significant impact on small test laboratories and such concerns are greatly outweighed by the costs that can result when equipment causes harmful interference to other radio services or must be pulled from the market due to non-compliance that is the result of improper testing.
34. The Commission further proposed to include laboratories located outside of the United States on the accredited testing laboratory list only if it recognized the laboratories' accreditation under the terms of a Mutual Recognition Agreement (MRA) or other agreement. Because some testing laboratories are located in countries that do not have an MRA with the United States, the Commission proposed to continue to require in
35. The Commission also adopted the requirement that testing laboratories may only sub-contract/outsource testing to laboratories that have been recognized by the Commission as accredited to the appropriate international standard. The Commission rejected comments asking it to adopt a more permissive rule that would also allow an accredited testing laboratory to sub-contract/outsource testing to a competent unaccredited entity. The Commission found it to be inconsistent to disallow submission of test results from an unaccredited submitting laboratory but allow submission of test results from an unaccredited sub-contracting laboratory. The Commission also noted that it had not been provided with any information indicating that sub-contracting with laboratories that are recognized by the Commission as accredited is more burdensome to applicants for certification than using a sub-contracting process that meets the requirements of ISO/IEC 17025, or that such burdens (if any) would be substantial enough to outweigh the benefits associated with ensuring that all work is performed by accredited laboratories. The Commission also found no reason to exempt bench testing from the accreditation requirement, citing the importance of ensuring that such tests are performed properly and observing that because equipment subject to certification is rarely subject only to bench tests, there would be little benefit in providing an exception for labs that perform only such testing.
36. While the “2.948 listing” process was ended, the Commission decided that it would still maintain a list of accredited testing laboratories that are acceptable to the Commission for testing equipment subject to the Certification and DoC procedures, as well as the types of equipment that each laboratory is accredited to test. Additionally, the Commission decided to retain the requirement in § 2.948 that test laboratories compile a description of their measurement facilities and require that they supply this information to a laboratory accreditation body for review as part of its documentation for accreditation or to the Commission upon request.
37. The Commission will cease recognizing new unaccredited 2.948-listed laboratories as of the effective date of the rules adopted in the Report and Order. Laboratories recognized under the 2.948 criteria as of the effective date of this Report and Order will continue to appear on the OET published list for such laboratories and be recognized until their expiration date of recognition or for one year from the effective date, whichever is sooner, to allow them time to become accredited. 2.948-listed laboratories whose recognition expires prior to one year from the effective date of the rules may request that the Commission extend their recognition date until one year from the effective date of the rules set forth in the Report and Order. Any testing that is completed by unaccredited recognized 2.948-listed laboratories during the one-year period beginning on the effective date of the rules adopted in the Report and Order will be accepted only in support of a Certification application submitted within 15 months of the aforementioned effective date.
38. Under § 2.948(d) of the rules, any entity seeking recognition from the Commission as an accreditation body for test laboratories must obtain the approval of OET. The Commission proposed, in the
1. Successful completion of a ISO/IEC 17011 peer review, such as being a signatory to the International Laboratory Accreditation Cooperation (ILAC) Mutual Recognition Arrangement or other equivalent laboratory accreditation agreement;
2. Experience with the accreditation of electromagnetic compatibility (EMC), radio and telecom testing laboratories to ISO/IEC 17025. This can be demonstrated by having OET staff participate in a witness audit of the accreditation body performing an assessment of an EMC/Radio/Telecom testing laboratory; or by having OET staff review the report generated by the NIST laboratory accreditation evaluation program conducted to support the Asia Pacific Economic Cooperation (APEC) Mutual Recognition Arrangement for Conformity tries that do not have an MRA with the United States were almost evenly split, with an Assessment of Telecommunications Equipment. An applicant that offers other evidence has the burden of demonstrating that the information would enable OET to evaluate its experience with the accreditation of EMC, radio and telecom testing laboratories to ISO/IEC 17025.
3. Accreditation personnel/assessors with specific technical experience in the Commission equipment authorization rules and requirements; and
4. Procedures and policies developed by [the testing firm accreditation bodies] for the accreditation of testing laboratories for FCC equipment authorization programs.
39. The Commission adopted the proposal to codify the above criteria for OET's determination of the acceptability of new laboratory accreditation bodies. Under these rules, the applicant will submit information addressing each of the four elements to OET for evaluation. Applicants will be able to choose how they show that they meet each of the elements, and OET was directed to use its existing resources—including the KDB and public notice process—to provide additional guidance, clarification, and updates, as needed.
40. In a slight change from the proposal, the adopted rule will not list specific organizations that operate recognition programs under ISO/IEC 17011 and instead includes a general
41. As to NIST's suggestion that the rule include further specific elaboration on other supporting evidence, the Commission noted that the rule specifies only the key elements that OET will use in evaluating the competence of an accreditation body and it gave OET the flexibility to accept other supporting evidence on a case-by-case basis in order to accommodate evolving industry practices.
42. Under the current rules, a measurement facility that is used for measuring radiated emissions from equipment subject to parts 15 and 18 must meet the site validation requirements in ANSI C63.4–2001. While radiated emission measurements at frequencies above 1 GHz are required for many devices subject to parts 15 and 18 of the rules, ANSI C63.4–2001 does not have specific site validation criteria for test facilities used for making radiated emissions in this frequency range. Rather, it only states that facilities determined to be suitable for performing measurements in the frequency range 30 MHz to 1 GHz are considered suitable for performing measurements in the frequency range 1 GHz to 40 GHz, without specific site validation criteria for the higher frequencies. Subsequent versions of the emission measurement standard, ANSI C63.4–2009 and ANSI C63.4–2014, both provide two options for test site validation for facilities used to make radiated emission measurements above 1 GHz, both of which include additional requirements. To be suitable for measurements in the frequency range 1 GHz to 40 GHz the facility must utilize RF absorbing material covers the ground plane in such a manner that either of the following conditions are met: (1) The site validation criteria specified in the CISPR 16–1–4 (CISPR 16) standard is met; or (2) a minimum area of the ground plane is covered using RF absorbing material.
43. In the
44. In the Order, the Commission required that test facilities that conduct radiated emission measurements above 1 GHz must meet the site validation requirements in ANSI C63.4–2014. The Commission found ANSI C63.4–2014 to be essentially the same as the 2009 version discussed in the NPRM (a specific set of validation criteria for test facilities that was missing in the 2001 version), and, noting that no parties had opposed ANSI C63's recommendation to we use the 2014 standard, determined that use of the 2014 version would avoid any confusion associated with using a version of the standard that is not the most current.
45. On its face, the adoption of the revised ANSI C63.4 standard necessitates compliance with the CISPR 16 standard. The Commission acknowledged the costs of the upgrades to test facilities that would be necessary to meet the site validation requirements in CISPR 16, and decided to allow either alternative for site validation in ANSI C63.4–2014 to be used to determine the suitability of a test facility to be used to make radiated emissions measurements above 1 GHz during a three-year transition period. After this time, test facilities used to make radiated emissions will be required to demonstrate compliance with the site validation criteria specified in CISPR 16. Because not all radiated emission measurement methods for licensed devices require the use of a test facility that meets the site validation requirements in ANSI C63.4–2014, the Commission revised to § 2.948(d) to specify that the site validation requirements only apply for radiated emissions test methods that require the use of a validated test site.
46. The Commission requires that most devices subject to part 15 technical requirements be tested to demonstrate compliance with the measurement procedures in ANSI C63.4 before they can be imported into or marketed within the United States. Specifically, § 15.31(a) of the rules states that the Commission will measure emissions from most intentional and unintentional radiators using the standard published by the American National Standard Institute Accredited Standards Committee C63®—Electromagnetic Compatibility (ANSI–ASC C63), titled ANSI C63.4–2003,
47. The Commission has issued a number of public notices, interpretations and advisories on measurement standards to supplement the test procedures given in the ANSI C63.4 standard listed in the rules (
48. Upon publication of the 2009 standards by ANSI–ASC C63, OET issued a Public Notice announcing that, until it could initiate a rulemaking proceeding to incorporate the new standards into the rules, compliance measurements may be made under either the then-new 2009 standards or the 2003 standard currently in the rules. In the
49. In the
50. Finally, in the NPRM, the Commission recognized that work was underway to provide further updates to the standards, and sought comment on whether there were any significant differences between the 2009 versions of the standards and the latest drafts, and whether any of the changes in these drafts would address our concerns. After release of the
51. ANSI–ASC C63 initially provided comments supporting the adoption of ANSI C63.4–2009 and ANSI C63.10–2009, along with suggestions that address concerns raised by other commenters. In its subsequent
52. ANSI–ASC C63 claimed that ANSI C63.4–2014 improved on various aspects of the C63.4–2009 standard. Specifically, the newest version of the standard addresses: Hybrid antenna qualification procedure; removal of testing procedures for transmitters as they are now covered by ANSI C63.10–2013; application of standard in the United States and Canada; improvements to “2 dB rule”; test setup details for tablet computers; test site validation interval guideline for radiated emissions above 1 GHz; use of RF absorber for radiated emissions above 1 GHz; visual display procedures based on size of screen; and further clarification on radiated emissions above 1 GHz.
53. ANSI–ASC C63 further stated that the ANSI C63.10–2013 standard further improved on various aspects of the C63.10–2009, and it noted changes relating to: Clarifications of instrumentation factors such as detector and antenna requirements; the use of spectrum analyzers; out-of-band emission (OOBE) and band edge requirements; millimeter wave procedures, measurements below 30 MHz and above 1 GHz; new procedures for wireless devices using new technology (
54. The Commission found that the improvements made in ANSI C63.4–2014 and ANSI C63.10–2013 represented the best measurement procedures, and it therefore decided to incorporate references to ANSI C63.4–2014 and ANSI C63.10–2013 into the rules as the measurement procedures for determining the compliance of unintentional and intentional radiators, respectively. The Commission concluded that the newest editions of the standards were adopted with the input of manufacturers, trade groups, and other academic bodies, and reflects the current state-of-the-art design and manufacturing processes. The new standards also provide a meaningful distinction between intentional and unintentional radiators, which will to ensure that noncompliant devices do not enter the marketplace where they may be difficult to eliminate. While the Commission acknowledged that compliance costs are a normal and expected part of a standards-driven regime where the standards are periodically updated, it noted that by implementing the 2013 and 2014 editions it can mitigate any costs that would have been associated with meeting the 2009 editions as an interim step, and recognized that there would be costs associated with not acting to implement the latest standards.
55. The Commission asserted its continued belief that there is insufficient evidence that rod antennas, artificial hands or absorber clamps produce accurate, repeatable measurements, and that short-duration emissions can produce as much nuisance to radio communications as continuous emissions, and decided to exclude ANSI C63.4–2014 sections that allow for these methods. The Commission also provided a transition period for ANSI C63.4 that will end one year from the effective date of the rules. During this time which parties may continue to comply with either ANSI C63.4–2003, ANSI C63.4–2009 (consistent with current practice) or with the new ANSI C63.4–2014. After the transition period date only compliance with ANSI C63.4–2014 will be accepted. The Commission also decided to apply a one-year transition period for use of the new edition of ANSI C63.10–2013.
56. The Commission also addressed numerous comments that addressed engineering and administrative issues implicated by the adoption of the new standards. Several commenters requested that the Commission not rule out future consideration of the use of CISPR 22 standard for measuring equipment subject to Part 15, as an alternative to ANSI C63.4–2009. In addition, HP proposed referencing CISPR 32 for test methods up to 6 GHz.
57. In the
58. Several commenters addressed the so-called “2 dB rule,” a method used to limit the amount of testing needed by determining the worst-case configuration. In this regard, ANSI–ASC C63 stated it had made additional improvements to the “2 dB rule” in ANSI C63.4–2014. The Commission found that the ANSI C63.4–2014 changes improved on ANSI C63.4–2009 and should address the record comments. Nevertheless, to reduce potential burdens on equipment
59. ACIL and dB Technology discussed the proper arrangement of the measurement antenna relative to the equipment under test (EUT) when performing radiated emissions testing above 1 GHz. The Commission offered guidance for such testing: Measurement procedures for radiated emissions measurements above 1 GHz have required that the measurement antenna be pointed at the source of the radiated emission from the EUT in a manner that ensures that the measurement is maximized. This can be achieved using different methods.
60. The Commission received several comments complaining that ANSI C63.4–2009 excludes hybrid antennas for making radiated emissions measurements. ANSI–ASC C63 stated that ANSI C63.4–2014 has addressed concerns with the use of hybrid antennas, and it recommended that the Commission allow the use of hybrid antennas for testing of products pursuant to the new procedures in ANSI C63.4–2014 that detail how they are to be used. The Commission agreed and found that the ANSI C63.4–2014 standard is an improvement over the 2009 standard in that it provides a means for the use of hybrid antennas that is appropriate and reliable for providing accurate measurements.
61. The Commission recognized that standards development organizations often provide informative explanations and interpretations of the standards that they develop, offering helpful insight to the rationale behind the development of a standard. While it will continue to consider them in response to requests for guidance or clarification, the Commission clarified that it will not incorporate the interpretations of standards organizations automatically into its rules, as some commenters had assumed. The Commission asserted its discretion to use its own judgment in interpreting standards, even as it is informed by the interpretation(s) of the standards organization. In addition, the Commission would not adopt the interpretation of a standards organization in a case in which doing so would effectively change the Commission's rules without the opportunity for comment. Moreover, the Commission pointed out that ANSI–ASC C63 comments indicated that it does not require parties to follow such explanations and interpretations to be considered “compliant” with a standard, until such time that they are included in the normative part of the standard via full approval process by the ANSI–ASC C63 committee. The Commission also disagreed with commenters who asserted that it should not adopt the new ANSI standards because they cross-references to other undated standards. These commenters were concerned that this practice could inadvertently result in new compliance requirements by introducing revised editions without the opportunity for comment or defined transition periods. The Commission recognized that the use of undated references could be unclear to users—particularly when there are several versions of the referenced standard. However, the Commission believed that requiring that only dated standards be cross-referenced would not always result in certainty regarding compliance requirements. ANSI–ASC C63 explained that it decided to use undated references to other ANSI–ASC C63 standards since it carefully reviews the effect of any revisions as part of the standards development process. The Commission accepted this convention, acknowledging that, under this approach, there could be a revision to a standard cross-referenced referenced in ANSI C63.4 or ANSI C63.10. When this occurs, OET will provide guidance via the KDB on the use of updated references in ANSI C63.4 and ANSI C63.10. If the change that would result in a substantive change in requirements, the revised cross-referenced standard would not take effect until the Commission or OET on delegated authority completes a rulemaking adopting that change.
62. Finally, the Commission addressed a specific and narrow concern raised by Inovonics which stated that, while its products meet the frequency hopping requirements for unlicensed devices in § 15.247(a)(1)(i) using the bandwidth measurement procedure in ANSI C63.4–2003, it would be unable to meet the frequency hopping requirement using the proposed bandwidth measurement procedure in ANSI C63.10–2009 due to difference in resolution bandwidth setting techniques when measuring occupied bandwidth. Inovonics asserted that redesigning future products to meet the frequency hopping requirement would impose burdens on consumers of large-scale unlicensed systems who would no longer be able to modify their existing systems without substantially replacing all of their equipment. It suggested that, if the Commission adopts a revised standard, it include an extensive grandfathering period for testing equipment under the existing standard.
63. The Commission agreed with Inovonics argument that application of the 2009 standard would result in Inovonics' existing consumers having to choose whether to replace entire systems or forego the benefits of updating equipment or expanding their existing installations, and that application of the standard would be so unduly burdensome as to run counter to the public interest. In the evaluation of devices from Inovonics that are designed to be compatible with Inovonics equipment that has already been authorized, the Commission will to continue to accept the bandwidth measurement procedure in ANSI C63.4–2003 for purposes of demonstrating that products meet the frequency hopping requirements for its unlicensed devices in § 15.247(a)(1)(i). Inovonics must phase out its use of the 2003 standard after December 31, 2020—the date it suggests in its comments—or when the Commission adopts further revisions to the standard, whichever occurs first. The Commission found that this transition would allow Inovonics sufficient time to prepare its customers for replacing their systems as it plans equipment designs that can be tested to comply with the updated standard. Because it will still be subject to the objective measurement procedure embodied in the 2003 standard, the Commission affirmed its confidence that Inovonics' equipment will comport with the appropriate part 15 technical requirements and not create a risk of interference.
64. Parts 2 and 15 of the Commission's rules incorporate various industry measurement standards that have been developed by different industry groups, subject to periodic revision. The Commission has delegated authority to the Chief of OET to make editorial non-substantive changes to the rules pertaining to parts 2, 5, 15, and 18 of the rules, including references to updated standards that do not involve substantive changes. Non-editorial revisions to the rules require action by the full Commission and all rule changes to reference updated standards have been effected by Commission action. In the
65. The Commission adopted its NPRM proposal to give the Chief of OET delegated authority to engage in limited rulemaking action in order to modify parts 2, 5, 15, and 18 of rules to reference updated versions of standards that are already referenced in the rules. When it updates these references, in order to effectuate any degree of change to the substantive obligations of any party subject to FCC regulation, OET must follow Administrative Procedure Act (APA) requirements by publishing a notice in the
66. The Commission amended § 2.1033 of the rules to require that applications for Certification include photographs or diagrams of the test set-up for each of the required types of tests applicable to the device for which Certification is requested. The photographs or diagrams must show enough detail to confirm other information contained in the test report, and any photographs must clearly show the test configuration used. The Commission stated that the changes will make the Certification procedure consistent with the verification and DoC procedures, which require photographs or diagrams, and will allow it to determine whether a test laboratory or TCB tested equipment in accordance with the applicable measurement procedures. The Commission determined that the cost of this requirement would negligible because it requires a test laboratory or TCB to take a minimal number of additional photographs during testing or provide some relatively simple diagrams and include those with the test report submitted with the application for Certification. Additionally, the Commission found no need to specify in § 2.1033 that photographs or diagrams may be in electronic format since it accepts only electronic filings from TCBs and because codifying such aspects of the filing procedure could limit OET's flexibility in modifying them later. Additionally, the Commission decided to not adopt Bay Area Compliance's suggestion regarding a time/date stamp requirement since such data could be easily altered in conjunction with a fraudulent filing.
67.
68. To allow time for currently operating laboratories to become fully accredited and comply with the new ANSI C63.4 site validation criteria above 1 GHz, the Commission proposed adopted the transition periods set forth in the
69. The docket included a Petition for Rulemaking filed by James E. Whedbee that proposed a new rule stating that a Commission license holder may use devices authorized for use under our part 15 rules and that such devices would not require a separate equipment authorization. Since the Commission currently does not place any restrictions on the use of part 15 devices by a holder of any other Commission license holder as long as the device is used within its authorized parameters, the Commission denied the petition as moot. To the extent that the petitioner intended to propose other alterations to our practice or procedures, the Commission found that the petition did not state what the proposed changes would do or why they are needed, and therefore failed to provide sufficient reason to justify the institution of a rulemaking proceeding.
70. The OFR recently revised the regulations to require that agencies must discuss in the preamble of the rule ways that the materials the agency incorporates by reference are reasonably available to interested persons and how interested parties can obtain the materials. In addition, the preamble of the rule must summarize the material. 1 CFR 51.5(b). In accordance with OFR's requirements, the discussion in this section summarizes ANSI, CISPR and ISO/IEC standards. Copies of the standards are also available for purchase from the standards development organizations: The IEEE standards may be purchased from the Institute of Electrical and Electronic Engineers (IEEE), 3916 Ranchero Drive, Ann Arbor, MI 48108, 1–800–699–9277,
(1) ANSI C63.4–2014: “American National Standard for Methods of Measurement of Radio-Noise Emissions from Low-Voltage Electrical and Electronic Equipment in the Range of 9 kHz to 40 GHz,” ANSI approved June 13, 2014:
• Except sections 4.5.3, 4.6, 6.2.13, 8.2.2, 9, and 13, IBR approved for §§ 2.950(h), 15.31(a)(4), and 15.38(b)(1).
• Sections 5.4.4 through 5.5 IBR approved for §§ 2.910(c)(1), 2.948(d), and 2.950(f).
This standard, ANSI C63.4–2014, contains methods, instrumentation, and facilities for measurement of radio-frequency (RF) signals and noise emitted from electrical and electronic devices in the frequency range of 9 kHz to 40 GHz, as usable, for example, for compliance testing to U.S. (47 CFR part 15) and Industry Canada (ICES–003) regulatory requirements.
(2) ANSI C63.10–2013, “American National Standard of Procedures for Compliance Testing of Unlicensed Wireless Devices,” ANSI approved June 27, 2013, IBR approved for §§ 2.910(c)(3), 2.950(g), 15.31(a)(3), and 15.38(b)(4).
This standard, ANSI C63.10–2013, contains standard methods and instrumentation and test facilities requirements for measurement of radio frequency (RF) signals and noise emitted from unlicensed wireless devices (also called unlicensed transmitters, intentional radiators, and license-exempt transmitters) operating in the frequency range 9 kHz to 231 GHz.
(1) CISPR 16–1–4:2010–04: “Specification for radio disturbance and immunity measuring apparatus and methods—Part 1–4: Radio disturbance and immunity measuring apparatus—Antennas and test sites for radiated disturbance measurements” Edition 3.0, 2010–04, IBR approved for §§ 2.910(b)(1), 2.948(d), and 2.950(f).
This standard, CISPR 16–1–4:2010–04, specifies the characteristics and performance of equipment for the measurement of radiated disturbances in the frequency range 9 kHz to 18 GHz. Specifications for antennas and test sites are included. The requirements of this publication apply at all frequencies and for all levels of radiated disturbances within the CISPR indicating range of the measuring equipment.
(1) ISO/IEC 17011:2004(E), “Conformity assessment—General requirements for accreditation bodies accrediting conformity assessment bodies,” First Edition, 2004–09–01, IBR approved for §§ 2.910(d)(1), 2.948(e), 2.949(b)(1), 2.950(c) and (d), 2.960(b), and (c)(1), and 68.160(c)(1).
This standard, ISO/IEC 17011:2004(E), specifies general requirements for accreditation bodies assessing and accrediting conformity assessment bodies (CABs). It is also appropriate as a requirements document for the peer evaluation process for mutual recognition arrangements between accreditation bodies.
(2) ISO/IEC 17025:2005(E), “General requirements for the competence of testing and calibration laboratories,” Second Edition, 2005–05–15 IBR approved for §§ 2.910(d)(2), 2.948(e), 2.949(b)(2), 2.962(c)(3), (c)(4), and (d)(1), and 68.162(c)(3), (c)(4), and (d)(1).
This standard, ISO/IEC 17025:2005(E), specifies the general requirements for the competence to carry out tests and/or calibrations, including sampling. It covers testing and calibration performed using standard methods, non-standard methods, and laboratory-developed methods.
(3) ISO/IEC 17065:2012(E), “Conformity assessment—Requirements for bodies certifying products, processes and services,” First Edition, 2012–09–15, IBR approved for §§ 2.910(d)(3), 2.950(b), 2.960(b), 2.962(b)(1), (c)(1), (c)(4), (d)(1), (d)(3), (f)(2), and (g)(1), 68.160 (b) and 68.162(b)(1), (c)(1), (c)(4), (d)(1), (d)(2), (f)(2), and (g)(2).
This standard, ISO/IEC 17065:2012(E), specifies requirements, the observance of which is intended to ensure that certification bodies operate certification schemes in a competent, consistent and impartial manner, thereby facilitating the recognition of such bodies and the acceptance of certified products, processes and services on a national and international basis and so furthering international trade. This International Standard can be used as a criteria document for accreditation or peer assessment or designation by governmental authorities, scheme owners and others.
(4) ISO/IEC Guide 58:1993 “Calibration and testing laboratory accreditation systems—General requirements for operation and recognition”, First Edition 1993 IBR approved for §§ 2.910(d)(4), and 2.950(d).
This document, ISO/IEC Guide 58:1993, sets out the general requirements for the operation of a system for accreditation of calibration and/or testing laboratories so that the accreditations granted and the services covered by the accreditations may be recognized at a national or international level as competent and reliable.
(5) ISO/IEC Guide 61:1996 “General requirements for assessment and accreditation of certification/registration bodies”, First Edition 1996, IBR approved for §§ 2.910(d)(5), and 2.950(c).
This document, ISO/IEC Guide 61:1996, specifies general requirements for a body to follow if it is to be recognized at a national or international level as competent and reliable in assessing and subsequently accrediting certification bodies or registration bodies. Conformity to the requirements of this Guide will promote equivalence of national systems and facilitate agreements on mutual recognition of accreditations between such bodies.
(6) ISO/IEC Guide 65:1996, “General requirements for bodies operating product certification systems,” First Edition 1996, IBR approved for §§ 2.910(d)(6), and 2.950(b).
This document, ISO/IEC Guide 65: 1996, specifies requirements, the observance of which is intended to ensure that certification bodies operate third-party certification systems in a consistent and reliable manner, thereby facilitating their acceptance on a national and international basis and so furthering international trade.
71. As required by the Regulatory Flexibility Act of 1980, as amended (RFA),
72. In the Report and Order, the Commission took actions to update its radiofrequency (RF) equipment authorization program to build on the success realized by our use of Commission-recognized Telecommunication Certification Bodies (TCBs). The adopted rules will facilitate the continued rapid introduction of new and innovative products to the market while maintaining our ability to ensure that these products do not cause harmful interference with each other or with other communications devices and services.
Specifically, in this Report and Order the Commission:
• Discontinued FCC processing of any applications for equipment Certification of RF equipment;
• Permitted TCBs to process and grant all applications for Certification;
• Codified a pre-grant approval procedure that TCBs must currently follow when certifying equipment based on new technology that requires consultation with the FCC;
• Clarified a TCB's responsibilities in performing post-market surveillance of products it has approved;
• Specified steps for addressing instances of deficient TCB performance,
• Modified the rules to reference current standards used to accredit TCBs that approve RF equipment under part 2 of the Commission's rules and terminal equipment under part 68 of the Commission's rules;
• Required accreditation of all laboratories that test equipment subject to any of the certification procedures under part 2 of the Commission's rules and codified a procedure through which the Commission currently recognizes new laboratory accreditation bodies;
• Updated references to industry measurement procedures in the Commission's rules; and provided greater flexibility under the Office of Engineering and Technology's (OET) existing delegated authority to enable it to address minor technical issues that may be raised when updating to the latest versions of industry standards that are referenced in parts 2, 5, 15, and 18 of the Commission's rules.
73. One commenter addressed the conclusions that were reached in the Initial Regulatory Flexibility Analysis (IRFA) regarding the economic impact that the proposed rules would have on small entities. That commenter, dB Technology, asserted that the IRFA failed to account for the negative effects of adopting the proposal to require that all laboratories that perform certification testing be accredited.
74. In the Report and Order in this proceeding, the Commission adopted the requirement that all laboratories that perform Certification testing be accredited. It did so on the basis that requiring testing laboratory accreditation is an important adjunct to our decision to allow TCBs to certify all RF equipment, and because the requirement will provide a higher degree of confidence that equipment testing done in support of Certification applications is conducted in accordance with the applicable standards. To the extent that dB technologies is suggesting that the Commission take an alternate approach, such as continuing to allow for unaccredited laboratories, it was considered but rejected on the basis that it would not accomplish the objectives of the proceeding. It is extremely important that equipment be properly evaluated prior to being released into the marketplace (where it may be difficult or impossible to retrieve). Not requiring accreditation, or only applying such a requirement to certain types of laboratories, would present unacceptable risks to the integrity and success of our equipment authorization program. It would also increase the potential for the imposition of extraordinary costs (both costs associated with the identification and recall of noncompliant products by manufacturers, and costs associated with interference by noncompliant devices that could affect a larger group of users). For these reasons, the Commission adopted the accreditation rule based on the proposals in the NPRM and its accompanying IRFA.
75. Pursuant to the Small Business Jobs Act of 2010, the Commission was required to respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rules as a result of those comments. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.
76. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted.
77.
78. The Commission's rules require that equipment be authorized in accordance with one of three procedures specified in Subpart J of part 2 of the rules described below (with certain
79. In the
80. The Commission adopted its proposals specifying how applicants will file with TCBs and how TCBs will file with the Commission, and will required that the information provided to the Commission shall be submitted electronically through the Commission's EAS.
81. The Commission will stop accepting applications for grant of Certification as of the effective date of the Report and Order and will modify § 1.1103 of the rules to remove the equipment authorization services sections related to Certification as all of the processes under the Certification section will no longer be handled by the Commission, and no fee will be charged by the Commission when a TCB issues a grant of Certification. Applications received prior to the effective date will be reviewed following the current review procedures and approved if compliant with all requirements. Finally, the Commission also adopted the proposed TCB process changes and amended the various sections of part 2 that required updating to reflect the TCB role in the Certification process, as modified herein.
82. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.
83. The Commission adopted the proposed modifications to the administrative requirements for test laboratories and TCBs on the belief that the changes will make the equipment authorization program more efficient and effective, thus benefiting small entities. Specifically, TCBs will approve all equipment, including equipment that TCBs may not currently approve because it incorporates new technology or requires measurements for which the procedures are not yet clearly defined. To more efficiently implement this change, the Commission will also integrate a new procedure into our equipment authorization system that will enable TCBs to obtain guidance from the Commission on testing or other certification issues. It is expected that these changes will reduce the time required for manufacturers to obtain equipment approval.
84. The Commission also adopted its proposals to require accreditation of test laboratories that perform certification testing and establish additional measures to address TCB performance in order to ensure the continuing quality of the TCB program. This will benefit equipment manufacturers by ensuring that all TCBs operate in accordance with the Commission's rules, thus providing a clear path to market and a level
85. This Report and Order contains no new information collection requirements, only non-substantive modifications.
86. The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act.
87. Pursuant to sections 1, 4(i), 7(a), 301, 302, 303(f), 303(g), 303(r), 307(e) and 332 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 157(a), 301, 302a, 303(f), 303(g), 303(r), 307(e), and 332, this Report and Order
88. The rules and requirements adopted in this Report and Order will be effective July 13, 2015.
89. Pursuant to the authority of Section 5(c) of the Communications Act of 1934, as amended, 47 U.S.C. 155(c), the Commission delegate authority to the Office of Engineering and Technology as set forth herein.
90. The Petition for Rulemaking filed by James E. Whedbee
91. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center,
92. Pursuant to the authority contained in Sections 4(i), 4(j), and 303 of the Communications Act, as amended, 47 U.S.C. 154(i), 154(j) and 303, that should no petitions for reconsideration or applications for review be timely filed, this proceeding
Organization and functions (Government agencies), Reporting and recordkeeping requirements.
Administrative practice and procedure, Reporting and recordkeeping requirements.
Communications equipment, Incorporation by reference, Reporting and recordkeeping requirements.
Communications equipment, Incorporation by reference, Radio, and Reporting and recordkeeping requirements.
Communications equipment, Incorporation by reference, and Reporting and recordkeeping.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 0, 1, 2, 15 and 68 as follows:
Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 225, unless otherwise noted.
(a) * * *
(1) Notice of proposed rulemaking and of inquiry and final orders in rulemaking proceedings, inquiry proceedings and non-editorial orders making changes, except that:
(i) The Chief of the Office of Engineering and Technology is delegated authority, together with the Chief of the Wireless Telecommunications Bureau, to adopt certain technical standards applicable to hearing aid compatibility under § 20.19 of this chapter, as specified in § 20.19(k).
(ii) The Chief of the Office of Engineering and Technology is delegated authority, by notice-and-comment rulemaking if required by statute or otherwise in the public interest, to issue an order amending rules in parts 2, 5, 15, or 18 of this chapter that reference industry standards to specify revised versions of the standards. This delegation is limited to modifying rules to reference revisions to standards that are already in the rules and not to incorporate a new standard into the rules, and is limited to the approval of changes to the technical standards that do not raise major compliance issues.
(f) The Chief of the Office of Engineering and Technology is authorized to enter into agreements with the National Institute of Standards and Technology and other accreditation bodies to perform accreditation of test laboratories pursuant to § 2.948(e) of this chapter. In addition, the Chief is authorized to make determinations regarding the continued acceptability of individual accrediting organizations and accredited laboratories.
(b)
15 U.S.C. 79
Payment can be made electronically using the Commission's electronic filing and payment system “Fee Filer” (
47 U.S.C. 154, 302a, 303, and 336, unless otherwise noted.
(a) In order to carry out its responsibilities under the Communications Act and the various treaties and international regulations, and in order to promote efficient use of the radio spectrum, the Commission has developed technical standards for radio frequency equipment and parts or components thereof. The technical standards applicable to individual types of equipment are found in that part of the rules governing the service wherein the equipment is to be operated. In addition to the technical standards provided, the rules governing the service may require that such equipment be verified by the manufacturer or importer, be authorized under a Declaration of Conformity, or receive a grant of Certification from a Telecommunication Certification Body.
(b) Sections 2.902 through 2.1077 describe the verification procedure, the procedure for a Declaration of Conformity, and the procedures to be followed in obtaining certification and the conditions attendant to such a grant.
(a) A Declaration of Conformity is a procedure where the responsible party, as defined in § 2.909, makes measurements or takes other necessary steps to ensure that the equipment complies with the appropriate technical standards. Submittal of a sample unit or representative data to the Commission demonstrating compliance is not required unless specifically requested pursuant to § 2.945.
(a) Certification is an equipment authorization approved by the Commission or issued by a Telecommunication Certification Body (TCB) and authorized under the authority of the Commission, based on representations and test data submitted by the applicant.
(a) In the case of equipment which requires the issuance of a grant of certification, the party to whom that grant of certification is issued (the grantee). If the radio frequency equipment is modified by any party other than the grantee and that party is not working under the authorization of the grantee pursuant to § 2.929(b), the party performing the modification is responsible for compliance of the product with the applicable administrative and technical provisions in this chapter.
(a) The materials listed in this section are incorporated by reference in this part. These incorporations by reference were approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. These materials are incorporated as they exist on the date of the approval, and notice of any change in these materials will be published in the
(b) International Electrotechnical Commission (IEC), IEC Central Office, 3, rue de Varembe, CH–1211 Geneva 20, Switzerland, Email:
(1) CISPR 16–1–4:2010–04: “Specification for radio disturbance and immunity measuring apparatus and methods—Part 1–4: Radio disturbance and immunity measuring apparatus—Antennas and test sites for radiated disturbance measurements”, Edition 3.0, 2010–04, IBR approved for §§ 2.948(d) and 2.950(f).
(2) [Reserved]
(c) Institute of Electrical and Electronic Engineers (IEEE), 3916 Ranchero Drive, Ann Arbor, MI 48108, 1–800–699–9277,
(1) ANSI C63.4–2014: “American National Standard for Methods of Measurement of Radio-Noise Emissions from Low-Voltage Electrical and Electronic Equipment in the Range of 9 kHz to 40 GHz,” ANSI approved June 13, 2014, IBR approved for § 2.950(h) and:
(i) Sections 5.4.4 through 5.5, IBR approved for §§ 2.948(d) and 2.950(f); and
(ii) [Reserved]
(2) ANSI C63.10–2013, “American National Standard of Procedures for Compliance Testing of Unlicensed Wireless Devices,” ANSI approved June 27, 2013, IBR approved for § 2.950(g).
(d) International Organization for Standardization (ISO), 1, ch. De la Voie-Creuse, CP 56, CH–1211, Geneva 20, Switzerland;
(1) ISO/IEC 17011:2004(E), “Conformity assessment—General requirements for accreditation bodies accrediting conformity assessment bodies,” First Edition, 2004–09–01, IBR approved for §§ 2.948(e), 2.949(b), 2.950(c) and (d), and 2.960(c).
(2) ISO/IEC 17025:2005(E), “General requirements for the competence of testing and calibration laboratories,” Section Edition, 2005–05–15, IBR approved for §§ 2.948(e), 2.949(b), 2.962(c) and (d).
(3) ISO/IEC 17065:2012(E), “Conformity assessment—Requirements for bodies certifying products, processes and services,” First Edition, 2012–09–15, IBR approved for §§ 2.950(b), 2.960(b), 2.962(b), (c), (d), (f), and (g).
(4) ISO/IEC Guide 58:1993(E), “Calibration and testing laboratory accreditation systems—General requirements for operation and recognition”, First Edition 1993, IBR approved for § 2.950(d).
(5) ISO/IEC Guide 61:1996(E), “General requirements for assessment and accreditation of certification/registration bodies”, First Edition 1996, IBR approved for § 2.950(c).
(6) ISO/IEC Guide 65:1996(E), “General requirements for bodies operating product certification systems,” First Edition 1996, IBR approved for § 2.950(b).
(a) All requests for equipment authorization shall be submitted in writing to a Telecommunication Certification Body (TCB) in a manner prescribed by the TCB.
(b) A TCB shall submit an electronic copy of each equipment authorization application to the Commission pursuant to § 2.962(f)(6) on a form prescribed by the Commission at
(c) Each application that a TCB submits to the Commission shall be accompanied by all information required by this subpart and by those parts of the rules governing operation of the equipment, the applicant's certifications required by paragraphs (d)(1) and (2) of this section, and by requisite test data, diagrams, photographs, etc., as specified in this subpart and in those sections of rules under which the equipment is to be operated.
(d) The applicant shall provide to the TCB all information that the TCB requests to process the equipment authorization request and to submit the application form prescribed by the Commission and all exhibits required with this form.
(1) The applicant shall provide a written and signed certification to the TCB that all statements it makes in its request for equipment authorization are true and correct to the best of its knowledge and belief.
(2) The applicant shall provide a written and signed certification to the TCB that the applicant complies with the requirements in § 1.2002 of this chapter concerning the Anti-Drug Abuse Act of 1988.
(3) Each request for equipment authorization submitted to a TCB, including amendments thereto, and related statements of fact and authorizations required by the Commission, shall be signed by the applicant if the applicant is an individual; by one of the partners if the applicant is a partnership; by an officer, if the applicant is a corporation; or by a member who is an officer, if the applicant is an unincorporated association: Provided, however, that the application may be signed by the applicant's authorized representative who shall indicate his title, such as plant manager, project engineer, etc.
(4) Information on the Commission's equipment authorization requirements can be obtained from the Internet at
(e) Technical test data submitted to the TCB and to the Commission shall be signed by the person who performed or supervised the tests. The person signing the test data shall attest to the accuracy of such data. The Commission or TCB may require the person signing the test data to submit a statement showing that they are qualified to make or supervise the required measurements.
(f) Signed, as used in this section, means an original handwritten signature; however, the Office of Engineering and Technology may allow signature by any symbol executed or adopted by the applicant or TCB with the intent that such symbol be a signature, including symbols formed by computer-generated electronic impulses.
(a) A Commission recognized TCB will grant an application for certification if it finds from an examination of the application and supporting data, or other matter which it may officially notice, that:
(d) Grants will be effective from the date of publication on the Commission Web site and shall show any special condition(s) attaching to the grant. The official copy of the grant shall be maintained on the Commission Web site.
(e) The grant shall identify the approving TCB and the Commission as the issuing authority.
(f) In cases of a dispute the Commission will be the final arbiter.
(c) If an applicant is requested to file additional documents or information and fails to submit the requested material within the specified time period, the application may be dismissed.
The grantee of an equipment authorization may market devices having different model/type numbers or trade names without additional authorization, provided that such devices are electrically identical and the equipment bears an FCC Identifier validated by a grant of certification. A device will be considered to be electrically identical if no changes are made to the authorized device, or if the changes made to the device would be treated as class I permissive changes within the scope of § 2.1043(b)(1). Changes to the model number or trade name by anyone other than the grantee, or under the authorization of the grantee, shall be performed following the procedures in § 2.933.
(a) A grant of certification will list the validated FCC Identifier consisting of the grantee code assigned by the FCC pursuant to paragraph (b) of this section, and the equipment product code assigned by the grantee pursuant to paragraph (c) of this section.
(c) * * *
(1) After assignment of a grantee code each grantee will continue to use the same grantee code for subsequent equipment authorization applications. In the event the grantee name is changed or ownership is transferred, the circumstances shall be reported to the Commission so that a new grantee code can be assigned, if appropriate. See § 2.929(c) and (d) for additional information.
(e) No FCC Identifier may be used on equipment to be marketed unless that specific identifier has been validated by a grant of equipment certification. This shall not prohibit placement of an FCC identifier on a transceiver which includes a verified receiver subject to § 15.101 of this chapter, provided that the transmitter portion of such transceiver is covered by a valid grant of type acceptance or certification. The FCC Identifier is uniquely assigned to the grantee and may not be placed on the equipment without authorization by the grantee. See § 2.803 for conditions applicable to the display at trade shows of equipment which has not been granted equipment authorization where such grant is required prior to marketing. Labelling of such equipment may include model or type numbers, but shall not include a purported FCC Identifier.
(a) A grant of certification is valid only when the FCC Identifier is permanently affixed on the device and remains effective until set aside, revoked, withdrawn, surrendered, or terminated.
(b) A grant of certification recognizes the determination that the equipment has been shown to be capable of compliance with the applicable technical standards if no unauthorized change is made in the equipment and if the equipment is properly maintained and operated. The issuance of a grant of equipment certification shall not be construed as a finding with respect to matters not encompassed by the Commission's rules, especially with respect to compliance with 18 U.S.C. 2512.
(c) No person shall, in any advertising matter, brochure, etc., use or make reference to an equipment authorization in a deceptive or misleading manner or convey the impression that such certification reflects more than a Commission-authorized determination that the device or product has been shown to be capable of compliance with the applicable technical standards of the Commission's rules.
(a) An equipment authorization may not be assigned, exchanged or in any other way transferred to a second party, except as provided in this section.
(c) Whenever there is a change in the name and/or address of the grantee of certification, notice of such change(s) shall be submitted to the Commission via the Internet at
(d) In the case of transactions affecting the grantee, such as a transfer of control or sale to another company, mergers, or transfer of manufacturing rights, notice must be given to the Commission via the Internet at
(d) All requests for permissive changes must be accompanied by the anti-drug abuse certification required under § 1.2002 of this chapter.
(a) A new application for certification shall be filed whenever there is a change in the FCC Identifier for the equipment with or without a change in design, circuitry or construction. However, a change in the model/type number or trade name performed in accordance with the provisions in § 2.924 of this chapter is not considered to be a change in identification and does not require additional authorization.
(b) An application filed pursuant to paragraph (a) of this section where no change in design, circuitry or construction is involved, need not be accompanied by a resubmission of equipment or measurement or test data customarily required with a new application, unless specifically requested. In lieu thereof, the applicant shall attach a statement setting out:
(5) The photographs required by § 2.1033(b)(7) or (c)(12) showing the exterior appearance of the equipment, including the operating controls available to the user and the identification label. Photographs of the construction, the component placement on the chassis, and the chassis assembly are not required to be submitted unless specifically requested.
(a)
(2) If the applicant fails to provide a sample of the equipment, the TCB may dismiss the application without prejudice.
(3) In the event the applicant believes that shipment of the sample to the Commission's laboratory or the TCB is impractical because of the size or weight of the equipment, or the power requirement, or for any other reason, the applicant may submit a written explanation why such shipment is impractical and should not be required.
(4) The Commission may take administrative sanctions against a grantee of certification that fails to respond within 21 days to a Commission or TCB request for an equipment sample, such as suspending action on applications for equipment authorization submitted by that party while the matter is being resolved. The Commission may consider extensions of time upon submission of a showing of good cause.
(b)
(2) A TCB may request samples of equipment that it has certified from the grantee of certification, or request a voucher to obtain a product from the marketplace, for the purpose of performing post-market surveillance as described in § 2.962. TCBs must document their sample requests to show the date they were sent and provide this documentation to the Commission upon request.
(3) The cost of shipping the equipment to the Commission's laboratory and back to the party submitting the equipment shall be borne by the party from which the Commission requested the equipment.
(4) In the event a party believes that shipment of the sample to the Commission's laboratory or the TCB is impractical because of the size or weight of the equipment, or the power requirement, or for any other reason, that party may submit a written explanation why such shipment is impractical and should not be required.
(5) Failure of a responsible party or other party marketing equipment subject to this chapter to comply with a request from the Commission or TCB for equipment samples or vouchers within 21 days may be cause for actions such as such as suspending action on applications for certification submitted by a grantee or forfeitures pursuant to § 1.80 of this chapter. The Commission or TCB requesting the sample may consider extensions of time upon submission of a showing of good cause.
(c)
(d)
(a) Test data must be measured in accordance with the following standards or measurement procedures:
(e) If deemed necessary, additional information may be required concerning the measurement procedures employed in obtaining the data submitted for equipment authorization purposes.
(a) Equipment authorized under the certification or Declaration of Conformity (DoC) procedure shall be tested at a laboratory that is accredited in accordance with paragraph (e) of this section.
(b) A laboratory that makes measurements of equipment subject to an equipment authorization under the certification, DoC or verification procedure shall compile a description of the measurement facilities employed.
(1) The description of the measurement facilities shall contain the following information:
(i) Location of the test site.
(ii) Physical description of the test site accompanied by photographs that clearly show the details of the test site.
(iii) A drawing showing the dimensions of the site, physical layout of all supporting structures, and all structures within 5 times the distance between the measuring antenna and the device being measured.
(iv) Description of structures used to support the device being measured and the test instrumentation.
(v) List of measuring equipment used.
(vi) Information concerning the calibration of the measuring equipment,
(vii) For a measurement facility that will be used for testing radiated emissions, a plot of site attenuation data taken pursuant to paragraph (d) of this section.
(2) The description of the measurement facilities shall be provided to a laboratory accreditation body upon request.
(3) The description of the measurement facilities shall be retained by the party responsible for verification of equipment and provided to the Commission upon request.
(i) The party responsible for verification of equipment may rely upon the description of the measurement facilities retained by an independent laboratory that performed the tests. In this situation, the party responsible for
(ii) No specific site calibration data is required for equipment that is verified for compliance based on measurements performed at the installation site of the equipment. The description of the measurement facilities may be retained at the site at which the measurements were performed.
(c) The Commission will maintain a list of accredited laboratories that it has recognized. The Commission will make publicly available a list of those laboratories that have indicated a willingness to perform testing for the general public. Inclusion of a facility on the Commission's list does not constitute Commission endorsement of that facility. In order to be included on this list, the accrediting organization (or Designating Authority in the case of foreign laboratories) must submit the information listed below to the Commission's laboratory:
(1) Laboratory name, location of test site(s), mailing address and contact information;
(2) Name of accrediting organization;
(3) Scope of laboratory accreditation;
(4) Date of expiration of accreditation;
(5) Designation number;
(6) FCC Registration Number (FRN);
(7) A statement as to whether or not the laboratory performs testing on a contract basis;
(8) For laboratories outside the United States, the name of the mutual recognition agreement or arrangement under which the accreditation of the laboratory is recognized;
(9) Other information as requested by the Commission.
(d) When the measurement method used requires the testing of radiated emissions on a validated test site, the site attenuation must comply with the requirements of Sections 5.4.4 through 5.5 of the following procedure: ANSI C63.4–2014 (incorporated by reference, see § 2.910). Measurement facilities used to make radiated emission measurements from 30 MHz to 1 GHz shall comply with the site validation requirements in ANSI C63.4–2014 (clause 5.4.4) and for radiated emission measurements from 1 GHz to 40 GHz shall comply with the site validation requirement of ANSI C63.4–2014 (clause 5.5.1 a) 1)), such that the site validation criteria called out in CISPR 16–1–4:2010–04 (incorporated by reference, see § 2.910) is met. Test site revalidation shall occur on an interval not to exceed three years.
(e) A laboratory that has been accredited with a scope covering the measurements required for the types of equipment that it will test shall be deemed competent to test and submit test data for equipment subject to verification, Declaration of Conformity, and certification. Such a laboratory shall be accredited by a Commission recognized accreditation organization based on the International Organization for Standardization/International Electrotechnical Commission International Standard ISO/IEC 17025, (incorporated by reference, see § 2.910). The organization accrediting the laboratory must be recognized by the Commission's Office of Engineering and Technology, as indicated in § 0.241 of this chapter, to perform such accreditation based on International Standard ISO/IEC 17011 (incorporated by reference, see § 2.910). The frequency for reassessment of the test facility and the information that is required to be filed or retained by the testing party shall comply with the requirements established by the accrediting organization, but shall occur on an interval not to exceed two years.
(f) The accreditation of a laboratory located outside of the United States, or its possessions, will be acceptable only under one of the following conditions:
(1) If the accredited laboratory has been designated by a foreign Designating Authority and recognized by the Commission under the terms of a government-to-government Mutual Recognition Agreement/Arrangement (MRA); or
(2) If the laboratory is located in a country that does not have an MRA with the United States, then it must be accredited by an organization recognized by the Commission under the provisions of § 2.949 for performing accreditations in the country where the laboratory is located.
(a) A party wishing to become a laboratory accreditation body recognized by OET must submit a written request to the Chief of OET requesting such recognition. OET will make a determination based on the information provided in support of the request for recognition.
(b) Applicants shall provide the following information as evidence of their credentials and qualifications to perform accreditation of laboratories that test equipment to Commission requirements, consistent with the requirements of § 2.948(e). OET may request additional information, or showings, as needed, to determine the applicant's credentials and qualifications.
(1) Successful completion of an ISO/IEC 17011 (incorporated by reference, see § 2.910) peer review, such as being a signatory to an accreditation agreement that is acceptable to the Commission.
(2) Experience with the accreditation of electromagnetic compatibility (EMC), radio and telecommunications testing laboratories to ISO/IEC 17025 (incorporated by reference, see § 2.910).
(3) Accreditation personnel/assessors with specific technical experience on the Commission equipment authorization rules and requirements.
(4) Procedures and policies developed for the accreditation of testing laboratories for FCC equipment authorization programs.
(a) As of July 13, 2015 the Commission will no longer accept applications for Commission issued grants of equipment certification.
(b) Prior to September 15, 2015 a TCB shall be accredited to either ISO/IEC Guide 65 or ISO/IEC 17065 (incorporated by reference, see § 2.910). On or after September 15, 2015 a TCB shall be accredited to ISO/IEC 17065.
(c) Prior to September 15, 2015 an organization accrediting the prospective telecommunication certification body shall be capable of meeting the requirements and conditions of ISO/IEC Guide 61 or ISO/IEC 17011 (incorporated by reference, see § 2.910). On or after September 15, 2015 an organization accrediting the prospective telecommunication certification body shall be capable of meeting the requirements and conditions of ISO/IEC 17011.
(d) Prior to September 15, 2015 an organization accrediting the prospective accredited testing laboratory shall be capable of meeting the requirements and conditions of ISO/IEC Guide 58 or ISO/IEC 17011. On or after September 15, 2015 an organization accrediting the prospective accredited testing laboratory shall be capable of meeting the requirements and conditions of ISO/IEC 17011.
(e) The Commission will no longer accept applications for § 2.948 test site listing as of July 13, 2015. Laboratories that are listed by the Commission under the § 2.948 process will remain listed until the sooner of their expiration date or July 13, 2016 and may continue to submit test data in support of
(f) Measurement facilities used to make radiated emission measurements from 1 GHz to 40 GHz shall comply with the site validation option of ANSI C63.4–2014, (clause 5.5.1a)1)) which references CISPR 16–1–4:2010–04 (incorporated by reference, see § 2.910) by July 13, 2018.
(g) Measurements for intentional radiators subject to part 15 of this chapter are to be made using the procedures in ANSI C63.10–2013 (incorporated by reference, see § 2.910) by July 13, 2016.
(h) Measurements for unintentional radiators are to be made using the procedures in ANSI C63.4, except clauses 4.5.3, 4.6, 6.2.13, 8.2.2, 9, and 13 (incorporated by reference, see § 2.910), by July 13, 2016.
(b) The importer of equipment subject to verification may, upon receiving a written statement from the manufacturer that the equipment complies with the appropriate technical standards, rely on the manufacturer or independent testing agency to verify compliance. The test records required by § 2.955 however should be in the English language and made available to the Commission upon a reasonable request, in accordance with § 2.945.
(a) The Commission may recognize Telecommunication Certification Bodies (TCBs) which have been designated according to requirements of paragraph (b) or (c) of this section to issue grants of certification as required under this part. Certification of equipment by a TCB shall be based on an application with all the information specified in this part. The TCB shall review the application to determine compliance with the Commission's requirements and shall issue a grant of equipment certification in accordance with § 2.911.
(b) In the United States, TCBs shall be accredited and designated by the National Institute of Standards and Technology (NIST) under its National Voluntary Conformity Assessment Evaluation (NVCASE) program, or other recognized programs based on ISO/IEC 17065 (incorporated by reference, see § 2.910) to comply with the Commission's qualification criteria for TCBs. NIST may, in accordance with its procedures, allow other appropriately qualified accrediting bodies to accredit TCBs. TCBs shall comply with the requirements in § 2.962 of this part.
(c) * * *
(1) The organization accrediting the prospective telecommunication certification body shall be capable of meeting the requirements and conditions of ISO/IEC 17011 (incorporated by reference, see § 2.910).
(a) Telecommunication certification bodies (TCBs) designated by NIST, or designated by another authority pursuant to an effective bilateral or multilateral mutual recognition agreement or arrangement to which the United States is a party, shall comply with the requirements of this section.
(b)
(2) Certification shall normally be based on testing no more than one unmodified representative sample of each product type for which certification is sought. Additional samples may be requested if clearly warranted, such as when certain tests are likely to render a sample inoperative.
(c)
(2) The TCB shall demonstrate expert knowledge of the regulations for each product with respect to which the body seeks designation. Such expertise shall include familiarity with all applicable technical regulations, administrative provisions or requirements, as well as the policies and procedures used in the application thereof.
(3) The TCB shall have the technical expertise and capability to test the equipment it will certify and shall also be accredited in accordance with ISO/IEC 17025 (incorporated by reference, see § 2.910) to demonstrate it is competent to perform such tests.
(4) The TCB shall demonstrate an ability to recognize situations where interpretations of the regulations or test procedures may be necessary. The appropriate key certification and laboratory personnel shall demonstrate knowledge of how to obtain current and correct technical regulation interpretations. The competence of the TCB shall be demonstrated by assessment. The general competence, efficiency, experience, familiarity with technical regulations and products covered by those technical regulations, as well as compliance with applicable parts of ISO/IEC 17025 and ISO/IEC 17065 shall be taken into consideration during assessment.
(5) A TCB shall participate in any consultative activities, identified by the Commission or NIST, to facilitate a common understanding and interpretation of applicable regulations.
(6) The Commission will provide public notice of the specific methods that will be used to accredit TCBs, consistent with these qualification criteria.
(7) A TCB shall be reassessed for continued accreditation on intervals not exceeding two years.
(d)
(2) A TCB shall not outsource review and certification decision activities.
(3) When external resources are used to provide the evaluation function, including the testing of equipment subject to certification, the TCB shall be responsible for the evaluation and shall maintain appropriate oversight of the external resources used to ensure reliability of the evaluation. Such oversight shall include periodic audits of products that have been tested and other activities as required in ISO/IEC 17065 when a certification body uses external resources for evaluation.
(e)
(ii) The Commission will recognize as a TCB any organization outside the United States that meets the qualification criteria and is designated pursuant to an effective bilateral or multilateral MRA as provided in § 2.960(c).
(2) The Commission will withdraw its recognition of a TCB if the TCB's designation or accreditation is withdrawn, if the Commission determines there is just cause for withdrawing the recognition, or if the TCB requests that it no longer hold its designation or recognition. The Commission will limit the scope of equipment that can be certified by a TCB if its accreditor limits the scope of its accreditation or if the Commission determines there is good cause to do so. The Commission will notify a TCB in writing of its intention to withdraw or limit the scope of the TCB's recognition and provide at least 60 days for the TCB to respond. In the case of a TCB designated and recognized pursuant to an effective bilateral or multilateral mutual recognition agreement or arrangement (MRA), the Commission shall consult with the Office of the United States Trade Representative (USTR), as necessary, concerning any disputes arising under an MRA for compliance with the Telecommunications Trade Act of 1988 (Section 1371–1382 of the Omnibus Trade and Competitiveness Act of 1988).
(3) The Commission will notify a TCB in writing when it has concerns or evidence that the TCB is not certifying equipment in accordance with the Commission's rules and policies and request that it explain and correct any apparent deficiencies. The Commission may require that all applications for the TCB be processed under the pre-approval guidance procedure in § 2.964 for at least 30 days, and will provide a TCB with 30 days' notice of its intent to do so unless good cause exists for providing shorter notice. The Commission may request that a TCB's Designating Authority or accreditation body investigate and take appropriate corrective actions as required, and the Commission may initiate action to limit or withdraw the recognition of the TCB as described in § 2.962(e)(2).
(4) If the Commission withdraws its recognition of a TCB, all certifications issued by that TCB will remain valid unless specifically set aside or revoked by the Commission under paragraph (f)(5) of this section.
(5) A list of recognized TCBs will be published by the Commission.
(f)
(2) A TCB shall accept test data from any Commission-recognized accredited test laboratory, subject to the requirements in ISO/IEC 17065 and shall not unnecessarily repeat tests.
(3) A TCB may establish and assess fees for processing certification applications and other Commission-required tasks.
(4) A TCB may only act on applications that it has received or which it has issued a grant of certification.
(5) A TCB shall dismiss an application which is not in accordance with the provisions of this subpart or when the applicant requests dismissal, and may dismiss an application if the applicant does not submit additional information or test samples requested by the TCB.
(6) Within 30 days of the date of grant of certification the Commission or TCB issuing the grant may set aside a grant of certification that does not comply with the requirements or upon the request of the applicant. A TCB shall notify the applicant and the Commission when a grant is set aside. After 30 days, the Commission may revoke a grant of certification through the procedures in § 2.939.
(7) A TCB shall follow the procedures in § 2.964 of this part for equipment on the pre-approval guidance list.
(8) A TCB shall supply an electronic copy of each certification application and all necessary exhibits to the Commission prior to grant or dismissal of the application. Where appropriate, the application must be accompanied by a request for confidentiality of any material that may qualify for confidential treatment under the Commission's rules.
(9) A TCB shall grant or dismiss each certification application through the Commission's electronic filing system.
(10) A TCB may not:
(i) Grant a waiver of the rules;
(ii) Take enforcement actions; or
(iii) Authorize a transfer of control of a grantee.
(11) All TCB actions are subject to Commission review.
(g)
(2) The Chief of the Office of Engineering and Technology (OET) has delegated authority under § 0.241(g) of this chapter to develop procedures that TCBs will use for performing post-market surveillance. OET will publish a document on TCB post-market surveillance requirements, and this document will provide specific information such as the number and types of samples that a TCB must test.
(3) OET may request that a grantee of equipment certification submit a sample directly to the TCB that performed the original certification for evaluation. Any equipment samples requested by the Commission and tested by a TCB will be counted toward the minimum number of samples that the TCB must test.
(4) TCBs may request samples of equipment that they have certified directly from the grantee of certification in accordance with § 2.945.
(5) If during post market surveillance of a certified product, a TCB determines that a product fails to comply with the technical regulations for that product, the TCB shall immediately notify the grantee and the Commission in writing of its findings. The grantee shall provide a report to the TCB describing the actions taken to correct the situation, and the TCB shall provide a report of these actions to the Commission within 30 days.
(6) TCBs shall submit periodic reports to OET of their post-market surveillance activities and findings in the format and by the date specified by OET.
(a) The Commission will publish a “Pre-approval Guidance List” identifying the categories of equipment or types of testing for which Telecommunication Certification Bodies (TCBs) must request guidance from the Commission before approving equipment on the list.
(b) TCBs shall use the following procedure for approving equipment on the Commission's pre-approval guidance list.
(1) A TCB shall perform an initial review of the application and determine the issues that require guidance from the Commission. The TCB shall electronically submit the relevant exhibits to the Commission along with a specific description of the pertinent issues.
(2) The TCB shall complete the review of the application in accordance with the Commission's guidance.
(3) The Commission may request and test a sample of the equipment before the application can be granted.
(4) The TCB shall electronically submit the application and all exhibits to the Commission along with a request to grant the application.
(5) The Commission will give its concurrence for the TCB to grant the application if it determines that the equipment complies with the rules. The Commission will advise the TCB if additional information or equipment testing is required, or if the equipment cannot be certified because it does not comply with the Commission's rules.
(b) * * *
(14) Contain at least one drawing or photograph showing the test set-up for each of the required types of tests applicable to the device for which certification is requested. These drawings or photographs must show enough detail to confirm other information contained in the test report. Any photographs used must be focused originals without glare or dark spots and must clearly show the test configuration used.
(c) Applications for equipment other than that operating under parts 15, 11 and 18 of this chapter shall be accompanied by a technical report containing the following information:
(21) Contain at least one drawing or photograph showing the test set-up for each of the required types of tests applicable to the device for which certification is requested. These drawings or photographs must show enough detail to confirm other information contained in the test report. Any photographs used must be focused originals without glare or dark spots and must clearly show the test configuration used.
(a) Except as provided in paragraph (b)(3) of this section, changes to the basic frequency determining and stabilizing circuitry (including clock or data rates), frequency multiplication stages, basic modulator circuit or maximum power or field strength ratings shall not be performed without application for and authorization of a new grant of certification. Variations in electrical or mechanical construction, other than these indicated items, are permitted provided the variations either do not affect the characteristics required to be reported to the Commission or the variations are made in compliance with the other provisions of this section. Changes to the software installed in a transmitter that do not affect the radio frequency emissions do not require any additional filings and may be made by parties other than the holder of the grant of certification.
(b) Three classes of permissive changes may be made in certificated equipment without requiring a new application for and grant of certification. None of the classes of changes shall result in a change in identification.
(1) A Class I permissive change includes those modifications in the equipment which do not degrade the characteristics reported by the manufacturer and accepted by the Commission when certification is granted. No filing is required for a Class I permissive change.
(2) A Class II permissive change includes those modifications which degrade the performance characteristics as reported to the Commission at the time of the initial certification. Such degraded performance must still meet the minimum requirements of the applicable rules. When a Class II permissive change is made by the grantee, the grantee shall provide complete information and the results of tests of the characteristics affected by such change. The modified equipment shall not be marketed under the existing grant of certification prior to acknowledgement that the change is acceptable.
(3) A Class III permissive change includes modifications to the software of a software defined radio transmitter that change the frequency range, modulation type or maximum output power (either radiated or conducted) outside the parameters previously approved, or that change the circumstances under which the transmitter operates in accordance with Commission rules. When a Class III permissive change is made, the grantee shall provide a description of the changes and test results showing that the equipment complies with the applicable rules with the new software loaded, including compliance with the applicable RF exposure requirements. The modified software shall not be loaded into the equipment, and the equipment shall not be marketed with the modified software under the existing grant of certification, prior to acknowledgement that the change is acceptable. Class III changes are permitted only for equipment in which no Class II changes have been made from the originally approved device.
Any software change that degrades spurious and out-of-band emissions previously reported at the time of initial certification would be considered a change in frequency or modulation and would require a Class III permissive change or new equipment authorization application.
(4) Class I and Class II permissive changes may only be made by the holder of the grant of certification, except as specified.
(c) A grantee desiring to make a change other than a permissive change shall file a new application for certification accompanied by the required information as specified in this part and shall not market the modified device until the grant of certification has been issued. The grantee shall attach a description of the change(s) to be made and a statement indicating whether the change(s) will be made in all units (including previous production) or will be made only in those units produced after the change is authorized.
(f) For equipment other than that operating under parts 15 or 18 of this chapter, when a Class II permissive change is made by other than the grantee of certification, the information and data specified in paragraph (b)(2) of this section shall be supplied by the person making the change. The modified equipment shall not be operated under an authorization prior to acknowledgement that the change is acceptable.
(b) The responsible party, if different from the manufacturer, may upon receiving a written statement from the manufacturer that the equipment complies with the appropriate technical standards, relies on the manufacturer or independent testing agency to determine compliance. However, the test records required by § 2.1075 shall be in the English language and shall be made available to the Commission upon
(c) The records listed in paragraphs (a) and (b) of this section shall be retained for two years after the manufacture or assembly, as appropriate, of said equipment has been permanently discontinued, or until the conclusion of an investigation or a proceeding if the responsible party is officially notified that an investigation or any other administrative proceeding involving the equipment has been instituted. Requests for the records described in this section and for sample units also are covered under the provisions of § 2.945.
47 U.S.C. 154, 302a, 303, 304, 307, 336, 544a, and 549.
(a) * * *
(3) Other intentional radiators are to be measured for compliance using the following procedure: ANSI C63.10–2013 (incorporated by reference, see § 15.38).
(4) Unintentional radiators are to be measured for compliance using the following procedure excluding clauses 4.5.3, 4.6, 6.2.13, 8.2.2, 9, and 13: ANSI C63.4–2014 (incorporated by reference, see § 15.38).
(b) The following documents are available from the following address: American National Standards Institute (ANSI), 25 West 43rd Street, 4th Floor, New York, NY 10036, (212) 642–4900, or at
(1) ANSI C63.17–2013: “American National Standard for Methods of Measurement of the Electromagnetic and Operational Compatibility of Unlicensed Personal Communications Services (UPCS) Devices,” approved August 12, 2013, IBR approved for § 15.31.
(2) Third Edition of the International Special Committee on Radio Interference (CISPR), Pub. 22, Information Technology Equipment-Radio Disturbance Characteristics-Limits and Methods of Measurement,” 1997, IBR approved for § 15.09.
(f) Institute of Electrical and Electronic Engineers (IEEE), 3916 Ranchero Drive, Ann Arbor, MI 48108, 1–800–699–9277,
(1) ANSI C63.4–2014: “American National Standard for Methods of Measurement of Radio-Noise Emissions from Low-Voltage Electrical and Electronic Equipment in the Range of 9 kHz to 40 GHz,” ANSI approved June 13, 2014, IBR approved for § 15.31(a)(4), except clauses 4.5.3, 4.6, 6.2.13, 8.2.2, 9, and 13.
(2) ANSI C63.10–2013, “American National Standard of Procedures for Compliance Testing of Unlicensed Wireless Devices,”ANSI approved June 27, 2013, IBR approved for § 15.31(a)(3).
Secs. 4, 5, 303, 48 Stat., as amended, 1066, 1068, 1082; (47 U.S.C. 154, 155, 303).
(a) The Commission may recognize designated Telecommunication Certification Bodies (TCBs) which have been designated according to the requirements of paragraphs (b) or (c) of this section to certify equipment as required under this part. Certification of equipment by a TCB shall be based on an application with all the information specified in this part. The TCB shall process the application to determine compliance with the Commission's requirements and shall issue a written grant of equipment authorization. The grant shall identify the approving TCB and the Commission as the issuing authority.
(b) In the United States, TCBs shall be accredited and designated by the National Institute of Standards and Technology (NIST) under its National Voluntary Conformity Assessment Evaluation (NVCASE) program, or other recognized programs based on ISO/IEC 17065:2012, to comply with the Commission's qualification criteria for TCBs. NIST may, in accordance with its procedures, allow other appropriately qualified accrediting bodies to accredit TCBs. TCBs shall comply with the requirements in § 68.162 of this part.
(c) * * *
(1) The organization accrediting the prospective telecommunication certification body shall be capable of meeting the requirements and conditions of ISO/IEC 17011:2004.
(d)
(2) International Electrotechnical Commission (IEC), IEC Central Office, 3, rue de Varembe, CH–1211 Geneva 20, Switzerland, Email:
(i) ISO/IEC 17011:2004(E), “Conformity assessment—General requirements for accreditation bodies accrediting conformity assessment bodies,” First Edition, 2004–09–01, IBR approved for § 68.160(c).
(ii) ISO/IEC 17065:2012(E), “Conformity assessment—Requirements for bodies certifying products, processes and services,” First Edition, 2012–09–15.
(a) Telecommunication certification bodies (TCBs) designated by the National Institute of Standards and Technology (NIST), or designated by another authority pursuant to an effective bilateral or multilateral mutual recognition agreement or arrangement to which the United States is a party, shall comply with the following requirements.
(b)
(c)
(3) The TCB shall have the technical expertise and capability to test the equipment it will certify and shall also be accredited in accordance with ISO/IEC 17025 to demonstrate it is competent to perform such tests.
(4) The TCB shall demonstrate an ability to recognize situations where interpretations of the regulations or test procedures may be necessary. The appropriate key certification and laboratory personnel shall demonstrate knowledge of how to obtain current and correct technical regulation interpretations. The competence of the telecommunication certification body shall be demonstrated by assessment. The general competence, efficiency, experience, familiarity with technical regulations and products included in those technical regulations, as well as compliance with applicable parts of the ISO/IEC 17025 and ISO/IEC 17065 shall be taken into consideration.
(d)
(2) A recognized TCB shall not outsource review and certification decision activities.
(3) When external resources are used to provide the evaluation function, including the testing of equipment subject to certification, the TCB shall be responsible for the evaluation and shall maintain appropriate oversight of the external resources used to ensure reliability of the evaluation. Such oversight shall include periodic audits of products that have been tested and other activities as required in ISO/IEC 17065 when a certification body uses external resources for evaluation.
(e)
(ii) The Commission will recognize as a TCB any organization outside the United States that meets the qualification criteria and is designated pursuant to an effective bilateral or multilateral Mutual Recognition Agreement (MRA) as provided in § 68.160(c).
(2) The Commission will withdraw the recognition of a TCB if the TCB's accreditation or designation by NIST or its recognized accreditor is withdrawn, if the Commission determines there is just cause for withdrawing the recognition, or if the TCB requests that it no longer hold the recognition. The Commission will limit the scope of equipment that can be certified by a TCB if its accreditor limits the scope of its accreditation or if the Commission determines there is good cause to do so. The Commission will notify a TCB in writing of its intention to withdraw or limit the scope of the TCB's recognition and provide a TCB with at least 60 day notice of its intention to withdraw the recognition and provide the TCB with an opportunity to respond. In the case of a TCB designated and recognized pursuant to an effective bilateral or multilateral MRA, the Commission shall consult with the Office of United States Trade Representative (USTR), as necessary, concerning any disputes arising under an MRA for compliance with the Telecommunications Trade Act of 1988 (Section 1371–1382 of the Omnibus Trade and Competitiveness Act of 1988).
(3) The Commission may request that a TCB's Designating Authority or accreditation body investigate and take appropriate corrective actions as required, when it has concerns or evidence that the TCB is not certifying equipment in accordance with Commission rules or ACTA requirements, and the Commission may initiate action to limit or withdraw the recognition of the TCB.
(4) If the Commission withdraws the recognition of a TCB, all certifications issued by that TCB will remain valid unless specifically revoked by the Commission.
(5) A list of recognized TCBs will be published by the Commission.
(f) * * *
(2) A TCB shall accept test data from any source, subject to the requirements in ISO/IEC 17065 and shall not unnecessarily repeat tests.
(g) * * *
(2) In accordance with ISO/IEC 17065 a TCB is required to conduct appropriate surveillance activities. These activities shall be based on type testing a few samples of the total number of product types which the certification body has certified. Other types of surveillance activities of a product that has been certified are permitted provided they are no more onerous than testing type. The Commission may at any time request a list of products certified by the certification body and may request and receive copies of product evaluation reports. The Commission may also request that a TCB perform post-market surveillance, under Commission guidelines, of a specific product it has certified.
(3) The Commission may request that a grantee of equipment certification submit a sample directly to the TCB that performed the original certification for evaluation. Any equipment samples requested by the Commission and tested by a TCB will be counted toward the minimum number of samples that the TCB must test.
(4) A TCBs may request samples of equipment that they have certified directly from the grantee of certification.
(5) If during, post-market surveillance of a certified product, a certification body determines that a product fails to comply with the applicable technical regulations, the certification body shall immediately notify the grantee and the Commission. The TCB shall provide a follow-up report to the Commission within 30 days of reporting the non-compliance by the grantee to describe the resolution or plan to resolve the situation.
(6) Where concerns arise, the TCB shall provide a copy of the application file to the Commission within 30 calendar days of a request for the file made by the Commission to the TCB and the manufacturer. Where appropriate, the file should be accompanied by a request for confidentiality for any material that may qualify for confidential treatment under the Commission's rules. If the application file is not provided within 30 calendar days, a statement shall be provided to the Commission as to why it cannot be provided.
(h) In the case of a dispute with respect to designation or recognition of a TCB and the testing or certification of products by a TCB, the Commission will be the final arbiter. Manufacturers and recognized TCBs will be afforded at least 60 days to comment before a decision is reached. In the case of a TCB designated or recognized, or a product certified pursuant to an effective bilateral or multilateral mutual recognition agreement or arrangement (MRA) to which the United States is a party, the Commission may limit or withdraw its recognition of a TCB designated by an MRA party and revoke the Certification of products using testing or certification provided by such a TCB. The Commission shall consult with the Office of the United States Trade Representative (USTR), as necessary, concerning any disputes arising under an MRA for compliance with under the Telecommunications Trade Act of 1988.
(i)
(1) International Electrotechnical Commission (IEC), IEC Central Office, 3, rue de Varembe,CH–1211 Geneva 20, Switzerland, Email:
(i) ISO/IEC 17025:2005(E), “General requirements for the competence of testing and calibration laboratories,” Second Edition, 2005–05–15.
(ii) ISO/IEC 17065:2012(E), “Conformity assessment—Requirements for bodies certifying products, processes and services,” First Edition, 2012–09–15.
(2) [Reserved]
Nuclear Regulatory Commission.
Petition for rulemaking; consideration in the rulemaking process.
The U.S. Nuclear Regulatory Commission (NRC) will consider in the rulemaking process three issues raised in a petition for rulemaking (PRM), PRM–37–1, submitted by Anthony Pietrangelo, on behalf of the Nuclear Energy Institute (NEI or the petitioner). The petitioner requests that the NRC amend its regulations to clarify and expand current exemptions for when the physical protection measures for category 1 and category 2 quantities of radioactive material do not apply to a licensee.
The docket for the petition, PRM–37–1, is closed on June 12, 2015.
Further NRC action on the issues raised by this petition can be found on the Federal rulemaking Web site at
Please refer to the petition Docket ID NRC–2014–0172 when contacting the NRC about the availability of information regarding this petition. You can obtain publicly-available documents related to this petition by using any of the following methods:
•
•
•
Cardelia Maupin, Office of Nuclear Material Safety and Safeguards, telephone: 301–415–2312; email:
The NRC received and docketed a petition for rulemaking (ADAMS Accession No. ML14199A570) dated June 12, 2014, filed by Anthony R. Pietrangelo on behalf of the NEI. On October 28, 2014 (79 FR 64149) the NRC published a notice of docketing and request for comment on the petition. The petitioner requests that the NRC amend part 37 of Title 10 of the
The NRC solicited public comment through the notice of docketing and request for comment. The comment period closed on January 12, 2015. The NRC received seven comment letters. All seven letters were from members or representatives of the nuclear industry. The public comments supported NEI's request for rulemaking and urged the NRC to promptly initiate rulemaking to implement the changes proposed in the petition.
In addition to supporting the statements in NEI's PRM, some of the commenters also raised additional points in support of the petition. One commenter provided examples of some of the differences between 10 CFR part 37 and 10 CFR part 73 that the commenter did not believe resulted in an increased level of protection for category 1 or category 2 quantities of radioactive materials at power reactors, but must be addressed by licensees under 10 CFR part 37. Two commenters requested that the suggested change for
The NRC considered the public comments in its analysis of the petition.
This section presents the three issues raised by the petitioner followed by the NRC's analysis of the issues.
The petitioner requests that 10 CFR 37.11(b) be amended to allow for byproduct material kept within any area for which 10 CFR part 73 requires access control to be exempted from 10 CFR part 37 requirements regardless of whether the byproduct material “activities” are specifically “included in” a 10 CFR part 73 security plan. The petitioner states that the exemption should recognize the extent to which the physical protection requirements in 10 CFR part 73 meet or exceed the requirements of 10 CFR part 37, so there is no need for any additional security measures or documentation in the 10 CFR part 73 security plan. The petitioner asserts that 10 CFR part 37 currently imposes undue burden on licensees that should be alleviated through a rulemaking.
The petitioner requests that 10 CFR 37.11(c) be modified to remove any ambiguity as to what type of wastes the exemption applies. The petitioner states that the language is difficult to understand and has prompted numerous inquiries and many discussions among NRC and the nuclear industry. The petitioner notes that the NRC's guidance document, NUREG–2155, does clarify the ambiguity; however, the petitioner states that the NRC should provide licensees and the public with greater regulatory certainty by clarifying the provision in the regulations.
The petitioner requests that 10 CFR 37.11 be revised to include a new paragraph (d) that would address large components and storage of radioactive material in robust structures. The petitioner states that the exemption in 10 CFR 37.11(c) only addresses waste material, and therefore, large components and non-waste material stored in robust structures that present a similar or lower risk for theft or diversion are not exempt from the 10 CFR part 37 requirements. The petitioner notes that as part of the 10 CFR part 37 implementation process, the NRC recognized this material as low risk and issued EGM–14–001 to address large components and storage of material in robust structures. The petitioner states that a rulemaking to codify the EGM's rationale would recognize the practicalities militating against theft or diversion and would avoid the long-term use of enforcement discretion and case-by-case exemption in this area. The petitioner also states that definitions for “large component” and “robust structure” should be added to the regulations.
The NRC has reviewed the petition and related public comments. Based on its review, the NRC will consider the three issues raised in the petition in the rulemaking process. The docket for the petition, PRM–37–1, is closed.
Further NRC action on the issues raised in PRM–37–1 can be monitored on the Federal rulemaking Web site,
For the Nuclear Regulatory Commission.
Internal Revenue Service (IRS), Treasury.
Withdrawal of notice of proposed rulemaking and notice of proposed rulemaking by cross-reference to temporary regulations.
In the Rules and Regulations section of this issue of the
Comments and requests for a public hearing must be received by September 10, 2015.
Send submissions to: CC:PA:LPD:PR (REG–149518–03), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Concerning the proposed regulations, Kevin I. Babitz, (202) 317–6852; concerning submission of comments or to request a public hearing, Oluwafunmilayo Taylor at (202) 317–6901.
Temporary regulations in the Rules and Regulations section of this issue of the
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. These proposed regulations do not impose a collection of information on small entities. Further, pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that these proposed regulations would not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that these proposed regulations would primarily affect sophisticated ownership structures with interlocking ownership of corporations, partnerships and corporate stock. Additionally, these proposed regulations contain a number of de minimis provisions that render the regulations inapplicable to most small businesses. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to comments that are submitted timely to the IRS as prescribed in this preamble under the
The principal authors of these regulations are Joseph R. Worst and Kevin I. Babitz, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and the Treasury Department participated in their development.
Accordingly, under the authority of 26 U.S.C. 7805, the notice of proposed rulemaking (PS–91–90; REG–208989–90) that was published in the
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
26 U.S.C. 7805 * * *
Section 1.337(d)–3 also issued under 26 U.S.C. 337(d). * * *
[The text of proposed § 1.337(d)–3 is the same as the text of § 1.337(d)–3T(a) through (i) published elsewhere in this issue of the
(c)(1) [The text of proposed § 1.732–1(c)(1) is the same as the text of § 1.732–1T(c)(1) published elsewhere in this issue of the
(5) * * *
(ii) [The text of proposed § 1.732–1(c)(5)(ii) is the same as the text of § 1.732–1T(c)(5)(ii) published elsewhere in this issue of the
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking.
This document contains proposed regulations that would allow consolidated group members that are partners in the same partnership to aggregate their bases in stock distributed by the partnership for the purpose of limiting the application of rules that might otherwise cause basis reduction or gain recognition. The proposed regulations would also require certain corporations that engage in gain elimination transactions to reduce the basis of corporate assets or to recognize gain. The proposed regulations affect partnerships and their partners.
Comments and requests for a public hearing must be received by September 10, 2015.
Send submissions to: CC:PA:LPD:PR (REG–138759–14), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–138759–
Concerning the proposed regulations, Kevin I. Babitz, (202) 317–6852; concerning submission of comments or to request a public hearing, Oluwafunmilayo Taylor at (202) 317–6901.
In
Section 538 of the Ticket to Work and Work Incentives Improvement Act of 1999, Public Law 106–170, 113 Stat. 1860, (the Ticket to Work Act), enacted section 732(f) on December 17, 1999. Section 732(f) provides that if: (1) A corporate partner receives a distribution from a partnership of stock in another corporation (distributed corporation), (2) the corporate partner has control of the distributed corporation (ownership of stock meeting the requirements of section 1504(a)(2)) immediately after the distribution or at any time thereafter (the “control requirement”), and (3) the partnership's basis in the stock immediately before the distribution exceeded the corporate partner's basis in the stock immediately after the distribution, then the basis of the distributed corporation's property must be reduced by this excess. The amount of this reduction is limited to the amount by which the sum of the aggregate adjusted basis of property and the amount of money of the distributed corporation exceeds the corporate partner's adjusted basis in the stock of the distributed corporation. The corporate partner must recognize gain to the extent that the basis of the distributed corporation's property cannot be reduced.
Congress enacted section 732(f) due to concerns that a corporate partner could otherwise negate the effects of a basis step-down to distributed property required under section 732(b) by applying the step-down against the basis of distributed stock of a corporation (distributed corporation). The Senate Finance Committee stated that:
The Committee is concerned that the downward adjustment to the basis of property distributed by a partnership may be nullified if the distributed property is corporate stock. The distributed corporation can be liquidated by the corporate partner, so that the stock basis adjustment has no effect. Similarly, if the corporations file a consolidated return, their taxable income may be computed without reference to the downward adjustment to the basis of the stock. These results can occur either if the partnership has contributed property to the distributed corporation, or if the property was held by the corporation before the distribution. Therefore, the provision requires a basis reduction to the property of the distributed corporation.
For example, assume a corporate partner has a partnership interest with zero basis and receives a partnership distribution of high-basis stock in a corporation. The corporate partner's basis in the distributed corporation's stock is reduced to zero under section 732(a) or section 732(b). If the partnership has elected under section 754, then the basis of other partnership property is increased by an equal amount under section 734(b). The effects of the section 732 basis decrease and the section 734(b) basis increase generally offset each other. However, if the corporate partner owned stock in the distributed corporation that satisfied the control requirement, the corporate partner could liquidate the distributed corporation under section 332, and section 334(b) would generally provide for a carryover basis in the distributed corporation's property received by the corporate partner in the liquidation. Taken together, these rules could permit the partnership to increase the basis of its retained property without an equivalent basis reduction following the liquidation of the distributed corporation. Section 732(f) generally precludes this result by requiring that either the distributed corporation must reduce the basis of its property or the corporate partner must recognize gain (to the extent the distributed corporation is unable to reduce the basis of its property). Thus, section 732(f) generally ensures that any basis increase under section 734(b) is ultimately offset.
Section 732(f) applies if the corporate partner either has control of the distributed corporation following the distribution or if the corporate partner subsequently acquires control of the distributed corporation at any time thereafter. Section 732(f) does not apply if the corporate partner does not have control of the distributed corporation immediately following the distribution and the corporate partner establishes to the satisfaction of the Secretary that the distribution was not part of a plan or arrangement to acquire control of the distributed corporation.
In its discussion of the control requirement of section 732(f)(1)(B), the Conference Report to the Ticket to Work Act explains that “[t]his provision also calls for regulations, including regulations to avoid double counting and to prevent the abuse of the purposes of this provision.” H.R. Conf. Rep. No. 106–478, 106th Cong., 1st Sess. 174 (1999). This grant of regulatory authority is codified at section 732(f)(8), which provides that “[t]he Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including regulations to avoid double counting and to prevent the abuse of such purposes.”
Simultaneous with this notice of proposed rulemaking, the Treasury Department and the IRS are issuing final and temporary regulations under section 337(d) (§ 1.337(d)–3T) that prevent a corporate partner from using a partnership to avoid corporate-level gain required to be recognized under section 311(b) or section 336(a) following the repeal of the
As described in this preamble, Congress provided the Treasury Department and the IRS with a broad grant of statutory authority to carry out the purposes of sections 337(d) and 732(f). The Treasury Department and the IRS believe that as currently applied, section 732(f) may be too broad in some circumstances and too narrow in others. Specifically, section 732(f) may require basis reduction or gain recognition even though that basis reduction or gain recognition does not further the purposes of section 732(f). In other circumstances, corporate partners may inappropriately avoid the purposes of section 732(f) by engaging in transactions that allow corporate partners to receive property held by a distributed corporation without reducing the basis of that property to account for basis reductions under section 732(b) made when the partnership distributed stock of the distributed corporation to the corporate partner. These proposed regulations add rules to conform the application of section 732(f) with Congress's identified purposes for enacting sections 337(d) and 732(f) in these situations.
Section 732(f) generally applies on a partner-by-partner basis. However, the Treasury Department and the IRS believe that in certain circumstances, it is appropriate to aggregate the bases of consolidated group members in a partnership for purposes of applying section 732(f). For example, basis aggregation may be appropriate when two or more corporate partners in the same consolidated group (member-partners) receive a deemed distribution of stock in a distributed corporation either because (a) the partnership elects to be treated as an association taxable as a corporation under § 301.7701–3 or (b) one corporate partner acquires all of the interests in the partnership causing the partnership to liquidate. In these instances, section 732(b) may cause one member-partner to increase the basis of distributed stock while another member-partner reduces the basis of distributed stock by an equivalent amount. Under current law, section 732(f) may require the member-partner whose basis is reduced to recognize gain or to reduce the basis of the distributed corporation's property, with no offsetting loss or increase to the basis of the distributed corporation's property with respect to the member-partner whose basis is increased. The Treasury Department and the IRS do not believe that prohibiting member-partners from consolidating their bases in a partnership for purposes of applying section 732(f) in these situations furthers Congress's intent to sustain the effect of the basis reduction to distributed property.
These proposed regulations provide for the aggregation of basis within the same consolidated group (as defined in § 1.1502–1(h)), for purposes of section 732(f), when two conditions are met. First, two or more of the corporate partners receive a distribution of stock in a distributed corporation. Second, the distributed corporation is or becomes a member of the distributee partners' consolidated group following the distribution.
Under this rule, section 732(f) only applies to the extent that the partnership's adjusted basis in the distributed stock immediately before the distribution exceeds the aggregate basis of the distributed stock in the hands of all members of the distributee corporate partner's consolidated group immediately after the distribution. The requirement that the distributed corporation be a member of the consolidated group is intended to avoid unintended consequences that could result if that corporation was a controlled foreign corporation. However, the Treasury Department and the IRS request comments on whether this proposed rule should apply more broadly.
As described in the Background section of this Preamble, Congress enacted section 732(f) to address concerns that a corporate partner could otherwise negate the effects of a basis step-down to distributed property required under section 732(b) by applying the step-down against stock of a distributed corporation. Congress indicated that it intended for the control requirement to apply expansively by requiring corporate partners to apply section 732(f) whenever the corporate partner acquires control (as defined in section 732(f)(5)) of the distributed corporation as part of a plan or arrangement. The formalistic definition of control, however, fails to anticipate other scenarios in which a corporate partner's acquisition of the property of a distributed corporation has the same effect. To address these scenarios, Congress granted the Secretary authority to promulgate regulations necessary to carry out the purposes of section 732(f).
The Treasury Department and the IRS are concerned that some corporate partners might eliminate gain in the stock of a distributed corporation while avoiding the effects of a basis step-down in transactions in which the corporate partner's ownership of the distributed corporation does not satisfy the control requirement. For example, a distributed corporation not controlled by a corporate partner might subsequently merge into the corporate partner in a reorganization under section 368(a) in which gain is not recognized as part of a plan or arrangement. In this situation, the gain inherent in the stock of the distributed corporation is eliminated, but the basis of the distributed corporation's property is not reduced. If section 732(f) does not apply to this transaction, then the basis step-down is negated, contravening the purposes of section 732(f) and
Accordingly, these proposed regulations provide that, in the event of a gain elimination transaction, section 732(f) shall apply as though the corporate partner acquired control (as defined in section 732(f)(5)) of the distributed corporation immediately before the gain elimination transaction.
The proposed regulations define several terms for purposes of applying this rule. The term “Corporate Partner” means a person that is classified as a corporation for federal income tax purposes and that holds or acquires an interest in a partnership. The term “Stock” includes other equity interests, including options, warrants and similar interests. The term “Distributed Stock” means Stock distributed by a partnership to a Corporate Partner, or Stock the basis of which is determined by reference to the basis of such Stock. Distributed Stock also includes Stock owned directly or indirectly by a Distributed Corporation if the basis of such Stock has been reduced pursuant to section 732(f)(7). The term “Distributed Corporation” means the issuer of Distributed Stock (or, in the case of an option, the issuer of the Stock into which the option is exercisable). The term “Gain Elimination Transaction” means a transaction in which Distributed Stock is disposed of and less than all of the gain is recognized, unless (1) the transferor of the Distributed Stock receives in exchange Stock or a partnership interest that is exchanged basis property (as defined in section 7701(a)(44)) with respect to the Distributed Stock, or (2) a transferee corporation holds the Distributed Stock as transferred basis property (as defined in section 7701(a)(43)) with respect to a transferor corporation's gain. Examples of Gain Elimination Transactions include (without limitation) a reorganization under section 368(a) in which the
The IRS and the Treasury Department are concerned that taxpayers could use tiered partnerships to circumvent these regulations and section 732(f) generally. Congress specified in the Conference Report to the Ticket to Work Act that taxpayers should not be permitted to avoid the purposes of section 732(f) through the use of tiered partnerships. H.R. Conf. Rep. No. 106–478, 106th Cong., 1st Sess. 174 (1999). Therefore, these regulations require taxpayers to apply these regulations to tiered partnerships in a manner consistent with the purpose of section 732(f).
The rules governing aggregation of basis apply to distributions occurring on or after the date these regulations are published as final regulations in the
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. These proposed regulations do not impose a collection of information on small entities. Further, pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that these proposed regulations would not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that these proposed regulations would primarily affect sophisticated ownership structures with interlocking ownership of corporations, partnerships and corporate stock. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the
The principal authors of these regulations are Kevin I. Babitz and Joseph R. Worst, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
26 U.S.C. 7805 * * *
Section 1.732–3 also issued under 26 U.S.C. 337(d), 732(f), and 1502. * * *
(a)
(b)
(1) Two or more of the corporate partners receive a distribution of stock in another corporation; and
(2) The corporation, the stock of which was distributed by the partnership, is or becomes a member of the distributee partners' consolidated group following the distribution.
(c)
(2)
(i)
(ii)
(iii)
(iv)
(v)
(A) The transferor of the Distributed Stock receives in exchange Stock or a partnership interest that is exchanged basis property (as defined in section 7701(a)(44)) with respect to the Distributed Stock, or
(B) A transferee corporation holds the Distributed Stock as transferred basis property (as defined in section
(d)
(e)
Office of Surface Mining Reclamation and Enforcement, Interior.
Proposed rule; public comment period and opportunity for public hearing on proposed amendment.
The Office of Surface Mining Reclamation and Enforcement (OSMRE), is announcing receipt of a proposed amendment to the Kentucky regulatory program (the Kentucky program) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act). Kentucky submitted this proposed amendment with the intent to clarify certain permit application requirements. Specifically, Kentucky proposes to amend the language of two provisions that outline the permit application requirements for an operator seeking to mine land with severed surface and mineral estates.
This document gives the times and locations that the Kentucky program and this proposed amendment to that program are available for your inspection, the comment period during which you may submit written comments on the amendment, and the procedures that we will follow for the public hearing, if one is requested.
We will accept written comments on this amendment until 4 p.m., Eastern Standard Time (EST), July 13, 2015. If requested, we will hold a public hearing on the amendment on July 7, 2015. We will accept requests to speak at a hearing until 4:00 p.m., EST on June 29, 2015.
You may submit comments, identified by SATS No. KY–258–FOR and Docket ID OSM–2015–0001, by either of the following methods:
•
•
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•
Mr. Robert Evans, Field Office Director, Lexington Field Office, Office of Surface Mining Reclamation and Enforcement, 2675 Regency Road, Lexington, Kentucky 40503, Telephone: (859) 260–3900. Email:
In addition, you may review a copy of the amendment during regular business hours at the following location:
Mr. Steve Hohmann, Commissioner, Kentucky Department for Natural Resources, 2 Hudson Hollow, Frankfort, Kentucky 40601, Telephone: (502) 564–6940. Email:
Mr. Robert Evans, Office of Surface Mining Reclamation and Enforcement, Telephone: (859) 260–3900. Email:
Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, “. . . a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of this Act . . .; and rules and regulations consistent with regulations issued by the Secretary pursuant to this Act.”
By letter dated January 29, 2015 (Administrative Record No. KY–2001), the Kentucky Department for Natural Resources (KYDNR) submitted an amendment to its program under SMCRA (30 U.S.C. 1201
SMCRA sets forth the minimum application requirements for approval of a permit at section 510. When the mineral estate has been severed from the private surface estate, section 510(b)(6) of SMCRA provides that an operator
Currently, the Kentucky program requires a permit applicant to submit proof of its legal right to enter and commence surface or underground mining activities within the proposed permit area. The applicant is also required to explain the legal rights claimed and identify whether that right is the subject of pending litigation, among other application requirements. When the proposed land to be mined involves severed estates where the conveyance does not expressly grant the right to extract coal by surface mining methods and the operator has not obtained the written consent of all surface owners, the approved Kentucky program provides that the submission of a copy of the original instrument of severance and documentation that under applicable State law, the applicant has the legal authority to extract the coal by those methods is sufficient to demonstrate a right of entry and right to surface mine.
KYDNR now seeks to revise section 4 of 405 KAR 8:030 for surface coal mining permits, and 405 KAR 8:040 for underground coal mining permits. Specifically, KYDNR proposes to modify section 4(2)(c) to contain language that it believes clarifies the applicant's duty to demonstrate a right of entry and right to mine when the private surface estate and mineral estate has been severed. This revision proposes to remove the language in the current Kentucky program that requires the applicant to provide a copy of the original severance instrument. The proposed amendment would also move the proviso that the regulatory authority is prohibited from adjudicating property rights disputes into a new section, located at section 4(3) of 405 KAR 8:030 and 8:040.
The full text of the program amendment is available for you to read at the locations listed above under
Under the provisions of 30 CFR 732.17(h), we are seeking your comments on whether the amendment satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the State program.
If you submit written or electronic comments on the proposed rule during the 30-day comment period, they should be specific, confined to issues pertinent to the proposed regulations, and explain the reason for any recommended change(s). We appreciate any and all comments, but those most useful and likely to influence decisions on the final regulations will be those that either involve personal experience or include citations to and analyses of SMCRA, its legislative history, its implementing regulations, case law, other pertinent State or Federal laws or regulations, technical literature, or other relevant publications.
We cannot ensure that comments received after the close of the comment period (see
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.
If you wish to speak at the public hearing, contact the person listed under
To assist the transcriber and ensure an accurate record, we request, if possible, that each person who speaks at the public hearing provide us with a written copy of his or her comments. The public hearing will continue on the specified date until everyone scheduled to speak has been given an opportunity to be heard. If you are in the audience and have not been scheduled to speak and wish to do so, you will be allowed to speak after those who have been scheduled. We will end the hearing after everyone scheduled to speak and others present in the audience who wish to speak, have been heard.
If only one person requests an opportunity to speak, we may hold a public meeting rather than a public hearing. If you wish to meet with us to discuss the amendment, please request a meeting by contacting the person listed under
This rule is exempted from review by the Office of Management and Budget (OMB) under Executive Order 12866.
When a State submits a program amendment to OSMRE for review, our regulations at 30 CFR 732.17(h) require us to publish a notice in the
Intergovernmental relations, Surface mining, Underground mining.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to disapprove an element of State Implementation Plan (SIP) submissions from Illinois regarding the infrastructure requirements of section 110 of the Clean Air Act (CAA) for the 2006 fine particulate matter (PM
Comments must be received on or before July 13, 2015.
Submit your comments, identified by Docket ID No. EPA–R05–OAR–2009–0805 (2006 PM
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Sarah Arra, Environmental Scientist, Attainment Planning and Maintenance Section, Air Programs Branch (AR–18J), U.S. Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886–9401,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:
When submitting comments, remember to:
1. Identify the rulemaking by docket number and other identifying information (subject heading,
2. Follow directions—EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
4. Describe any assumptions and provide any technical information and/or data that you used.
5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
6. Provide specific examples to illustrate your concerns, and suggest alternatives.
7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
8. Make sure to submit your comments by the comment period deadline identified.
This rulemaking addresses August 9, 2011, and December 31, 2012, submissions from the Illinois Environmental Protection Agency (Illinois EPA) intended to address all applicable infrastructure requirements for the 2006 PM
The requirement for states to make a SIP submission of this type arises out of CAA section 110(a)(1). Pursuant to section 110(a)(1), states must make SIP submissions “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof),” and
This specific rulemaking is only taking action on the CAA section 110(a)(2)(E)(ii) requirement of these submittals. The majority of the other infrastructure elements were approved October 29, 2012 (77 FR 65478) and October 16, 2014 (79 FR 62042), rulemakings.
On September 13, 2013, EPA issued “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a)(2)” (2013 Memo). This guidance provides, among other things, advice on the development of infrastructure SIPs for the 2006 PM
Section 110(a)(2)(E)(ii) requires each SIP to contain provisions that comply with the state board requirements of section 128 of the CAA. That provision contains two explicit requirements: (1) That any board or body which approves permits or enforcement orders under this chapter shall have at least a majority of members who represent the public interest and do not derive any significant portion of their income from persons subject to permits and enforcement orders under this chapter, and (2) that any potential conflicts of interest by members of such board or body or the head of an executive agency with similar powers be adequately disclosed. The 2013 Memo specifies that the provisions that implement CAA section 128 would need to be contained within the SIP. “EPA would not approve an infrastructure SIP submission that only provides a narrative description of existing air agency laws, rules, and regulations that are not approved into the SIP to address CAA section 128 requirements.” 2013 Memo at 42.
After reviewing Illinois' SIP, EPA has made the preliminary determination that it does not contain provisions to comply with section 128 of the CAA, and thus Illinois' August 9, 2011, and December 31, 2012, infrastructure SIP submissions do not meet the requirements of the CAA. While Illinois has state statutes that may address, in whole or in part, requirements related to state boards at the state level, these provisions are not included in the SIP as required by the CAA. Based on an evaluation of the Federally-approved Illinois SIP, EPA is proposing to disapprove Illinois' infrastructure SIP submission in regards to meeting the requirements of section 110(a)(2)(E)(ii) of the CAA for the 2006 PM
EPA is proposing to disapprove a portion of submissions from Illinois certifying that its current SIP is sufficient to meet the required infrastructure element under CAA section 110(a)(2)(E)(ii) for the 2006 PM
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and, therefore, is not subject to review by the Office of Management and Budget.
This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
This action merely proposes to disapprove state law as not meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
Because this rulemaking proposes to disapprove pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it 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).
This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to disapprove a state rule, and does not alter the relationship or the distribution of power and responsibilities established in the CAA.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
This rulemaking also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it proposes to disapprove a state rule.
Because it is not a “significant regulatory action” under Executive Order 12866 or a “significant energy action,” this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply,
In reviewing state submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), EPA has no authority to disapprove a state submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a state submission, to use VCS in place of a state submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Particulate matter, Reporting and recordkeeping requirements.
Environmental Protection Agency.
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve the portions of the state implementation plan (SIP) revisions submitted by the State of South Carolina, through South Carolina Department of Health and Environmental Control on August 8, 2014, and August 22, 2014, that address the base year emissions inventory and emissions statements requirements for the State's portion of the bi-state Charlotte-Gastonia-Rock Hill North Carolina-South Carolina 2008 8-hour ozone national ambient air quality standards (NAAQS) nonattainment area. Annual emissions reporting (
Written comments must be received on or before July 13, 2015
Submit your comments, identified by Docket ID No. EPA–R04–OAR–2014–0915 by one of the following methods:
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Please see the direct final rule which is located in the Rules section of this
Tiereny Bell, Air Regulatory Management Section, Air Planning and Implementation Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. Ms. Bell can be reached at (404) 562–9088 and via electronic mail at
For additional information see the direct final rule which is published in the Rules Section of this
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing uses that qualify for the critical use exemption and the amount of methyl bromide that may be produced or imported for those uses for the 2016 control period. EPA is proposing this action under the authority of the Clean Air Act to reflect consensus decisions of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer at the Twenty-Sixth Meeting of the Parties in November 2014.
Comments must be received on or before July 13, 2015.
Submit your comments, identified by Docket ID No. EPA–HQ–OAR–2013–0369, to the Federal eRulemaking Portal:
For additional submission methods, the full EPA public comment policy, and general guidance on making effective comments, please visit
Jeremy Arling, Stratospheric Protection Division, Office of Atmospheric Programs, Mail Code 6205T, 1200 Pennsylvania Avenue NW., Washington, DC 20460; telephone number (202) 343–9055; email address
This proposed rule concerns Clean Air Act (CAA) restrictions on the consumption, production, and use of methyl bromide (a Class I, Group VI controlled substance) for critical uses during calendar year 2016. Under the Clean Air Act, methyl bromide consumption (consumption is defined under section 601 of the CAA as production plus imports minus exports) and production were phased out on January 1, 2005, apart from allowable exemptions, such as the critical use and the quarantine and preshipment (QPS) exemptions. With this action, EPA is proposing and seeking comment on the uses that will qualify for the critical use exemption as well as specific amounts of methyl bromide that may be produced and imported for proposed critical uses for 2016.
Entities and categories of entities potentially regulated by this proposed action include producers, importers, and exporters of methyl bromide; applicators and distributors of methyl bromide; and users of methyl bromide that applied for the 2016 critical use exemption including growers of vegetable crops, ornamentals, fruits, and nursery stock, and owners of stored food commodities. This list is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be regulated by this proposed action. To determine whether your facility, company, business, or organization could be regulated by this proposed action, you should carefully examine the regulations promulgated at 40 CFR part 82, subpart A. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the preceding section.
Methyl bromide is an odorless, colorless, toxic gas which is used as a broad-spectrum pesticide and is controlled under the CAA as a Class I ozone-depleting substance (ODS). Methyl bromide was once widely used as a fumigant to control a variety of pests such as insects, weeds, rodents, pathogens, and nematodes. Information on methyl bromide can be found at
Methyl bromide is also regulated by EPA under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and other statutes and regulatory authority, as well as by States under their own statutes and regulatory authority. Under FIFRA, methyl bromide is a restricted use pesticide. Restricted use pesticides are subject to Federal and State requirements governing their sale, distribution, and use. Nothing in this proposed rule implementing Title VI of the Clean Air Act is intended to derogate from provisions in any other Federal, State, or local laws or regulations governing actions including, but not limited to, the sale, distribution, transfer, and use of methyl bromide. Entities affected by this proposal must comply with FIFRA and other pertinent statutory and regulatory requirements for pesticides (including, but not limited to, requirements pertaining to restricted use pesticides) when producing, importing, exporting, acquiring, selling, distributing, transferring, or using methyl bromide. The provisions in this proposed action are intended only to implement the CAA restrictions on the production, consumption, and use of methyl bromide for critical uses exempted from the phaseout of methyl bromide.
The regulatory requirements of the stratospheric ozone protection program that limit production and consumption of ozone-depleting substances are in 40 CFR part 82, subpart A. The regulatory program was originally published in the
Methyl bromide was added to the Protocol as an ozone-depleting substance in 1992 through the Copenhagen Amendment to the Protocol. The Parties to the Montreal Protocol (Parties) agreed that each developed country's level of methyl bromide production and consumption in 1991 should be the baseline for establishing a freeze on the level of methyl bromide production and consumption for developed countries. EPA published a rule in the
At the Seventh Meeting of the Parties (MOP) in 1995, the Parties agreed to adjustments to the methyl bromide control measures and agreed to reduction steps and a 2010 phaseout date for developed countries with exemptions permitted for critical uses. At that time, the United States continued to have a 2001 phaseout date in accordance with section 602(d) of the CAAA of 1990. At the Ninth MOP in 1997, the Parties agreed to further adjustments to the phaseout schedule for methyl bromide in developed countries, with reduction steps leading to a 2005 phaseout. The Parties also established a phaseout date of 2015 for countries operating under Article 5 of the Protocol (developing countries).
In October 1998, the U.S. Congress amended the Clean Air Act to prohibit the termination of production of methyl bromide prior to January 1, 2005, to require EPA to align the U.S. phaseout of methyl bromide with the schedule specified under the Protocol, and to authorize EPA to provide certain exemptions. These amendments were contained in Section 764 of the 1999 Omnibus Consolidated and Emergency Supplemental Appropriations Act (Pub. L. 105–277, October 21, 1998) and were codified in section 604 of the CAA, 42 U.S.C. 7671c. The amendment that specifically addresses the critical use exemption appears at section 604(d)(6), 42 U.S.C. 7671c(d)(6). EPA revised the phaseout schedule for methyl bromide production and consumption in a rulemaking on November 28, 2000 (65 FR 70795), which allowed for the reduction in methyl bromide consumption specified under the Protocol and extended the phaseout to 2005 while creating a placeholder for critical use exemptions. Through an interim final rule on July 19, 2001 (66 FR 37751), and a final rule on January 2, 2003 (68 FR 238), EPA amended the regulations to allow for an exemption for quarantine and preshipment purposes.
On December 23, 2004 (69 FR 76982), EPA published a rule (the “Framework Rule”) that established the framework for the critical use exemption, set forth a list of approved critical uses for 2005, and specified the amount of methyl bromide that could be supplied in 2005 from stocks and new production or import to meet the needs of approved critical uses. EPA subsequently published rules applying the critical use exemption framework for each of the annual control periods from 2006 to 2015.
In accordance with Article 2H(5) of the Montreal Protocol, the Parties have issued several Decisions pertaining to the critical use exemption. These include Decisions IX/6 and Ex. I/4, which set forth criteria for review of critical uses. The status of Decisions is addressed in
Under authority of section 604(d)(6) of the CAA, EPA is now proposing the uses that will qualify as approved critical uses for 2016, as well as the amount of methyl bromide that may be produced or imported to satisfy those uses. The proposed critical uses and amounts reflect Decision XXVI/6, taken at the Twenty-Sixth Meeting of the Parties in November 2014.
Article 2H of the Montreal Protocol established the critical use exemption provision. At the Ninth Meeting of the Parties in 1997, the Parties established the criteria for an exemption in Decision IX/6. In that Decision, the Parties agreed that “a use of methyl bromide should qualify as `critical' only if the nominating Party determines that: (i) The specific use is critical because the lack of availability of methyl bromide for that use would result in a significant market disruption; and (ii) There are no technically and economically feasible alternatives or substitutes available to the user that are acceptable from the standpoint of environment and health and are suitable to the crops and circumstances of the nomination.” EPA promulgated these criteria in the definition of “critical use” at 40 CFR 82.3.
In addition, Decision IX/6 provides that production and consumption, if any, of methyl bromide for critical uses should be permitted only if a variety of conditions have been met, including that all technically and economically feasible steps have been taken to minimize the critical use and any associated emission of methyl bromide, that research programs are in place to develop and deploy alternatives and substitutes, and that methyl bromide is not available in sufficient quantity and quality from existing stocks of banked or recycled methyl bromide.
EPA requested critical use exemption applications for 2016 through a
EPA reviews the data submitted by applicants, as well as data from governmental and academic sources, to establish whether there are technically and economically feasible alternatives available for a particular use of methyl bromide, and whether there would be a significant market disruption if no exemption were available. In addition, an interagency workgroup reviews other parameters of the exemption applications such as dosage and emissions minimization techniques and applicants' research or transition plans. As required in section 604(d)(6) of the CAA, for each exemption period, EPA consults with the United States Department of Agriculture (USDA).
On January 22, 2014, the United States submitted the twelfth
The December 23, 2004, Framework Rule established the framework for the critical use exemption program in the United States, including definitions, prohibitions, trading provisions, and recordkeeping and reporting obligations. The preamble to the Framework Rule included EPA's determinations on key issues for the critical use exemption program.
Since publishing the Framework Rule, EPA has annually promulgated regulations to exempt specific quantities of production and import of methyl bromide and to indicate which uses meet the criteria for the exemption program for that year.
This proposed action continues the approach established in the 2013 Rule (78 FR 43797, July 22, 2013) for determining the amounts of Critical Use Allowances (CUAs) to be allocated for critical uses. A CUA is the privilege granted through 40 CFR part 82 to produce or import 1 kilogram (kg) of methyl bromide for an approved critical use during the specified control period. A control period is a calendar year. See 40 CFR 82.3. Each year's allowances expire at the end of that control period and, as explained in the Framework Rule, are not bankable from one year to the next.
In Decision XXVI/6, taken in November 2014, the Parties to the Protocol agreed “[t]o permit, for the agreed critical-use categories for 2015 and 2016 set forth in table A of the annex to the present decision for each party, subject to the conditions set forth in the present decision and in decision Ex.I/4 to the extent that those conditions are applicable, the levels of production and consumption for 2015 and 2016 set forth in table B of the annex to the present decision, which are necessary to satisfy critical uses. . . .” The following uses are those set forth in table A of the annex to Decision XXVI/6 for the United States for 2016:
EPA is proposing to modify the table in 40 CFR part 82, subpart A, appendix L to reflect the agreed critical use categories for 2016. EPA is proposing to amend the table of critical uses and critical users based on the uses permitted in Decision XXVI/6 and the technical analyses contained in the 2016 U.S. nomination that assess data submitted by applicants to the CUE program.
Specifically, EPA is proposing to remove the food processing uses that were listed as critical uses for 2014. The California Date Commission as well as all users under the food processing use (rice millers, pet food manufacturing facilities, and members of the North American Millers' Association) did not submit CUE applications for 2016 and therefore were not included in the 2016 U.S. nomination to the Parties of the Montreal Protocol.
EPA is also proposing to remove the remaining commodity uses (walnuts, dried plums, figs, and raisins). These sectors applied for a critical use in 2016 but the United States did not nominate them for 2016. In addition, some sectors that were not on the list of critical uses for 2014 or 2015 submitted applications for 2016. These sectors are: Michigan cucurbit, eggplant, pepper, and tomato growers; Florida eggplant, pepper, strawberry, and tomato growers; the California Association of Nursery and Garden Centers; California stone fruit, table and raisin grape, walnut, and almond growers; ornamental growers in California and Florida; and the U.S. Golf Course Superintendents Association. EPA conducted a thorough technical assessment of each application and considered the effects that the loss of methyl bromide would have for each agricultural sector, and whether significant market disruption would occur as a result. Following this technical review, EPA consulted with the USDA and the Department of State. EPA determined that these users did not meet the critical use criteria in Decision IX/6 and the United States therefore did not include them in the 2016 Critical Use Nomination. EPA notified these sectors of their status by letters dated March 28, 2014. For each of these uses, EPA found that there are technically and economically feasible alternatives to methyl bromide. EPA refers readers to the
EPA is also seeking comment on the technical analyses contained in the U.S. nomination (available for public review in the docket) and information regarding any changes to the registration (including cancellations or registrations), use, or efficacy of alternatives that occurred after the nomination was submitted. EPA recognizes that as the market for alternatives evolves, the thresholds for what constitutes “significant market disruption” or “technical and economic feasibility” may change. Such information has the potential to alter the technical or economic feasibility of an alternative and could thus cause EPA to modify the analysis that underpins EPA's determination as to which uses and what amounts of methyl bromide qualify for the CUE. EPA notes that it will not finalize a rule containing uses beyond those agreed to by the Parties for 2016.
Table A of the annex to Decision XXVI/6 lists critical uses and amounts agreed to by the Parties to the Montreal Protocol for 2016. The maximum amount of new production and import for U.S. critical uses in 2016, specified in Table B of the annex to Decision XXVI/6, is 234.78 MT, minus available stocks. This figure is equivalent to less than 1 percent of the U.S. 1991 methyl bromide consumption baseline of 25,528 MT.
EPA is proposing to determine the level of new production and import according to the framework and as modified by the 2013 Rule. Under this approach, the amount of new production for each control period would equal the total amount permitted by the Parties to the Montreal Protocol in their Decisions minus any reductions for available stocks, carryover, and the uptake of alternatives. These terms (available stocks, carryover, and the uptake of alternatives) are discussed in detail below. Applying this approach,
The Parties to the Protocol recognized in their Decisions that the level of existing stocks may differ from the level of available stocks. Decision XXVI/6 states that “production and consumption of methyl bromide for critical uses should be permitted only if methyl bromide is not available in sufficient quantity and quality from existing stocks. . . .” In addition, the Decision states that “parties operating under critical-use exemptions should take into account the extent to which methyl bromide is available in sufficient quantity and quality from existing stocks. . . .” Earlier Decisions also refer to the use of “quantities of methyl bromide from stocks that the Party has recognized to be available.” Thus, it is clear that individual Parties may determine their level of available stocks. Section 604(d)(6) of the CAA does not require EPA to adjust the amount of new production and import to reflect the availability of stocks; however, as explained in previous rulemakings, making such an adjustment is a reasonable exercise of EPA's discretion under this provision.
In the 2013 CUE Rule (78 FR 43797, July 22, 2013), EPA established an approach that considered whether a percentage of the existing inventory was available. In that rule, EPA took comment on whether 0% or 5% of the existing stocks was available. The final rule found that 0% was available for critical use in 2013 for a number of reasons including: A pattern of significant underestimation of inventory drawdown; the increasing concentration of critical users in California while inventory remained distributed nationwide; and the recognition that the agency cannot compel distributors to sell inventory to critical users. For further discussion, please see the 2013 CUE Rule (78 FR 43802).
EPA believes that 5% of existing stocks will be available in 2016 for the two proposed critical uses. As a result of the changes to the FIFRA labeling, methyl bromide sold or distributed in 2015 can only be used for approved critical uses or for quarantine and preshipment purposes. Except for sectors with quarantine and preshipment uses, California strawberries is the only pre-plant sector that will be able to use stocks in 2015 or 2016. EPA does not anticipate stocks to be used for quarantine and preshipment uses as there are no production allowances required to manufacture that material and it tends to be less expensive than stocks. Distributors will therefore likely make stocks available to California strawberry growers in 2015 and 2016.
While EPA is not proposing to estimate the amount that will be used in 2015, EPA believes that at least 5% stocks will be available in 2016. As discussed in the carryover section below, demand by California strawberry growers in 2014 for critical use methyl bromide was lower than anticipated. For the first time since 2009, not all of the critical use material produced or imported for a control period was sold. Decreased demand for critical use methyl bromide in 2014 means that unsold material already produced will be available in 2015 in addition to stocks.
Furthermore, EPA now knows the national distribution and composition of stocks (
For these reasons, EPA is proposing to find 5% of the existing inventory available for use in 2016. EPA specifically invites comment on whether between 0% and 5% of existing inventory will be available to critical users in 2016, taking into consideration the FIFRA labeling changes, the recent history of inventory drawdown, the amount of unsold 2014 critical use methyl bromide, the removal of the critical stock allowance provisions that limited the amount of stocks that can be sold for critical uses, the quantity and geographical location of approved uses, and the quantity and location of stocks. Existing stocks, as of December 31, 2014, were equal to 158,121 kg. Therefore, EPA is proposing to reduce the amount of new production for 2016 by 7,906 kg.
In 2015, companies reported that 442,200 kg of methyl bromide was produced or imported for U.S. critical uses in 2014. EPA also received reports that 355,857 kg of critical use methyl bromide was sold to end-users in 2014. EPA calculates that the carryover amount at the end of 2014 was 86,343 kg, which is the difference between the reported amount of critical use methyl bromide produced or imported in 2014 and the reported amount of sales of that material to end users in 2014. EPA's calculation of carryover is consistent with the method used in previous CUE rules, and with the format in Decision XVI/6 for calculating column L of the U.S. Accounting Framework. All U.S. Accounting Frameworks for critical use methyl bromide are available in the public docket for this rulemaking. EPA is therefore proposing to reduce the total level of new production and import for critical uses by 86,343 kg to reflect the amount of carryover material available at the end of 2014, in addition to the 7,906 kg reduction for available stocks discussed above.
EPA is not proposing to make any other modifications to CUE amounts to account for availability of alternatives. Rates of transition to alternatives have
EPA is proposing to assign the 7,906 kg reduction for available stocks and 86,343 kg reduction for carryover in proportion to the amounts indicated in Table A of the annex to Decision XXVI/6. In other words, both the pre-plant and the post-harvest allocation would be reduced by 40%. Specifically, the pre-plant allocation for California strawberry production would decline from 231,540 kg to 138,592 kg and the post-harvest allocation for dry cured ham would decline from 3,240 kg to 1,939 kg. Reported data show that the critical use methyl bromide carried over from 2014 and the existing stocks include both pre-plant and post-harvest material. EPA invites comment on reducing the allocation in this proportional manner or whether an alternate method is preferable.
The proposed Framework Rule contained several options for allocating critical use allowances, including a sector-by-sector approach. The agency evaluated various options based on their economic, environmental, and practical effects. After receiving comments, EPA determined in the final Framework Rule that a lump-sum, or universal, allocation, modified to include distinct caps for pre-plant and post-harvest uses, was the most efficient and least burdensome approach that would achieve the desired environmental results, and that a sector-by-sector approach would pose significant administrative and practical difficulties. Because EPA is proposing only one use in the pre-plant sector and one use in the post-harvest sector for 2016, this proposed rule follows the breakout of specific uses in Decision XXVI/6.
Decision XXVI/6 calls on Parties to apply the criteria in Decision IX/6, paragraph 1 and the conditions set forth in Decision Ex. I/4 (to the extent applicable) to exempted critical uses for the 2016 control period. The following section provides references to sections of this preamble and other documents where EPA considers the criteria of those two Decisions.
Decision IX/6, paragraph 1 contains the critical use criteria, which are summarized in Section III.A of the preamble. The nomination documents detail how each proposed critical use meets the criteria in Decision IX/6, paragraph 1 including: The lack of available technically and economically feasible alternatives under the circumstance of the nomination; efforts to minimize use and emissions of methyl bromide where technically and economically feasible; and the development of research and transition plans. The nomination documents also address the requests in Decision Ex. I/4 paragraphs 5 and 6 that Parties consider and implement MBTOC recommendations, where feasible, on actions a Party may take to reduce the critical uses of methyl bromide and include information on the methodology they use to determine economic feasibility.
A discussion of the agency's application of the critical use criteria to the proposed critical uses for 2016 appears in Sections III.A., III.C., and III.D. of this preamble. EPA solicits comments on the technical and economic basis for determining that the uses listed in this proposed rule meet the criteria of the critical use exemption.
The agency has previously provided its interpretation of the criterion in Decision IX/6, paragraph (1)(a)(i) regarding the presence of significant market disruption in the absence of an exemption. EPA refers readers to the preamble to the 2006 CUE rule (71 FR 5989, February 6, 2006) as well as to the memo in the docket titled “Development of 2003 Nomination for a Critical Use Exemption for Methyl Bromide for the United States of America” for further elaboration. As explained in those documents, EPA's interpretation of this term has several dimensions, including looking at potential effects on both demand and supply for a commodity, evaluating potential losses at both an individual level and at an aggregate level, and evaluating potential losses in both relative and absolute terms.
The United States has also considered the adoption of alternatives and research into methyl bromide alternatives in the development of the National Management Strategy submitted to the Ozone Secretariat in December 2005 and updated in October 2009. The National Management Strategy addresses all of the aims specified in Decision Ex. I/4, paragraph 3 to the extent feasible and is available in the docket for this rulemaking.
Previous Decisions of the Parties have stated that critical users shall employ emissions minimization techniques such as virtually impermeable films, barrier film technologies, deep shank injection and/or other techniques that promote environmental protection, whenever technically and economically feasible. EPA developed a comprehensive strategy for risk mitigation through the 2009 Reregistration Eligibility Decision (RED)
EPA will continue to work with the U.S. Department of Agriculture–
Users of methyl bromide should continue to make every effort to minimize overall emissions of methyl bromide. EPA also encourages researchers and users who are using techniques to minimize emissions of methyl bromide to inform EPA of their experiences and to provide information on such techniques with their critical use applications.
Additional information about these statutes and Executive Orders can be found at
This action is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. This action was deemed to raise novel legal or policy issues. Any changes made in response to OMB recommendations have been documented in the docket.
This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control number 2060–0482. The application, recordkeeping, and reporting requirements have already been established under previous critical use exemption rulemakings.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. Since this rule would allow the use of methyl bromide for approved critical uses after the phaseout date of January 1, 2005, this action would confer a benefit to users of methyl bromide. We have therefore concluded that this action will relieve regulatory burden for all directly regulated small entities.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531–1538. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. This action would allocate allowances for the production and import of methyl bromide to private entities. This rule also would limit the proposed critical uses to geographical areas that reflect the scope of the trade associations that applied for a critical use. This rule does not impose any duties or responsibilities on State governments or allocate any rights to produce or use methyl bromide to a State government.
This action does not have tribal implications as specified in Executive Order 13175. This rule does not significantly or uniquely affect the communities of Indian tribal governments nor does it impose any enforceable duties on communities of Indian tribal governments. Thus, Executive Order 13175 does not apply to this action.
This action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because the Agency does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This action's health and risk assessments are contained in the Regulatory Impacts Analysis and Benefits Analysis found in the docket.
This action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution or use of energy. This action does not pertain to any segment of the energy production economy nor does it regulate any manner of energy use.
This rulemaking does not involve technical standards.
EPA believes this action will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations, because it affects the level of environmental protection equally for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population. Any ozone depletion that results from this action will result in impacts that are, in general, equally distributed across geographical regions in the United States. The impacts do not fall disproportionately on minority or low-income populations but instead vary with a wide variety of factors. Populations that work or live near fields or other application sites may benefit from the reduced amount of methyl bromide applied, as compared to amounts allowed under previous critical use exemption rules.
Environmental protection, Chemicals, Exports, Imports, Ozone depletion.
For the reasons set forth in the preamble, EPA proposes to amend 40 CFR part 82 as follows:
42 U.S.C. 7414, 7601, 7671–7671q.
(c) * * *
(1) * * *
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments; notice of public hearing.
NMFS proposes to modify the baseline annual U.S. quota and subquotas for Atlantic bluefin tuna (BFT). NMFS also proposes minor modifications to the regulatory text regarding Atlantic tuna purse seine auxiliary vessel activity under the “transfer at sea” provisions. This action is necessary to implement binding recommendations of the International Commission for the Conservation of Atlantic Tunas (ICCAT), as required by the Atlantic Tunas Convention Act (ATCA), and to achieve domestic management objectives under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
Written comments must be received on or before July 13, 2015. NMFS will host an operator-assisted public hearing conference call and webinar on July 1, 2015, from 2 to 4 p.m. EDT, providing an opportunity for individuals from all geographic areas to participate. See
You may submit comments on this document, identified by “NOAA–NMFS–2015–0011,” by either of the following methods:
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The public hearing conference call information is phone number 1–800–779–5379; participant passcode 1594994. Participants are strongly encouraged to log/dial in 15 minutes prior to the meeting. NMFS will show a brief presentation via webinar followed by public comment. To join the webinar, go to:
Supporting documents, including the Environmental Assessment, Regulatory Impact Review, and Initial Regulatory Flexibility Analysis, may be downloaded from the HMS Web site at
Sarah McLaughlin or Brad McHale, 978–281–9260.
Atlantic bluefin tuna, bigeye tuna, albacore tuna, yellowfin tuna, and skipjack tuna (hereafter referred to as “Atlantic tunas”) are managed under the dual authority of the Magnuson-Stevens Act and ATCA. As an active member of ICCAT, the United States implements binding ICCAT recommendations. ATCA authorizes the Secretary of Commerce (Secretary) to promulgate regulations, as may be necessary and appropriate to carry out ICCAT recommendations. The authority to issue regulations under the Magnuson-Stevens Act and ATCA has been delegated from the Secretary to the Assistant Administrator for Fisheries, NMFS.
Since 1982, ICCAT has recommended a Total Allowable Catch (TAC) of western Atlantic BFT, and since 1991, ICCAT has recommended specific limits (quotas) for the United States and other Contracting Parties.
In 2006, NMFS published a final rule in the
Regulations implemented under the authority of ATCA (16 U.S.C. 971
NMFS has prepared an Environmental Assessment (EA), Regulatory Impact Review (RIR), and an Initial Regulatory Flexibility Analysis (IRFA), which present and analyze anticipated environmental, social, and economic impacts of several alternatives for each of the major issues contained in this proposed rule. The list of alternatives and their analyses are provided in the draft EA/RIR/IRFA and are not repeated here in their entirety. A copy of the draft EA/RIR/IRFA prepared for this proposed rule is available from NMFS (see
At its November 2014 meeting, ICCAT adopted a western Atlantic BFT TAC of 2,000 mt annually for 2015 and 2016 after considering the results of the 2014 BFT stock assessment and following negotiations among Contracting Parties (ICCAT Recommendation 14–05). This TAC, which is an increase from the 1,750-mt TAC that has applied annually since 2011, is consistent with scientific advice from the 2014 stock assessment, which indicated that annual catches of less than 2,250 mt would have a 50-percent probability of allowing the spawning stock biomass to be at or above its 2013 level by 2019 under either recruitment scenario, and that annual catches of 2,000 mt or less would continue to allow stock growth under both the low and high recruitment scenarios for the remainder of the rebuilding program. All TAC, quota, and weight information discussed in this notice are whole weight amounts.
For 2015 and 2016, the ICCAT Recommendation also makes the following allocations from the western BFT 2,000-mt TAC for bycatch related to directed longline fisheries in the Northeast Distant gear restricted area (NED): 15 mt for Canada and 25 mt for the United States. Following subtraction of these allocations from the TAC, the recommendation allocates the remainder to the United States (54.02 percent), Canada (22.32 percent) Japan (17.64 percent), Mexico (5.56 percent), UK (0.23 percent), and France (0.23 percent). For the United States, 54.02 percent of the remaining 1,960 mt is
As a method for limiting fishing mortality on juvenile BFT, ICCAT continued to recommend a tolerance limit on the annual harvest of BFT measuring less than 115 cm (straight fork length) to no more than 10 percent by weight of a Contracting Party's total BFT quota over the 2015 and 2016 fishing periods. The United States implements this provision by limiting the harvest of school BFT (measuring 27 to less than 47 inches (68.5 to less than 119 cm curved fork length)) as appropriate to not exceed the 10-percent limit over the two-year period.
The 1999 FMP and its implementing regulations established baseline percentage quota shares for the domestic fishing categories. These percentage shares were based on allocation procedures that NMFS developed over several years, based on historical share, fleet size, effort, and landings by category, and stock assessment data collection needs. The baseline percentage quota shares established in the 1999 FMP were continued in the 2006 Consolidated HMS FMP. Amendment 7 to the 2006 Consolidated HMS FMP modified the quota calculation process as follows: First, 68 mt is subtracted from the baseline annual U.S. BFT quota and allocated to the Longline category quota. Second, the remaining quota is divided among the categories according to the following percentages: General—47.1 percent; Angling—19.7 percent; Harpoon—3.9 percent; Purse Seine—18.6 percent; Longline—8.1 percent (plus the 68-mt initial allocation); Trap—0.1 percent; and Reserve—2.5 percent.
The table below shows the proposed quotas and subquotas that result from applying this process. These quotas would be codified at § 635.27(a) and would remain in effect until changed (for instance, if any new ICCAT western BFT TAC recommendation is adopted). Because ICCAT adopted TACs for 2015 and 2016 in Recommendation 14–05, NMFS currently anticipates that these annual base quotas would be in effect through 2016.
Also as a result of the Amendment 7 process and consistent with the regulations, NMFS at the beginning of the year calculated the quota available to individual Atlantic Tunas Purse Seine category fishery participants for 2015 based on BFT catch (landings and dead discards) by those fishery participants in 2014 and then reallocated the remaining 87.4 mt of available Purse Seine category quota to the Reserve category for the 2015 fishing year. This process resulted in revised Purse Seine and Reserve category quotas of 71.7 mt and 108.8 mt, respectively (80 FR 7547, February 11, 2015). If NMFS finalizes the U.S. baseline BFT quota as proposed here, NMFS will again calculate the amounts of quota available to individual Purse Seine fishery participants for 2015 applying the baseline Purse Seine category quota as finalized (and adjust the Reserve category quota as appropriate). Based on
Amendment 7 also changed the way that NMFS adjusts the U.S. annual quota for any previous year's underharvest. Rather than publishing proposed and final quota specifications annually to adjust the quota for the underharvest as NMFS has in the past, NMFS will automatically augment the Reserve category quota to the extent that underharvest from the previous year is available. Such adjustment will be consistent with ICCAT limits and will be calculated when complete BFT catch information for the prior year is available and finalized. NMFS may allocate any portion of the Reserve category quota for inseason or annual adjustments to any fishing category quota pursuant to regulatory determination criteria described at 50 CFR 635.27(a)(8), or for scientific research.
Although preliminary 2014 landings and dead discard estimates indicate an underharvest of approximately 218 mt (using the 160.6-mt 2013 dead discard estimate as a proxy), the amount the United States may carry forward to 2015 is limited to 94.9 mt by ICCAT recommendation. The final 2013 estimate and a preliminary 2014 estimate will be available in June 2015, and NMFS will announce any adjustment to the 2015 Reserve category quota based on the amount of 2014 underharvest.
Currently, HMS regulations specify that an owner or operator of a vessel for which an Atlantic Tunas Purse Seine category permit has been issued “may transfer large medium and giant BFT at sea from the net of the catching vessel to another vessel for which an Atlantic Tunas Purse Seine category permit has been issued, provided the amount transferred does not cause the receiving vessel to exceed its currently authorized vessel allocation, including incidental catch limits.” NMFS is proposing minor modifications to this regulatory text to clarify that this text was not meant to allow “transfer at sea,” which clearly is prohibited by ICCAT Recommendation 14–05, but only to allow the routine, limited operations of an auxiliary vessel (
NMFS solicits comments on this proposed rule through July 13, 2015. See instructions in
NMFS will hold a public hearing conference call and webinar on July 1, 2015, from 2 p.m. to 4 p.m. EDT, to allow for an additional opportunity for interested members of the public from all geographic areas to submit verbal comments on the proposed quota rule.
The public is reminded that NMFS expects participants at public hearings and on conference calls to conduct themselves appropriately. At the beginning of the conference call, a representative of NMFS will explain the ground rules (all comments are to be directed to the agency on the proposed action; attendees will be called to give their comments in the order in which they registered to speak; each attendee will have an equal amount of time to speak; and attendees should not interrupt one another). The NMFS representative will attempt to structure the meeting so that all attending members of the public will be able to comment, if they so choose, regardless of the controversial nature of the subject(s). Attendees are expected to respect the ground rules, and, if they do not, they will be asked to leave the meeting.
The NMFS Assistant Administrator has determined that the proposed rule is consistent with the 2006 Consolidated HMS FMP and its amendments, the Magnuson-Stevens Act, ATCA, and other applicable law, subject to further consideration after public comment.
This proposed rule has been determined to be not significant for purposes of Executive Order 12866.
An 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. A description of the action, why it is being considered, and the legal basis for this action are contained in the
In compliance with section 603(b)(1) of the Regulatory Flexibility Act, the purpose of this proposed rulemaking is, consistent with the 2006 Consolidated HMS FMP objectives, the Magnuson-Stevens Act, and other applicable law, to analyze the impacts of the alternatives for implementing and allocating the ICCAT-recommended U.S. quota for 2015 and 2016; and to clarify the purse seine transfer at sea regulations for Atlantic tunas.
In compliance with section 603(b)(2) of the Regulatory Flexibility Act, the objective of this proposed rulemaking is to implement ICCAT recommendations.
Section 603(b)(3) requires agencies to provide an estimate of the number of small entities to which the rule would apply. The Small Business Administration (SBA) has established size criteria for all major industry sectors in the United States, including fish harvesters. This proposed rule is expected to directly affect commercial and for-hire fishing vessels that possess an Atlantic Tunas permit or Atlantic HMS Charter/Headboat permit. In general, the HMS Charter/Headboat category permit holders can be regarded as small entities for RFA purposes. HMS Angling (recreational) category permit holders are typically obtained by individuals who are not considered small entities for purposes of the RFA. The SBA has established size criteria for all major industry sectors in the United States including fish harvesters (79 FR 33647; June 12, 2014). A business involved in fish harvesting is classified as a “small business” if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts (revenue) not in excess of $20.5 million for all of its affiliated operations worldwide (NAICS code 114111, finfish fishing). NAICS is the North American Industry Classification System, a standard system used by business and government to classify business establishments into industries, according to their economic activity. The United States government developed NAICS to collect, analyze, and publish data about the economy. In addition, the SBA has defined a small charter/party boat entity (NAICS code 487210, for-hire) as one with average annual receipts (revenue) of less than $7.5 million.
As described in the recently published final rule to implement Amendment 7 to the 2006 Consolidated HMS FMP (79 FR 71510, December 2, 2014), the average annual gross revenue per active pelagic longline vessel was estimated to be $187,000 based on the 170 active vessels between 2006 and 2012 that produced an estimated $31.8 million in revenue annually. The maximum annual revenue for any pelagic longline vessel during that time period was less than $1.4 million, well below the SBA size threshold of $20.5 million in combined annual receipts. Therefore, NMFS considers all Atlantic Tunas Longline category permit holders to be small entities. NMFS is unaware of any other Atlantic Tunas category permit holders that potentially could earn more than $20.5 million in revenue annually. NMFS is also unaware of any charter/headboat businesses that could exceed the $7.5 million thresholds for those small entities. HMS Angling category permit holders are typically obtained by individuals who are not considered small entities for purposes of the RFA. Therefore, NMFS considers all Atlantic Tunas permit holders and HMS Charter/Headboat permit holders subject to this action to be small entities.
This action would apply to all participants in the Atlantic BFT fishery,
NMFS has determined that this action would not likely directly affect any small government jurisdictions defined under the RFA.
Under section 603(b)(4) of the Regulatory Flexibility Act, agencies are required to describe any new reporting, record-keeping, and other compliance requirements. There are no new reporting or recordkeeping requirements in any of the alternatives considered for this action.
Under section 603(b)(5) of the Regulatory Flexibility Act, agencies must identify, to the extent practicable, relevant Federal rules which duplicate, overlap, or conflict with the proposed rule. Fishermen, dealers, and managers in these fisheries must comply with a number of international agreements, domestic laws, and other FMPs. These include, but are not limited to, the Magnuson-Stevens Act, the ATCA, the High Seas Fishing Compliance Act, the Marine Mammal Protection Act, the Endangered Species Act (ESA), the National Environmental Policy Act, the Paperwork Reduction Act, and the Coastal Zone Management Act. This proposed rule has also been determined not to duplicate, overlap, or conflict with any relevant regulations, Federal or otherwise.
Under section 603(c) of the Regulatory Flexibility Act, agencies are required to describe any alternatives to the proposed rule which accomplish the stated objectives and which minimize any significant economic impacts. These alternatives and their impacts are discussed below. Additionally, the Regulatory Flexibility Act (5 U.S.C. 603 (c) (1)–(4)) lists four general categories of significant alternatives that would assist an agency in the development of significant alternatives. These categories of alternatives are: (1) Establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) use of performance rather than design standards; and, (4) exemptions from coverage of the rule for small entities.
In order to meet the objectives of this proposed rule, consistent with the Magnuson-Stevens Act, ATCA, and the ESA, NMFS cannot exempt small entities or change the reporting requirements only for small entities because all the entities affected are considered small entities. Thus, no alternatives are discussed that fall under the first and fourth categories described above. Amendment 7 implemented criteria for determining the availability of quota for Purse Seine fishery category participants and IBQs for the Longline category. Both of these and the eligibility criteria for IBQs and access to the Cape Hatteras GRA for the Longline category can be considered individual performance standards. NMFS has not yet found a practical means of applying individual performance standards to the other quota categories while, concurrently, complying with the Magnuson-Stevens Act. Thus, there are no alternatives considered under the third category.
NMFS has estimated the average impact that establishing the increased baseline annual U.S. BFT quota for all domestic fishing categories would have on each quota category and the vessels within those categories. As mentioned above, the 2014 ICCAT recommendation increased the annual U.S. baseline BFT quota for each of 2015 and 2016 to 1,058.79 mt and provides 25 mt annually for incidental catch of BFT related to directed longline fisheries in the NED. The baseline annual subquotas would be adjusted consistent with the process established in Amendment 7 (79 FR 71510, December 2, 2014), and these amounts would be codified.
To calculate the average ex-vessel revenues under the proposed action, NMFS first estimated potential category-wide revenues. The most recent ex-vessel average price per pound information for each commercial quota category is used to estimate potential ex-vessel gross revenues under the proposed subquotas (
No affected entities would be expected to experience negative, direct economic impacts as a result of this action. On the contrary, each of the quota categories would increase relative to the baseline quotas that applied in 2011 through 2014 and the quotas finalized in Amendment 7. To the extent that Purse Seine fishery participants and IBQ participants could receive additional quota as a result of Amendment 7-implemented allocation formulas being applied to increases in available Purse Seine and Longline category quota, those participants would receive varying increases, which would result in direct benefits from either increased fishing opportunities or quota leasing.
To estimate potential average ex-vessel revenues that could result from this action, NMFS divides the potential annual gross revenues for the General, Harpoon, Purse Seine, and Trap category by the number of permit holders. For the Longline category, NMFS divides the potential annual gross revenues by the number of active vessels as defined in Amendment 7. This is an appropriate approach for BFT fisheries, in particular because available landings data (weight and ex-vessel value of the fish in price-per-pound) allow NMFS to calculate the gross revenue earned by a fishery participant on a successful trip. The available data (particularly from non-Longline participants) do not, however, allow NMFS to calculate the effort and cost associated with each successful trip (
Success rates vary widely across participants in each category (due to extent of vessel effort and availability of commercial-sized BFT to participants where they fish) but for the sake of estimating potential revenues per vessel, category-wide revenues can be divided by the number of permitted vessels in each category. For the Longline fishery, the number of vessels deemed eligible for IBQ shares is used, and actual revenues would depend, in part, on each vessel's IBQ in 2015. Although HMS Charter/Headboat vessels may fish commercially under the General category quota and retention limits, because it is unknown what portion of HMS Charter/Headboat permit holders actively participate in the BFT fishery, NMFS is estimating potential General category ex-vessel revenue changes using the number of General category vessels only.
Estimated potential 2015 revenues on a per vessel basis, considering the number of permit holders listed above and the proposed subquotas, could be $2,441 for the General category; $43,703 for the Harpoon category; $387,618 for the Purse Seine category; $12,642 for the Longline category, using the 135 vessels eligible for IBQ shares; and $3,836 for the Trap category. Thus, all of the entities affected by this rule are considered to be small entities for the purposes of the RFA.
Consistent with Amendment 7 regulations, NMFS calculated the quota available to Purse Seine fishery participants for 2015 and then reallocated the remaining 87.4 mt of available Purse Seine category quota to the Reserve category (80 FR 7547, February 11, 2015). NMFS will further adjust those amounts if the U.S. baseline BFT quota in this proposed rule is finalized. The analyses in this IRFA are limited to the proposed baseline subquotas.
Because the directed commercial categories have underharvested their subquotas in recent years, the potential increases in ex-vessel revenues above may overestimate the probable economic impacts to those categories relative to recent conditions. Additionally, there has been substantial interannual variability in ex-vessel revenues per category in recent years due to recent changes in BFT availability and other factors.
The proposed modifications to the regulatory text concerning Atlantic tunas purse seine transfer at sea are intended to clarify the prohibition on transfer at sea. They apply to the five Purse Seine fishery participants only and are not expected to have significant economic impacts as they are administrative in nature, reflect current practice, and would not result in changes to Atlantic tunas purse seine operations.
Fisheries, Fishing, Fishing vessels, Foreign relations, Imports, Penalties, Reporting and recordkeeping requirements, Treaties.
For the reasons set out in the preamble, 50 CFR part 635 is proposed to be amended as follows:
16 U.S.C. 971
(a)
(1) * * *
(i) Catches from vessels for which General category Atlantic Tunas permits have been issued and certain catches from vessels for which an HMS Charter/Headboat permit has been issued are counted against the General category quota in accordance with § 635.23(c)(3). Pursuant to paragraph (a) of this section, the amount of large medium and giant bluefin tuna that may be caught, retained, possessed, landed, or sold under the General category quota is 466.7 mt, and is apportioned as follows, unless modified as described under paragraph (a)(1)(ii) of this section:
(A) January 1 through the effective date of a closure notice filed by NMFS announcing that the January subquota is reached, or projected to be reached under § 635.28(a)(1), or through March 31, whichever comes first—5.3 percent (24.7 mt);
(B) June 1 through August 31—50 percent (233.3 mt);
(C) September 1 through September 30—26.5 percent (123.7 mt);
(D) October 1 through November 30—13 percent (60.7 mt); and
(E) December 1 through December 31—5.2 percent (24.3 mt).
(2)
(i) After adjustment for the school bluefin tuna quota held in reserve (under paragraph (a)(7)(ii) of this section), 52.8 percent (46.6 mt) of the school bluefin tuna Angling category quota may be caught, retained, possessed, or landed south of 39°18′ N. lat. The remaining school bluefin tuna Angling category quota (41.7 mt) may be caught, retained, possessed or landed north of 39°18′ N. lat.
(ii) An amount equal to 52.8 percent (43.5 mt) of the large school/small medium bluefin tuna Angling category quota may be caught, retained, possessed, or landed south of 39°18′ N. lat. The remaining large school/small medium bluefin tuna Angling category quota (38.9 mt) may be caught, retained, possessed or landed north of 39°18′ N. lat.
(iii) One third (1.5 mt) of the large medium and giant bluefin tuna Angling category quota may be caught, retained, possessed, or landed, in each of the three following geographic areas: (1) North of 39°18′ N. lat.; (2) south of 39°18′ N. lat., and outside of the Gulf of Mexico; and (3) in the Gulf of Mexico. For the purposes of this section, the Gulf of Mexico region includes all waters of the U.S. EEZ west and north of the boundary stipulated at 50 CFR 600.105(c).
(3)
(4) * * *
(i)
(5)
(6)
(7) * * *
(i) The total amount of bluefin tuna that is held in reserve for inseason or annual adjustments and research using quota or subquotas is 24.8 mt, which may be augmented by allowable underharvest from the previous year, or annual reallocation of Purse Seine category quota as described under paragraph (a)(4)(v) of this section. Consistent with paragraphs (a)(8) through (10) of this section, NMFS may allocate any portion of the Reserve category quota for inseason or annual adjustments to any fishing category quota.
(ii) The total amount of school bluefin tuna that is held in reserve for inseason or annual adjustments and fishery-independent research is 18.5 percent (20.1 mt) of the total school bluefin tuna Angling category quota as described under paragraph (a)(2) of this section. This amount is in addition to the amounts specified in paragraph (a)(7)(i) of this section. Consistent with paragraph (a)(8) of this section, NMFS may allocate any portion of the school bluefin tuna Angling category quota held in reserve for inseason or annual adjustments to the Angling category.
(c) An owner or operator of a vessel for which an Atlantic Tunas Purse Seine category permit has been issued under § 635.4 may use an auxiliary vessel associated with the permitted vessel (
Commodity Credit Corporation and Farm Service Agency, USDA.
Notice of Intent (NOI); request for comments.
This notice announces that the Farm Service Agency (FSA), on behalf of the Commodity Credit Corporation (CCC), intends to prepare a Programmatic Environmental Impact Statement (PEIS) as required by the National Environmental Policy Act of 1969 (NEPA). The PEIS will assess the potential environmental consequences associated with proposed discretionary changes to the Biomass Crop Assistance Program (BCAP). This notice informs the public of FSA's intent to seek public comment on potential changes being considered for BCAP and on any environmental concerns related to the proposed changes. The input we receive as a result of this notice will enable us to develop alternatives for implementing the proposed changes to BCAP and begin to evaluate the impacts of those alternatives, as required by NEPA.
We will consider comments that we receive by July 13, 2015. Comments received after this date will be considered to the extent possible.
We invite you to submit comments on this NOI. In your comments, include the volume, date, and page number of this issue of the
• Federal eRulemaking Portal: Go to
• Email:
• Online: Go to
• Fax: (757) 594–1469.
• Mail, Hand Delivery, or Courier: BCAP PEIS, c/o Cardno TEC, Inc., 11817 Canon Blvd., Suite 300, Newport News, VA 23606.
All written comments will be available for inspection online at
Nell Fuller, National Environmental Compliance Manager, USDA, FSA, CEPD, Stop 0513, 1400 Independence Ave, SW., Washington, DC, 20250–0513, telephone: (202) 720–6303. Persons with disabilities who require alternative means for communication should contact the USDA Target Center at (202) 720–2600 (voice and TDD).
As required by NEPA (42 U.S.C. 4321–4347), the Council on Environmental Quality (CEQ) Regulations for Implementing the Procedural Provisions of NEPA (40 CFR parts 1500–1508), and FSA's NEPA compliance regulations (7 CFR part 799), FSA intends to assess potential discretionary changes to BCAP in 2015 by preparing a PEIS. The purpose of the PEIS process is to provide FSA decision makers, other agencies, Tribes, and the public with an analysis of the potential beneficial, adverse, and cumulative environmental impacts associated with proposed discretionary changes to BCAP.
BCAP was first authorized by the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill, Pub. L. 110–246). BCAP is a voluntary program that is intended to assist agricultural and forest land owners and operators with the establishment and production of eligible crops in selected project areas for conversion to bioenergy. Additionally, BCAP provides matching payments for the collection, harvest, storage and transportation of eligible material to designated biomass conversion facilities for use as heat, power, biobased products, research, or advanced biofuels. BCAP is administered by FSA on behalf of CCC with the support of other Federal and local agencies. More detailed information on BCAP may be obtained at
Since BCAP was initially authorized, FSA has completed extensive NEPA analysis relating to BCAP and to specific project areas and feedstocks. In 2010, a Final Programmatic Environmental Impact Statement (PEIS) for BCAP was published by FSA and resulted in a Record of Decision (ROD) that was signed on October 27, 2010. That PEIS evaluated environmental consequences of establishing and administering the BCAP as specified in the 2008 Farm Bill. The PEIS examined the environmental consequences of two alternatives: Targeted BCAP Implementation and Broad BCAP Implementation. Since 2010, Environmental Assessments (EA) have been prepared for various project areas and for specific feedstocks.
The Agricultural Act of 2014 (the 2014 Farm Bill, Pub. L. 113–79) amended and reauthorized BCAP through 2018. The 2014 Farm Bill included a number of non-discretionary changes to BCAP. Those changes are primarily administrative in nature and do not alter the general scope of the program. The 2014 Farm Bill changes have already been implemented through rulemaking (80 FR 10569–10575) and do not require additional analysis under NEPA.
FSA is currently considering discretionary changes to the way BCAP is implemented. Those discretionary changes define the scope of the new PEIS for which this NOI applies. The new PEIS that will be prepared for the proposed discretionary changes to BCAP will tie to the other applicable BCAP NEPA documentation as appropriate and will examine only those aspects of the program that are not covered in previous analyses. Copies of all FSA NEPA documents can be found at:
FSA is proposing several discretionary changes to further improve the functionality and flexibility of the establishment and annual
• Consideration and review of additional crops including: pongamia pinnata, giant miscanthus seeded and rhizome clones, giant reed (Arundo donax), pennycress (Thlaspi arvense), energy cane (Saccharum spp.), biomass sorghum, sweet sorghum, yellowhorned fruit tree, eastern cottonwood (Populus deltoides), kenaf, jatropha, eucalyptus (fast growing), castor beans (Ricinus communis), short rotation pine, tropical maize, hybrid willow, sweetgum, black locust, loblolly pine, aspen, rubber rabbitbrush (Ericameria nauseosa) and guayule (Parthenium argentatum).
• Requirements or additional practices for conservation plans on expiring Conservation Reserve Program (CRP) or Agricultural Conservation Easement Program (ACEP) land acres that would be enrolled in BCAP project areas.
• Potential for enrolling annual crops in BCAP project areas for contracts of less than five years.
• Program management processes that could help offset the lack of crop insurance for biomass crops or provide sufficient information for the Noninsured Crop Disaster Assistance Program (NAP) to establish coverage.
• Treatment of the required FSA annual rental reductions in the event of no bioenergy market end use (conversion to heat, power, advance biofuel or biobased product) for the harvested or collected biomass crops.
FSA will conduct scoping meetings to provide information on the proposed changes to BCAP and to solicit input from program participants, the public, and other stakeholders on the environmental impacts of these changes and alternatives to these changes. FSA will hold five scoping meetings. Each meeting will begin with an Open House (6 p.m.–6:30 p.m.) followed by a presentation (6:30 p.n.–7 p.m.). At the conclusion of the presentation FSA will accept verbal comments and answer questions. Times and locations are provided in the table below.
Under NEPA, the PEIS process provides a means for the public to provide input on implementation alternatives and environmental concerns for federal actions and programs. This notice informs the public of FSA's intent to prepare a PEIS for discretionary changes to BCAP, and provides notice of the opportunity for public input on the proposed discretionary changes. The PEIS will provide an analysis that evaluates program effects in appropriate contexts, describes the intensity of adverse as well as beneficial environmental impacts, and addresses the cumulative environmental impacts associated with the proposed changes to BCAP. There will be additional opportunities for public comment on the draft PEIS when it is developed. The final PEIS and subsequent Record of Decision will be used by FSA decision-makers in implementing changes to BCAP.
Forest Service, USDA.
Notice of intent to prepare an environmental assessment.
The Forest Service intends to prepare an environmental assessment to establish management direction for the land and resources within San Gabriel Mountains National Monument, designated by Presidential Proclamation on October 10, 2014. The Forest Service, as the responsible agency, proposes to amend the 2006 Angeles National Forest Land Management Plan with a management plan to provide for the protection of the objects of interest identified in the Proclamation. Approximately 99 percent of the Monument occurs on the Angeles National Forest and 1 percent on the San Bernardino National Forest.
Comments concerning the scope of the analysis must be received by July 27, 2015. The draft environmental assessment is expected in the spring of 2016, and the final environmental assessment and draft decision notice is expected in the summer of 2016.
Send written comments to Justin Seastrand, on behalf of the Angeles National Forest Supervisor, 701 North Santa Anita Avenue, Arcadia, CA 91006. Comments may also be provided via facsimile to 626–574–5235. Or submitted on the San Gabriel Mountain National Monument project Web page:
Justin Seastrand, Environmental Coordinator, USDA Forest Service, Angeles National Forest, 701 North Santa Anita Avenue, Arcadia, CA 91006; phone 626–574–5278; email
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 between 8 a.m. and 8 p.m., Eastern Time, Monday through Friday.
The Presidential Proclamation establishing San Gabriel Mountains National Monument (the Monument) requires the preparation of a
Based on a preliminary comparison of the Proclamation to the existing Angeles National Forest Land Management Plan (Forest Plan), agency personnel have concluded that, generally, Forest Plan direction is consistent with the management direction provided in the Proclamation for the Monument. However, some changes are necessary. Preliminary needs for changes to the Forest Plan to ensure consistency with the Proclamation include:
1.
2.
3.
4.
The Angeles National Forest proposes to change some existing management direction in the Forest Plan and to capture those changes in the San Gabriel Mountains National Monument Management Plan. The Forest Plan may be amended in the following areas to ensure appropriate management of the Monument, consistent with the Proclamation: (1) Forest Plan Part 1—Goal 4.1, related to Energy and Minerals Production; (2) Forest Plan Part 2—Land Use Zones (as amended), related to Wilderness Areas and suitable uses allowed within land use zones; (3) Forest Plan Part 2—Appendix B—Strategies, related to Minerals management and Off Highway Vehicle Use Opportunities; and (4) Forest Plan Part 3—Appendix D—Standard S34, related to the framework for regulation of recreational uses.
All other aspects of the Forest Plan in Part 1 (Vision, including goals), Part 2 (Strategy including objectives, suitable uses within land use zones, and `places'), and Part 3 (Design Criteria, including standards) would not change as part of this proposal and would be carried forward as written into the San Gabriel Mountains National Monument Management Plan.
At the end of the process, there would be a single document that would serve as a standalone San Gabriel Mountains National Monument Management Plan, even though it would be adopted as an amendment to the Forest Plan. Any existing direction from the Forest Plan that applies to and is brought forward for the Monument will be repeated in the Management Plan, so that a single document provides all management direction for the Monument. The Management Plan will apply to all National Forest Systems lands within the monument including the small portion of the Monument that is on San Bernardino National Forest System lands (1 percent), which would also be guided by the direction provided by the Management Plan.
The Angeles National Forest Supervisor will issue the decision.
This decision will amend the Angeles Forest Plan, and in doing so, create the San Gabriel Mountains National Monument Management Plan. The decision would only apply to National Forest System lands within the Monument. Those National Forest System lands outside the Monument will continue to be managed according to current direction in the Angeles Forest Plan.
This notice of intent initiates the scoping process, which guides the development of the environmental assessment. The Angeles National Forest encourages public review of this preliminary purpose and need for action and preliminary proposal. Public meetings will be held to answer questions about the preliminary Need to Change analysis, provide additional information, and gather comments and concerns. Public meetings will be held at the following locations and during the following times (Pacific time):
While public input is welcome through the planning process, two additional formal opportunities for public comment will occur when the draft environmental assessment is released for a 45-day comment period (anticipated spring 2016) and when the final environmental assessment and draft decision notice are released for a 45-day objection period (anticipated summer 2016).
It is important that reviewers provide their comments at such times and in such manner that they are useful to the agency's preparation of the environmental assessment. Therefore, comments should be provided before the close of the comment period and should clearly articulate the reviewer's concerns and contentions.
Comments received in response to this solicitation, including names and addresses of those who comment, will be part of the public record for this proposed action. Comments submitted
The San Gabriel Mountains National Monument Management Plan will be developed pursuant to the requirements of the National Forest Management Act of 1976 (NFMA) and the U.S. Forest Service Planning Rule. This project is an action to amend a Forest Plan, and as such, is subject to pre-decisional administrative review, pursuant to Subpart B of the Planning Rule (36 CFR part 219).
National Institute of Food and Agriculture, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104–13) and Office of Management and Budget (OMB) regulations at 5 CFR part 1320 (60 FR 44978, August 29, 1995), this notice announces the National Institute of Food and Agriculture's (NIFA) intention to revise a currently approved information collection entitled, “Research, Education, and Extension project online reporting tool (REEport).”
Written comments on this notice must be received by August 17, 2015, to be assured of consideration. Comments received after that date will be considered to the extent practicable.
Written comments may be submitted by any of the following methods: Email:
Robert Martin, Records Officer; email:
The purpose of this revision is to collect two new pieces of information as part of REEport: (1) Demographic data on grant participants, and (2) additional lines on the REEport Financial Report for “Non-Federal Funds” used on projects funded by NIFA.
All responses to this notice will be summarized and included in the request for OMB approval. All comments also will become a matter of public record.
The Jacksonville Port Authority, grantee of FTZ 64, submitted a notification of proposed production activity to the FTZ Board on behalf of Saft America Inc. (Saft), located in Jacksonville, Florida. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on June 1, 2015.
The Saft facility is located within Site 10 of FTZ 64. The facility is used for the warehousing, production and distribution of lithium-ion batteries. Pursuant to 15 CFR 400.14(b), FTZ activity would be limited to the specific foreign-status materials and components and specific finished products described in the submitted notification (as described below) and subsequently authorized by the FTZ Board.
Production under FTZ procedures could exempt Saft from customs duty payments on the foreign status components used in export production. On its domestic sales, Saft would be able to choose the duty rates during customs entry procedures that apply to: Lithium-ion batteries; lithium-ion batteries for vehicles; lithium-ion battery covers and jelly rolls; battery terminals; and, battery components (duty rate 3.4%) for the foreign status inputs noted below. Customs duties also could possibly be deferred or reduced on foreign status production equipment.
The components and materials sourced from abroad include: Natural graphite powder; lithium nickel cobalt; plastic casing; PVC sleeves; stand wire cables for batteries; wire fitted parts; aluminum can stocks; aluminum cans; storage battery modules; lithium-ion batteries and internal components; connecting cables; board panels; electrical circuits; copper cables; ocean-ready containers; and, battery test systems (duty rate ranges from duty-free to 5.8%).
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is July 22, 2015.
A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230–0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
For further information, contact Elizabeth Whiteman at
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a–81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
ATTEST:
An application has been submitted to the Foreign-Trade Zones (FTZ) Board by the Toledo-Lucas County Port Authority, grantee of Foreign-Trade Zone 8, requesting authority to reorganize the zone to expand its service area under the alternative site framework (ASF) adopted by the FTZ Board (15 CFR Sec. 400.2(c)). The ASF is an option for grantees for the establishment or reorganization of zones and can permit significantly greater
FTZ 8 was approved by the FTZ Board on October 11, 1960 (Board Order 51, 25 FR 9909, 10/15/1960) and reorganized under the ASF on December 20, 2012 (Board Order 1875, 78 FR 1197, 1/8/2013). The zone currently has a service area that includes Sandusky, Henry, Wood, Lucas and Defiance Counties, Ohio.
The applicant is now requesting authority to expand the service area of the zone to include Erie, Fulton, Ottawa, Paulding and Williams Counties, as described in the application. If approved, the grantee would be able to serve sites throughout the expanded service area based on companies' needs for FTZ designation. The proposed expanded service area is adjacent to the Toledo Customs and Border Protection Port of Entry.
In accordance with the FTZ Board's regulations, Elizabeth Whiteman of the FTZ Staff is designated examiner to evaluate and analyze the facts and information presented in the application and case record and to report findings and recommendations to the FTZ Board.
Public comment is invited from interested parties. Submissions shall be addressed to the FTZ Board's Executive Secretary at the address below. The closing period for their receipt is August 11, 2015. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to August 26, 2015.
A copy of the application will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230–0002, and in the “Reading Room” section of the FTZ Board's Web site, which is accessible via
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In response to a request from P.A.P. S.R.L. (PAP SRL), a producer/exporter of certain pasta from Italy, and pursuant to section 751(b) of the Tariff Act of 1930, as amended (the Act), 19 CFR 351.216 and 351.22l(c)(3)(ii), the Department of Commerce (the Department) is initiating a changed circumstances review (CCR) of the antidumping duty (AD) order on certain pasta from Italy with regard to PAP SRL. Based on the information received, we preliminarily determine that PAP SRL is the successor-in-interest to P.A.P. SNC Di Pazienza G. B. & C (PAP SNC) for purposes of determining AD liability. Interested parties are invited to comment on these preliminary results.
Cindy Robinson, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–3797.
On July 24, 1996, the Department published in the
We received no comments from interested parties.
Imports covered by the order are shipments of certain non-egg dry pasta. The merchandise subject to review is currently classifiable under items 1901.90.90.95 and 1902.19.20 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to the order is dispositive.
Pursuant to section 751(b)(1) of the Act and 19 CFR 351.216(d), the Department will conduct a CCR upon receipt of a request from an interested party or receipt of information concerning an AD order which shows changed circumstances sufficient to warrant a review of the order.
As noted above in the “Background” section, we received information indicating that in January 2015, PAP SNC's legal form was changed from a
19 CFR 351.221(c)(3)(ii) permits the Department to combine the notice of initiation of a CCR and the notice of preliminary results if the Department concludes that expedited action is warranted. In this instance, because we have the information necessary on the record to make a preliminary finding, we find that expedited action is warranted, and are combining the notice of initiation and the notice of preliminary results in accordance with 19 CFR 351.221(c)(3)(ii).
In making a successor-in-interest determination, the Department examines several factors, including but not limited to, changes in: (1) Management; (2) production facilities; (3) supplier relationships; and (4) customer base.
For a full description of the methodology underlying our conclusions,
Based on the evidence reviewed, we preliminarily determine that PAP SRL is the successor-in-interest to PAP SNC. Specifically, we find that the change of the company's legal form from SNC to SRL resulted in no significant changes to management, production facilities, supplier relationships, and customers with respect to the production and sale of the subject merchandise. Thus, PAP SRL operates essentially as the same business entity as PAP SNC with respect to the subject merchandise.
If the Department adopts these preliminary results in the final results, PAP SRL will be assigned the AD cash deposit rate currently assigned to PAP SNC with respect to the subject merchandise (
Interested parties may submit case briefs and/or written comments not later than 30 days after the date of publication of this notice.
Interested parties that wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically
Consistent with 19 CFR 351.216(e), we will issue the final results of this CCR no later than 270 days after the date on which this review was initiated, or within 45 days if all parties agree to our preliminary finding.
We are issuing and publishing this finding and notice in accordance with sections 751(b)(l) and 777(i)(l) of the Act and 19 CFR 351.216 and 351.221(c)(3)(ii).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On December 9, 2014, the Department of Commerce (the Department) published in the
Elizabeth Eastwood or Dennis McClure, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–3874 or (202) 482–5973, respectively.
On December 9, 2014, the Department published in the
From December 15 through 19, 2014, we conducted a verification of the cost data reported by Golden Dragon.
On January 29, 2015, we received case briefs from Golden Dragon, Nacobre
On March 23, 2015, we postponed the final results by 60 days, until June 8, 2015.
The merchandise subject to the order
All issues raised in the case and rebuttal briefs by Golden Dragon and the petitioners are listed in the Appendix to this notice and addressed in the Issues and Decision Memorandum. Parties can find a complete discussion of these issues and the corresponding recommendations in this public memorandum, which is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
Based on the comments received from interested parties regarding our
The period of review (POR) is November 1, 2012, through October 31, 2013.
We intend to disclose the calculations performed for Golden Dragon within five days of the date of publication of this notice to parties in this proceeding in accordance with 19 CFR 351.224(b). Because the Nacobre calculations did not change, there is nothing to disclose.
The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries.
Pursuant to the
The Department intends to issue assessment instructions to CBP 41 days after the date of publication of these
The following deposit requirements will be effective upon publication of the notice of these final results for all shipments of seamless refined copper pipe and tube from Mexico entered, or withdrawn from warehouse, for consumption on or after the publication date as provided by section 751(a)(2) of the Act: (1) The cash deposit rates for Golden Dragon and Nacobre will be equal to the weighted-average dumping margins established in the final results of this administrative review; (2) for merchandise exported by manufacturers or exporters not covered in this review but covered in a completed prior segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment; (3) if the exporter is not a firm covered in this review, a prior review, or the original investigation but the manufacturer is, the cash deposit rate will be the rate established for the most recently completed segment for the manufacturer of the merchandise; (4) the cash deposit rate for all other manufacturers or exporters will continue to be 26.03 percent, the all-others rate established in the
This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties has occurred and the subsequent assessment of doubled antidumping duties.
In accordance with 19 CFR 351.305(a)(3), this notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under the APO, which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation subject to sanction.
We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i) of the Act and 19 CFR 351.213(h).
National Institute of Standards and Technology, Department of Commerce.
Notice.
The National Institute of Standards and Technology (NIST) 8th NIST Cloud Computing Forum and Workshop will be held in Gaithersburg, Maryland on Tuesday, July 7, Wednesday, July 8, Thursday, July 9, and Friday July 10, 2015. The format is a four-day forum that emphasizes the participation and progress made by standard development organizations, researchers and the community of cloud computing experts. The Forum and Workshop will bring together leaders and innovators from industry, academia and government in an interactive format that combines keynote presentations, panel discussions, and breakout sessions. The forum and workshop are open to the general public. NIST invites presentations from interested speakers at this event as described in the
In addition, NIST invites organizations to participate as exhibitors as described in the
The 8th Forum and Workshop will be held 9:00 a.m.–5:00 p.m. Eastern Time (ET) on Tuesday, July 7, 9:00 a.m.-5:00 p.m. ET on Wednesday, July 8, 9:00 a.m.–5:00 p.m. ET on Thursday, July 9, and 9:00 a.m.–5:00 p.m. ET on Friday, July 10, 2015.
The event will be held at the National Institute of Standards and Technology, 100 Bureau Drive, Gaithersburg, MD 20899 in the Red Auditorium of the Administration Building (Building 101). Please note admittance instructions in the
Robert Bohn by email at
NIST hosted seven prior Cloud Computing Forum and Workshop events in May 2010, November 2010, April 2011, November 2011, June 2012, January 2013 and March 2014. This year's meeting will focus on the progress the cloud community has made on the 10 requirements provided in the USG Cloud Computing Technology Roadmap (NIST Special Publication 500–293). The NIST Cloud Computing Program (NCCP) published the final version of the Roadmap in October 2014.
Each of the 10 requirements described in the Roadmap comes with a set of Priority Action Plans (PAPs) that are self-tasking for the cloud computing community. Therefore, the NCCP is sponsoring a call for papers that address the Requirements and PAPs found in the Roadmap and welcomes relevant submissions for a talk approximately 15–20 minutes long. Authors of accepted abstracts will be invited to present their work. Additional information may be found at:
There will be a single-day parallel meeting on Thursday, July 9 on Cloud Forensics, which will focus on the issues enumerated in the NIST Cloud Computing Forensic Science Challenges (NIST IR 8006, draft). There will also be sessions dedicated to deployments of cloud computing in the government sector (Federal, State, Local) and on Cloud Computing Standards.
The series of workshops was originally organized in response to the request of the U.S. Chief Information Officer that NIST lead federal efforts on standards for data portability, cloud
NIST invites members of the public and other community stakeholders to participate in this event as a presenter or an exhibitor. To participate as a presenter, one will need to submit a completed “Abstract Submission” form to
On Tuesday, July 7, Wednesday, July 8, Thursday July 9, and Friday July 10, 2015, space will be available for 25 academic, industry, and standards development organizations to exhibit their respective Cloud Computing work at an exhibit table. The first 25 organizations requesting an exhibit table related to Cloud Computing will be accepted. Interested organizations should contact Tara Brown, email:
The official event Web site is with hotel information is:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of revised incidental harassment authorization.
In accordance with regulations implementing the Marine Mammal Protection Act (MMPA), notification is hereby given that NMFS has issued a revised Incidental Harassment Authorization (IHA) to The Narragansett Electric Company, doing business as National Grid (TNEC), to take marine mammals, by harassment, incidental to construction of the Block Island Transmission System (BITS).
Effective November 1, 2014, through October 31, 2015.
A copy of the revised IHA is available by writing to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, MD 20910.
An electronic copy of the revised IHA may be obtained by visiting the internet at:
John Fiorentino, Office of Protected Resources, NMFS, (301) 427–8477.
Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
An authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth.
On August 22, 2014, NMFS issued an IHA to Deepwater Wind Block Island Transmission, LLC (DWBIT) to take marine mammals, by Level B harassment, incidental to construction of the BITS, effective from November 1, 2014 through October 31, 2015 (79 FR 51314). On January 30, 2015, DWBIT sold the BITS, in its entirety, to TNEC. The BITS, a bi-directional submarine transmission cable, will interconnect Block Island to TNEC's existing distribution system in Narragansett, Rhode Island. To date, no construction has occurred.
DWBIT and TNEC subsequently submitted a written request to transfer the current IHA from DWBIT to TNEC. With the transfer of the BITS IHA, TNEC agrees to comply with the associated terms, conditions, stipulations, and restrictions of the original BITS IHA. No other changes were requested. The revised IHA remains effective from November 1, 2014, through October 31, 2015.
This
NMFS is changing the name of the holder of the BITS IHA from “Deepwater Wind Block Island Transmission, LLC, 56 Exchange Terrace, Suite 101, Providence, Rhode Island, 02903” to “The Narragansett Electric Company, d/b/a National Grid, 40 Sylvan Road, Waltham, Massachusetts, 02451.”
NMFS published a notice of the proposed revised IHA and request for public comments in the
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 service to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and deletes services previously furnished by such agencies.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia, 22202–4149.
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 service listed below from nonprofit agencies employing persons who are blind or have other severe disabilities.
The following products and service are proposed for addition to the Procurement List for production by the nonprofit agencies listed:
7510–00–NIB–9955—Envelope, Transparent, Large, 10″ × 13″, BX/25
The following services are proposed for deletion from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Addition to and Deletions from the Procurement List.
This action adds a service to the Procurement List that will be provided by a nonprofit agency employing persons who are blind or have other severe disabilities, and deletes products and services from the Procurement List previously furnished by such agencies.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia, 22202–4149.
Barry S. Lineback, Telephone: (703) 603–7740, Fax: (703) 603–0655, or email
On 2/27/2015 (80 FR 10668), the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed addition to the Procurement List.
After consideration of the material presented to it concerning capability of qualified nonprofit agency to provide the service and impact of the addition on the current or most recent contractor, the Committee has determined that the service listed below is 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 any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organization that will provide the service to the Government.
2. The action will result in authorizing a small entity to provide the 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 service proposed for addition to the Procurement List.
Accordingly, the following service is added to the Procurement List:
On 5/1/2015 (80 FR 24905) and 5/8/2015 (80 FR 26548–26549), the Committee for Purchase From People Who Are Blind or Severely Disabled published notices of proposed deletions from the Procurement List.
After consideration of the relevant matter presented, the Committee has determined that the products and services 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 products and services 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 products and services deleted from the Procurement List.
Accordingly, the following products and services are deleted from the Procurement List:
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act of 1995 (“PRA”), Federal agencies are required to publish notice in the
Comments must be submitted on or before August 11, 2015.
You may submit comments, identified by “Regulation of Domestic Exchange-Traded Options,” and Collection Number 3038–0007 by any of the following methods:
•
•
•
•
Please submit your comments using only one method.
Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street NW., Washington, DC 20581; Dana R. Brown, Division of Market Oversight, telephone: (202) 418–5093 and email:
Under the PRA, 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, the CFTC invites comments on:
• Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;
• The accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Ways to enhance the quality, usefulness, and clarity of the information to be collected; and
• Ways to minimize the burden of 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;
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
An agency may not conduct or sponsor, and person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the Commission's regulations were published on December 30, 1981.
There are no capital costs or operating and maintenance costs associated with this collection.
44 U.S.C. 3501
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (“PRA”), Federal agencies are required to publish notice in the
Comments must be submitted on or before August 11, 2015.
You may submit comments, identified by OMB Control No. 3038–0093 by any of the following methods:
• The Agency's Web site, at
•
•
•
Please submit your comments using only one method.
Lois J. Gregory, Associate Director, Division of Market Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581; (202) 418–5092; email:
Under the PRA, 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 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 collection of information, the CFTC invites comments on:
• Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;
• The accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Ways to enhance the quality, usefulness, and clarity of the information to be collected; and
• Ways to minimize the burden of 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;
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
•
•
(
Office of the Secretary of the Air Force, DOD.
Notice.
On May 22, 2015, the Secretary of the Air Force, acting as Executive Agent of the Secretary of Defense, determined that the service of the group known as: “U.S. and Foreign Employees of Air America, Inc., who operated fixed wing or helicopter aircraft in support of U.S. Army Special Forces in Laos as part of Operation Hot Foot and Operation White Star from 1959–1963; and the U.S. and Foreign Employees of Air America, Inc., who operated fixed wing
Mr. Bruce T. Brown, Executive Secretary, DoD Civilian/Military Service Review Board, 1500 West Perimeter Road, Suite 3700, Joint Base Andrews, NAF Washington, MD 20762–7002, 240–612–5364,
Department of Defense, Defense Security Cooperation Agency.
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, Transmittal 15–14 with attached transmittal, policy justification, and Sensitivity of Technology.
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FMS case SAA-$114M–24Aug00
FMS case YAB-$156M–31Aug02
FMS case YAC-$874M–4Mar08
FMS case AAC-$14M–8Jun11
FMS case AAD-$12M–30Jan15
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* As defined in Section 47(6) of the Arms Export Control Act.
The Government of the United Arab Emirates has requested a possible sale of 500 GBU–31B/B(V)1 (MK–84/BLU–117) bombs, 500 GBU–31B/B(V)3 (BLU–109) bombs, and 600 GBU–12 (MK–82/BLU–111) bombs, containers, fuzes, spare and repair parts, support equipment, publications and technical documentation, personnel training and training equipment, U.S. Government and contractor logistics and technical support services, and other related elements of logistics support. The estimated cost is $130 million.
This proposed sale will contribute to the foreign policy and national security of the United States by helping a strategic partner which has been, and continues to be, an important force for political stability and economic progress in the Middle East.
The proposed sale will provide the UAE with additional precision guided munitions capability to meet the current threat represented by the Islamic State in Iraq and the Levant, and Houthi aggression in Yemen. The UAE continues to provide host-nation support of vital U.S. forces stationed at Al Dhafra Air Base and plays a vital role in supporting U.S. regional interests. The UAE has proven to be a valued partner and an active participant in coalition operations. The UAE will have no difficulty absorbing these additional munitions into its armed forces.
The proposed sale of these munitions will not alter the basic military balance in the region.
The principal contractors will be The Boeing Company in Chicago, Illinois; and Raytheon Missile Systems in Tucson, Arizona. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this sale will not require any additional U.S. Government or contractor representatives' in the UAE. However, periodic travel will be required on a temporary basis for program reviews and technical support.
There will be no adverse impact on U.S. defense readiness as a result of this sale.
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1. The GBU–31 (2000 lb) Joint Direct Attack Munition (JDAM) is a guidance tail kit that converts unguided free-fall bombs into accurate, GPS guided adverse weather “smart” munitions. With the addition of a new tail section that contains an inertial navigational system and a global positioning system guidance control unit, JDAM improves the accuracy of unguided, general-purpose bombs in any weather condition. JDAM can be launched from very low to very high altitudes in a dive, toss and loft, or in straight and level flight with an on-axis or off-axis delivery. JDAM enables multiple weapons to be directed against single or multiple targets on a single pass. The GBU–31 V1 contains the standard BLU–117, Mk-84 bomb body. The GBU–31 V3 contains the BLU–109 penetrator bomb body. The highest classification for the JDAM, its components, and technical data is Secret. Weapon accuracy is dependent on target coordinates and present position as entered into the guidance control unit. After weapon release, movable tail fins guide the weapon to the target coordinates. In addition to the tail kit, other elements in the overall system that are essential for successful employment include:
a. Access to accurate target coordinates
b. INS/GPS capability
c. Operational Test and Evaluation Plan.
2. The Guided Bomb Unit (GBU–12) is a laser-guided ballistic bomb (LGB) based on the Mk 82 500-lb general purpose bomb. The LGB is a maneuverable, free-fall weapon that guides to a spot of laser energy reflected off of the target. The LGB is delivered like a normal general purpose warhead and the semi-active guidance corrects for many of the normal errors inherent in any delivery system. Laser designation for the weapon can be provided by a variety of laser target markers or designators. The laser seeker allows the user to select a unique code for use in the multi-laser environment and reduce the probability of interference among multiple weapons. The LGB consists of a laser guidance kit, a computer control group (CCG) and a warhead specific Air Foil Group (AFG) that attach to the nose and tail of the Mk 82. The overall classification of the weapon is Confidential.
3. If a technologically advanced adversary were to obtain knowledge of the 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 United Arab Emirates.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning the Construction Rate Requirements-Price Adjustment (Actual Method). A notice published in the
Submit comments on or before July 13, 2015.
Submit comments identified by Information Collection 9000–0154, Construction Rate
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Submit comments via the Federal eRulemaking portal by searching the OMB control number 9000–0154. Select the link “Comment Now” that corresponds with “Information Collection 9000–0154, Construction Rate Requirements-Price Adjustment (Actual Method)”. Follow the instructions provided on the screen. Please include your name, company name (if any), and “Information Collection 9000–0154, Construction Rate Requirements-Price Adjustment (Actual Method)” on your attached document.
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Mr. Edward Loeb, Procurement Analyst, Federal Acquisition Policy Division, GSA, 202–501–0650, or via email
Government contracting officers may include FAR clause 52.222–32, Construction Rate Requirements-Price Adjustment (Actual Method) in fixed-price solicitations and contracts, subject to the Construction Wage Rate Requirements statute under certain conditions. The conditions are that the solicitation or contract contains option provisions to extend the term of the contract and the contracting officer determines that the most appropriate method to adjust the contract price at option exercise is to use a computation method based on the actual increase or decrease from a new or revised Department of Labor Construction Wage Rate Requirements statute wage determination.
The clause requires that a contractor submit at the exercise of each option to extend the term of the contract, a statement of the amount claimed for incorporation of the most current wage determination by the Department of Labor, and any relevant supporting data, including payroll records, that the contracting officer may reasonably require. The information is used by Government contracting officers to establish the contract price adjustment for the construction requirements of a contract, generally if the contract requirements are predominantly services subject to the Service Contract Labor Standards.
Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the FAR, and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
Obtaining Copies of Proposals: Requesters may obtain a copy of the information collection documents from the General Services Administration, Regulatory Secretariat Division (MVCB), 1800 F Street NW., Washington, DC 20405, telephone 202–501–4755. Please cite OMB Control No. 9000–0154, Construction Rate Requirements-Price Adjustment (Actual Method), in all correspondence.
Notice.
The Department of Defense has submitted to OMB for clearance, the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
Consideration will be given to all comments received by July 13, 2015.
Fred Licari, 571–372–0493.
Written comments and recommendations on the proposed information collection should be sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk Officer for DoD, Room 10236, New Executive Office Building, Washington, DC 20503. You may also submit comments, identified by docket number and title, by the following method:
•
Written requests for copies of the information collection proposal should
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning material and workmanship. A notice was published in the
Submit comments on or before July 13, 2015.
Submit comments identified by Information Collection 9000–0062, Material and Workmanship, by any of the following methods:
•
•
Mr. Curtis E. Glover, Sr., Procurement Analyst, Federal Acquisition Policy Division, GSA, telephone 202–501–1448, or via email at
Under Federal contracts requiring that equipment (
The Government uses the submitted data to determine whether or not the equipment meets the contract requirements in the categories of performance, construction, and durability. This data is placed in the contract file and used during the inspection of the equipment when it arrives on the project and when it is made operable.
The information collection requirement at FAR clause 52.236–5 has increased due to the rounding up of the responses annually from 1.5 to 2.0, as you cannot have .5 of a response per year.
Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the FAR, and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
Department of Defense, Defense Security Cooperation Agency.
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, Transmittal 15–35 with attached transmittal, policy justification, and Sensitivity of Technology.
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* as defined in Section 47(6) of the Arms Export Control Act.
The Government of Japan has requested a possible sale of four (4) E–2D Advanced Hawkeye (AHE) Airborne Early Warning and Control (AEW&C) aircraft, ten (10) T56–A–427A engines (8 installed and 2 spares), eight (8) Multifunction Information Distribution System Low Volume Terminals (MIDS–LVT), four (4) APY–9 Radars, modifications, spare and repair parts, support equipment, publications and technical documentation, personnel training and training equipment, ferry services, aerial refueling support, U.S. Government and contractor logistics, engineering, and technical support services, and other related elements of logistics and program support. The estimated cost is $1.7 billion.
This proposed sale will contribute to the foreign policy and national security of the United States. Japan is one of the major political and economic powers in East Asia and the Western Pacific and a key partner of the United States in ensuring peace and stability in that region. It is vital to the U.S. national interest to assist Japan in developing and maintaining a strong and ready self-defense capability. This proposed sale is consistent with U.S. foreign policy and national security objectives and the 1960 Treaty of Mutual Cooperation and Security.
The proposed sale of E–2D AHE aircraft will improve Japan's ability to effectively provide homeland defense utilizing an AEW&C capability. Japan will use the E–2D AHE aircraft to provide AEW&C situational awareness of air and naval activity in the Pacific region and to augment its existing E–2C Hawkeye AEW&C fleet. Japan will have no difficulty absorbing these aircraft into its armed forces.
The proposed sale of these aircraft and support will not alter the basic military balance in the region.
The principal contractor will be Northrop Grumman Corporation Aerospace Systems in Melbourne, Florida. The acquisition and integration of all systems will be managed by the U.S. Navy's Naval Air Systems Command (NAVAIR). There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will not require any additional U.S. Government or contractor personnel in Japan. However, U.S. Government or contractor personnel in-country visits will be required on a temporary basis in conjunction with program technical and management oversight and support requirements.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The E–2D Advanced Hawkeye (AHE) Airborne Early Warning and Control (AEW&C) is a state of the art aircraft. The E–2D AHE provides detection and surveillance of regional surface and aircraft platforms through the use of the APY–9 radar, APX–122A Identification Friend or Foe (IFF), and ALQ 217 Electronic Support Measures (ESM) systems. The E–2D AHE provides area surveillance and detection, air intercept control, air traffic control, search and rescue assistance, communication relay and automatic tactical data exchange. The E–2D AHE is classified Secret.
2. The APY–9 radar is a mechanically rotated, electronically scanned array, which utilizes Space Time Adaptive Processing technology to provide 360-degree detection and surveillance in high clutter environments. It is able to provide simultaneous detection and surveillance of surface and air units. The APY–9 radar is classified Secret.
3. The Multifunction Information Distribution System Low Volume Terminals (MIDS–LVT) is a command, control, communications, and intelligence (C3I) system incorporating high-capacity, jam-resistant, digital communication links for exchange of near real-time tactical information including both data and voice, among air, ground and sea elements. The MIDS–LVT incorporates the Link-16 military technical data exchange network which supports key theater functions such as surveillance, identification, air control, and direction for U.S. Services and those allied and partner nations for which there is a validated interoperability requirement. The system provides jam-resistant, wide-area communications on a Link-16 network. Link-16 provides a correlated, real-time picture of the battle space. These devices have embedded communications security (COMSEC) which contains sensitive encryption algorithms and keying material. The MIDS–LVT is classified Secret.
4. The APX–122 Interrogator and APX–123 IFF Transponder are identification systems designed for command and control. They provide the ability to distinguish friendly aircraft, vehicles, or forces, and to determine their bearing and range from the interrogator. These devices have embedded COMSEC which contains sensitive encryption algorithms and keying material. The APX–122 Interrogator and APX–123 IFF Transponder are classified Secret.
5. The ALQ–217 Electronic Support Measure system is used to detect, intercept, identify, locate, record, and/or analyze sources of radiated electromagnetic energy to support classification of unknown surface and airborne units. The ALQ–217 is classified Secret.
6. If a technologically advanced adversary obtained knowledge of the specific hardware or software in the proposed sale, the information could be used to develop countermeasures which might reduce weapons system effectiveness or be used in the development of a system with similar or advanced capabilities.
7. A determination has been made that the Government of Japan can provide substantially 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.
8. All defense articles and services listed in this transmittal have been authorized for release and export to the Government of Japan.
Office of Innovation and Improvement, Department of Education.
Notice.
CSP Grants for Replication and Expansion of High-Quality Charter Schools.
Notice inviting applications for new awards for fiscal year (FY) 2015.
Catalog of Federal Domestic Assistance (CFDA) Number: 84.282M.
Applications Available: June 12, 2015.
Date of Pre-Application Meeting: June 16, 2015, 2:00 p.m. to 3:30 p.m., Washington, DC, time.
Deadline for Transmittal of Applications: July 15, 2015.
Deadline for Intergovernmental Review: September 25, 2015.
The purpose of the CSP Grants for Replication and Expansion of High-Quality Charter Schools (Replication and Expansion) competition (CFDA 84.282M) is to award grants to eligible applicants to enable them to replicate or expand high-quality charter schools with demonstrated records of success, including success in increasing student academic achievement. Eligible applicants may use their grant funds to expand the enrollment of one or more existing charter schools by substantially increasing the number of available seats per school or to open one or more new charter schools that are based on the charter school model for which the eligible applicant has presented evidence of success.
The FY 2015 Replication and Expansion competition differs from the FY 2014 Replication and Expansion competition in several ways. First, for the FY 2015 competition, we are using the Low-Income Demographic priority from the final priorities, requirements, and selection criteria for this program, published in the
Second, for FY 2015, the Department has consolidated three competitive preference priorities into a single competitive preference priority for projects designed to support specific types of high-need students. Applicants addressing this priority may select and address only one of these elements.
Element (a) of
Element (b) of
Element (c) of
The Department also has added an invitational priority that encourages applicants to conduct rigorous evaluations of their proposed projects. If well-implemented, the evaluations will produce evidence about the project's effectiveness that meets What Works Clearinghouse Evidence Standards. The Department is particularly interested in rigorous evaluations of applicants' schools or specific practices within those schools.
In addition, in January 2014, the Department updated Section E of the CSP Nonregulatory Guidance to clarify the circumstances in which charter schools receiving CSP funds may use weighted lotteries, including to give educationally disadvantaged students slightly better chances for admission. Applicants proposing to use weighted lotteries should review the information in the
Finally, the Consolidated and Further Continuing Appropriations Act, 2015 (FY 2015 Appropriations Act), Division G, Pub. L. 113–235, retains the authority from the Consolidated Appropriations Act, 2014 (FY 2014 Appropriations Act), Division H, Public Law 113–76, for CSP grant recipients to use funds to support preschool education in charter schools. For information on the use of CSP funds to support preschool education in charter schools, see the “Guidance on the use of Funds to Support Preschool Education” at
All charter schools receiving CSP funds, as outlined in section 5210(1)(G) of the Elementary and Secondary Education Act of 1965, as amended (ESEA), must comply with various non-discrimination laws, including the Age Discrimination Act of 1975, title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, part B of the Individuals with Disabilities Education Act (specifies rights afforded to students with disabilities and their parents), and applicable State laws.
This priority is for projects that will provide for the replication or expansion of high-quality charter schools by applicants that currently operate or manage more than one high-quality charter school (as defined in this notice).
To meet this priority, an applicant must demonstrate that at least 60 percent of all students in the charter schools it currently operates or manages are individuals from low-income families (as defined in this notice).
The Secretary encourages applicants to describe the extent to which the charter schools they currently operate or manage serve individuals from low-income families at rates that are comparable to the rates at which these individuals are served by public schools in the surrounding area.
For charter schools that serve students younger than five years old or older than 17 years old in accordance with their State's definition of “elementary education” or “secondary education,” at least 60 percent of all students in the schools who are between the ages of five and 17 must be individuals from low-income families to meet this priority.
In order to receive points under these competitive preference priorities, the applicant must identify the priority or priorities that it is addressing and provide documentation that supports the identified competitive preference priority or priorities.
These priorities are:
This priority is for projects that will serve high-need students through one of the methods described below. An application may receive priority points for only one element of
This priority is for projects that will serve high-need students through element (a), (b) or (c) as described below:
(a)
To meet this priority, an application must demonstrate that the proposed project is designed to improve academic outcomes or learning environments, or both, for students who are members of federally recognized Indian tribes.
Applicants are encouraged to demonstrate how the proposed project is designed to serve students who are members of federally recognized Indian tribes through a variety of means, such as creating or expanding charter schools in geographic areas with large numbers of students who are members of federally recognized Indian tribes, conducting targeted outreach and recruitment, or including in the charters or performance contracts for the charter schools funded under the project specific performance goals for students who are members of federally recognized Indian tribes.
(b)
To meet this priority, an applicant must demonstrate that its proposed replication or expansion of one or more high-quality charter schools (as defined in this notice) will occur in partnership with, and will be designed to assist, one or more LEAs in implementing academic or structural interventions to serve students attending schools that have been identified for improvement, corrective action, closure, or restructuring under section 1116 of the Elementary and Secondary Education Act of 1965, as amended (ESEA), and as described in the notice of final requirements for School Improvement Grants, published in the
Applicants in States operating under ESEA Flexibility that have opted to waive the requirement in ESEA section 1116(b) for LEAs to identify for improvement, corrective action, or restructuring, as appropriate, their Title I schools that fail to make adequate yearly progress (AYP) for two or more consecutive years may partner with LEAs to serve students attending priority or focus schools (see the Department's June 7, 2012 guidance entitled, “ESEA Flexibility,” at
(c)
This priority is for projects that are designed to serve and coordinate with a federally designated Promise Zone.
To view the list of designated Promise Zones and lead organizations please go to
This priority is for applicants that demonstrate a record of (in the schools they currently operate or manage), as
(a) Promote student diversity, including racial and ethnic diversity, or avoid racial isolation;
(b) Serve students with disabilities at a rate that is at least comparable to the rate at which these students are served in public schools in the surrounding area; and
(c) Serve English learners at a rate that is at least comparable to the rate at which these students are served in public schools in the surrounding area.
In support of this priority, applicants must provide enrollment data as well as descriptions of existing policies and activities undertaken or planned to be undertaken.
An applicant addressing
For information on permissible ways to meet this priority, please refer to the joint guidance issued by the Department's Office for Civil Rights and the U.S. Department of Justice entitled, “Guidance on the Voluntary Use of Race to Achieve Diversity and Avoid Racial Isolation in Elementary and Secondary Schools” (
This priority is for applicants that qualify as novice applicants. For purposes of this competition, “novice applicant” means an applicant for a grant from the Department that (i) has never received a Replication and Expansion grant; (ii) has never been a member of a group application, submitted in accordance with 34 CFR 75.127–75.129, that received a Replication and Expansion grant; and (iii) has not had an active discretionary grant from the Federal government in the five years before the deadline date for applications for new awards under this Replication and Expansion grant competition.
For purposes of clause (iii) in the preceding paragraph, a grant is active until the end of the grant's project or funding period, including any extensions of those periods that extend the grantee's authority to obligate funds (34 CFR 75.225(b)).
This priority is:
The Secretary is particularly interested in funding applications that demonstrate that the applicant is currently conducting, or will conduct, a rigorous independent evaluation of the applicant's charter schools, or specific practices within those charter schools, such as professional development practices (
In accordance with 34 CFR 75.590, Replication and Expansion grant funds may be used to cover post-award costs associated with an evaluation under this invitational priority or an evaluation under selection criterion (e) in section V.2 of this notice, provided that such costs are reasonable and necessary to meet the objectives of the approved project.
We encourage applicants to review the following technical assistance resources on evaluation: (1) WWC Procedures and Standards Handbook:
This Webinar discusses strategies for designing and executing studies that meet WWC standards without reservations. Applicants interested in reviewing this Webinar may find more information at the following Web site:
The following definitions are from 34 CFR 77.1 and the Final Priorities for this program.
(1) Increasing student academic achievement and attainment for all students, including, as applicable, educationally disadvantaged students served by the charter schools operated or managed by the applicant.
(2) Either (i) Demonstrated success in closing historic achievement gaps for the subgroups of students described in section 1111(b)(2)(C)(v)(II) of the ESEA at the charter schools operated or managed by the applicant, or;
(ii) No significant achievement gaps between any of the subgroups of students described in section 1111(b)(2)(C)(v)(II) of the ESEA at the charter schools operated or managed by the applicant and significant gains in student academic achievement with all populations of students served by the charter schools operated or managed by the applicant.
(3) Achieved results (including performance on statewide tests, annual student attendance and retention rates, high school graduation rates, college attendance rates, and college persistence rates where applicable and available) for low-income and other educationally disadvantaged students served by the charter schools operated or managed by
(4) No significant compliance issues (as defined in this notice), particularly in the areas of student safety and financial management. (76 FR 40898)
The regulations in 34 CFR part 79 apply to all applicants except federally recognized Indian tribes.
The regulations in 34 CFR part 86 apply only to institutions of higher education.
The regulations in 34 CFR part 99 apply only to an educational agency or institution.
Contingent upon the availability of funds and the quality of applications, we may make additional awards in FY 2016 and future years from the list of unfunded applications from this competition.
The Department is not bound by any estimates in this notice. The estimated range, average size, and number of awards are based on a single 12-month budget period. However, the Department may choose to fund more than 12 months of a project using FY 2015 funds.
1.
2.
3.
(a)
For this competition the maximum limit of grant funds that may be awarded per new school seat is $3,000, including a maximum limit per new school created of $800,000. The maximum limit per new school seat in a charter school that is substantially expanding its enrollment is $1,500, including a maximum limit per substantially expanded school of $800,000.
Applicants must ensure that all costs included in the proposed budget are reasonable and necessary in light of the goals and objectives of the proposed project. Any costs determined by the Secretary to be unreasonable or unnecessary will be removed from the final approved budget.
(b)
A charter school that has received CSP funds for replication previously, or that has received funds for planning or initial implementation of a charter school (
1.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1–800–877–8339.
Individuals with disabilities can obtain a copy of the application package in an accessible format (
2.a.
Page Limit: The application narrative (Part III of the application) is where you, the applicant, address the selection criteria that reviewers use to evaluate your application. We recommend that you limit the application narrative [Part III] to no more than 60 pages, using the following standards:
• A “page” is 8.5” x 11”, on one side only, with 1” margins at the top, bottom, and both sides.
• Double space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions, as well as all text in charts, tables, figures, and graphs.
• Use a font that is either 12 point or larger or no smaller than 10 pitch (characters per inch).
• Use one of the following fonts: Times New Roman, Courier, Courier New, or Arial. An application submitted in any other font (including Times Roman or Arial Narrow) will not be accepted.
The page limit does not apply to Part I, the cover sheet; Part II, the budget section, including the narrative budget justification; Part IV, the assurances and certifications; or the one-page abstract, the resumes, the bibliography, or the letters of support. However, the page limit does apply to all of the application narrative section [Part III].
b.
Given the types of projects that may be proposed in applications for the Replication and Expansion competition, an application may include business information that the applicant considers proprietary. The Department's regulations define “business information” in 34 CFR 5.11.
Because we plan to make successful applications available to the public, you may wish to request confidentiality of business information.
Consistent with Executive Order 12600, please designate in your application any information that you feel is exempt from disclosure under Exemption 4 of the Freedom of Information Act. In the appropriate Appendix section of your application, under “Other Attachments Form,” please list the page number or numbers on which we can find this information. For additional information please see 34 CFR 5.11(c).
3.
Applications Available: June 12, 2015.
Date of Pre-Application Meeting: The Department will hold a pre-application meeting via Webinar for prospective applicants on June 16, 2015, from 2:00 p.m. to 3:30 p.m., Washington, DC, time. Individuals interested in attending this meeting are encouraged to pre-register by emailing their name, organization, and contact information with the subject heading “PRE–APPLICATION MEETING” to
For further information about the pre-application meeting, contact Brian Martin, U.S. Department of Education, 400 Maryland Avenue SW., Room 4W224, Washington, DC 20202–5970. Telephone: (202) 205–9085 or by email:
Deadline for Transmittal of Applications: July 15, 2015.
Applications for grants under this competition must be submitted electronically using the Grants.gov Apply site (Grants.gov). For information (including dates and times) about how to submit your application electronically, or in paper format by mail or hand delivery if you qualify for an exception to the electronic submission requirement, please refer to section IV. 7.
We do not consider an application that does not comply with the deadline requirements.
Individuals with disabilities who need an accommodation or auxiliary aid in connection with the application process should contact the person listed under
Deadline for Intergovernmental Review: September 25, 2015.
4.
5.
Pursuant to section 5204(f)(3) of the ESEA, grantees under this program must use the grant funds for—
(a) Post-award planning and design of the educational program, which may include: (i) Refinement of the desired educational results and of the methods for measuring progress toward achieving those results; and (ii) professional development of teachers and other staff who will work in the charter school; and
(b) Initial implementation of the charter school, which may include: (i) Informing the community about the school; (ii) acquiring necessary equipment and educational materials and supplies; (iii) acquiring or developing curriculum materials; and (iv) other initial operational costs that cannot be met from State or local sources.
The FY 2015 Appropriations Act authorizes the use of CSP funds “for grants that support preschool education in charter schools.” Therefore, an application submitted under this competition may propose to use CSP funds to support preschool education in a charter school. For additional information and guidance regarding the use of CSP funds to support preschool education in charter schools, see “Guidance on the use of Funds to support Preschool Education,” released in November 2014 (
In accordance with the Final Priorities for this program, a grantee may use up to 20 percent of grant funds for initial operational costs associated with the expansion or improvement of the grantee's oversight or management of its charter schools, provided that: (i) the specific charter schools being created or substantially expanded under the grant are the intended beneficiaries of such expansion or
We reference additional regulations outlining funding restrictions in the
6.
a. Have a Data Universal Numbering System (DUNS) number and a Taxpayer Identification Number (TIN);
b. Register both your DUNS number and TIN with the System for Award Management (SAM) (formerly the Central Contractor Registry (CCR)), the Government's primary registrant database;
c. Provide your DUNS number and TIN on your application; and
d. Maintain an active SAM registration with current information while your application is under review by the Department and, if you are awarded a grant, during the project period.
You can obtain a DUNS number from Dun and Bradstreet. A DUNS number can be created within one-to-two business days.
If you are a corporate entity, agency, institution, or organization, you can obtain a TIN from the Internal Revenue Service. If you are an individual, you can obtain a TIN from the Internal Revenue Service or the Social Security Administration. If you need a new TIN, please allow 2–5 weeks for your TIN to become active.
The SAM registration process can take approximately seven business days, but may take upwards of several weeks, depending on the completeness and accuracy of the data entered into the SAM database by an entity. Thus, if you think you might want to apply for Federal financial assistance under a program administered by the Department, please allow sufficient time to obtain and register your DUNS number and TIN. We strongly recommend that you register early.
Once your SAM registration is active, you will need to allow 24 to 48 hours for the information to be available in Grants.gov and before you can submit an application through Grants.gov.
If you are currently registered with SAM, you may not need to make any changes. However, please make certain that the TIN associated with your DUNS number is correct. Also note that you will need to update your registration annually. This may take three or more business days.
Information about SAM is available at
In addition, if you are submitting your application via Grants.gov, you must (1) be designated by your organization as an Authorized Organization Representative (AOR); and (2) register yourself with Grants.gov as an AOR. Details on these steps are outlined at the following Grants.gov Web page:
7.
a.
Applications for grants under the CSP Grants for Replication and Expansion of High-Quality Charter Schools, CFDA number 84.282M, must be submitted electronically using the Governmentwide Grants.gov Apply site at
We will reject your application if you submit it in paper format unless, as described elsewhere in this section, you qualify for one of the exceptions to the electronic submission requirement
You may access the electronic grant application for CSP Grants for Replication and Expansion of High-Quality Charter Schools at
Please note the following:
• When you enter the Grants.gov site, you will find information about submitting an application electronically through the site, as well as the hours of operation.
• Applications received by Grants.gov are date and time stamped. Your application must be fully uploaded and submitted and must be date and time stamped by the Grants.gov system no later than 4:30:00 p.m., Washington, DC time, on the application deadline date. Except as otherwise noted in this section, we will not accept your application if it is received—that is, date and time stamped by the Grants.gov system—after 4:30:00 p.m., Washington, DC time, on the application deadline date. We do not consider an application that does not comply with the deadline requirements. When we retrieve your application from Grants.gov, we will notify you if we are rejecting your application because it was date and time stamped by the Grants.gov system after 4:30:00 p.m., Washington, DC time, on the application deadline date.
• The amount of time it can take to upload an application will vary depending on a variety of factors, including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you do not wait until the application deadline date to begin the submission process through Grants.gov.
• You should review and follow the Education Submission Procedures for submitting an application through Grants.gov that are included in the application package for this competition to ensure that you submit your application in a timely manner to the Grants.gov system. You can also find the Education Submission Procedures pertaining to Grants.gov under News and Events on the Department's G5 system home page at
• You will not receive additional point value because you submit your application in electronic format, nor will we penalize you if you qualify for an exception to the electronic submission requirement, as described elsewhere
• You must submit all documents electronically, including all information you typically provide on the following forms: the Application for Federal Assistance (SF 424), the Department of Education Supplemental Information for SF 424, Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• You must upload any narrative sections and all other attachments to your application as files in a .PDF (Portable Document) read-only, non-modifiable format. Specifically, do not upload an interactive or fillable .PDF
• Your electronic application must comply with any page-limit requirements described in this notice.
• After you electronically submit your application, you will receive from Grants.gov an automatic notification of receipt that contains a Grants.gov tracking number. (This notification indicates receipt by Grants.gov only, not receipt by the Department.) The Department then will retrieve your application from Grants.gov and send a second notification to you by email. This second notification indicates that the Department has received your application and has assigned your application a PR/Award number (an ED-specified identifying number unique to your application).
• We may request that you provide us original signatures on forms at a later date.
If you are prevented from electronically submitting your application on the application deadline date because of technical problems with the Grants.gov system, we will grant you an extension until 4:30:00 p.m., Washington, DC time, the following business day to enable you to transmit your application electronically or by hand delivery. You also may mail your application by following the mailing instructions described elsewhere in this notice.
If you submit an application after 4:30:00 p.m., Washington, DC time, on the application deadline date, please contact the person listed under
The extensions to which we refer in this section apply only to the unavailability of, or technical problems with, the Grants.gov system. We will not grant you an extension if you failed to fully register to submit your application to Grants.gov before the application deadline date and time or if the technical problem you experienced is unrelated to the Grants.gov system.
• You do not have access to the Internet; or
• You do not have the capacity to upload large documents to the Grants.gov system;
• No later than two weeks before the application deadline date (14 calendar days or, if the fourteenth calendar day before the application deadline date falls on a Federal holiday, the next business day following the Federal holiday), you mail or fax a written statement to the Department, explaining which of the two grounds for an exception prevent you from using the Internet to submit your application.
If you mail your written statement to the Department, it must be postmarked no later than two weeks before the application deadline date. If you fax your written statement to the Department, we must receive the faxed statement no later than two weeks before the application deadline date.
Address and mail or fax your statement to: Brian Martin, U.S. Department of Education, 400 Maryland Avenue, SW., room 4W224, Washington, DC 20202–5970. FAX: (202) 205–5630.
Your paper application must be submitted in accordance with the mail or hand delivery instructions described in this notice.
b.
If you qualify for an exception to the electronic submission requirement, you may mail (through the U.S. Postal Service or a commercial carrier) your application to the Department. You must mail the original and two copies of your application, on or before the application deadline date, to the Department at the following address:
U.S. Department of Education, Application Control Center, Attention: CFDA Number 84.282M, LBJ Basement Level 1, 400 Maryland Avenue, SW., Washington, DC 20202–4260.
You must show proof of mailing consisting of one of the following:
(1) A legibly dated U.S. Postal Service postmark.
(2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
(4) Any other proof of mailing acceptable to the Secretary of the U.S. Department of Education.
If you mail your application through the U.S. Postal Service, we do not accept either of the following as proof of mailing:
(1) A private metered postmark.
(2) A mail receipt that is not dated by the U.S. Postal Service.
If your application is postmarked after the application deadline date, we will not consider your application.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, you should check with your local post office.
c.
If you qualify for an exception to the electronic submission requirement, you (or a courier service) may deliver your paper application to the Department by hand. You must deliver the original and two copies of your application by hand, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: CFDA Number 84.282M, 550 12th Street, SW., Room 7039, Potomac Center Plaza, Washington, DC 20202–4260.
The Application Control Center accepts hand deliveries daily between 8:00 a.m. and 4:30:00 p.m., Washington, DC time, except Saturdays, Sundays, and Federal holidays.
If you mail or hand deliver your application to the Department—
(1) You must indicate on the envelope and—if not provided by the Department—in Item 11 of the SF 424 the CFDA number, including suffix letter, if any, of the competition under which you are submitting your application; and
(2) The Application Control Center will mail to you a notification of receipt of your grant application. If you do not receive this notification within 15 business days from the application deadline date, you should call the U.S. Department of Education Application Control Center at (202) 245–6288.
1.
These application requirements are from the Final Priorities for this program.
(a) Describe the objectives of the project for replicating or substantially expanding high-quality charter schools (as defined in this notice) and the methods by which the applicant will determine its progress toward achieving those objectives.
(b) Describe how the applicant currently operates or manages the charter schools for which it has presented evidence of success, and how the proposed new or substantially expanded charter schools will be operated or managed. Include a description of central office functions, governance, daily operations, financial management, human resources management, and instructional management. If applying as a group or consortium, describe the roles and responsibilities of each member of the group or consortium and how each member will contribute to this project.
(c) Describe how the applicant will ensure that each proposed new or substantially expanded charter school receives its commensurate share of Federal education funds that are allocated by formula each year, including during the first year of operation of the school and any year in which the school's enrollment substantially expands.
(d) Describe the educational program to be implemented in the proposed new or substantially expanded charter schools, including how the program will enable all students (including educationally disadvantaged students) to meet State student academic achievement standards, the grade levels or ages of students to be served, and the curriculum and instructional practices to be used.
An applicant proposing to create or substantially expand a single-sex charter school should include in its application, or as an addendum to the application, a detailed description of how it is complying with applicable nondiscrimination laws, including the Equal Protection Clause of the U.S. Constitution (as interpreted in
An applicant that currently offers or is proposing to create or expand single-sex classes or extracurricular activities at a coeducational charter school should also include in its application, or as an addendum to its application, a detailed description of how it will comply with applicable nondiscrimination laws, including the Equal Protection Clause of the U.S. Constitution (as interpreted in United States v. Virginia, 518 U.S. 515 (1996) and other cases) and Title IX of the Education Amendments of 1972 (20 U.S.C. 1681
(e) Describe the administrative relationship between the charter school or schools to be replicated or substantially expanded by the applicant and the authorized public chartering agency.
(f) Describe how the applicant will provide for continued operation of the proposed new or substantially expanded charter school or schools once the Federal grant has expired.
(g) Describe how parents and other members of the community will be involved in the planning, program design, and implementation of the proposed new or substantially expanded charter school or schools.
(h) Include a request and justification for waivers of any Federal statutory or regulatory provisions that the applicant believes are necessary for the successful operation of the proposed new or substantially expanded charter schools.
(i) Describe how the grant funds will be used, including how these funds will be used in conjunction with other Federal programs administered by the Secretary, and with any matching funds.
(j) Describe how all students in the community, including students with disabilities, English learners, and other educationally disadvantaged students, will be informed about the proposed new or substantially expanded charter schools and given an equal opportunity to attend such schools.
The applicant should provide a detailed description of its recruitment and admissions policies and practices, including a description of the lottery it plans to employ at each charter school if more students apply for admission than can be accommodated. The applicant should also describe any current or planned use of a weighted lottery or exemptions of certain categories of students from the lottery and how the use of such weights or exemptions is consistent with State law and the CSP authorizing statute. For information on the CSP lottery requirement, including permissible exemptions from the lottery and the circumstances under which charter schools receiving CSP funds may use weighted lotteries, see Section E of the CSP Nonregulatory Guidance at
An application that proposes to use a weighted lottery should provide the following:
(1) Information concerning the circumstances in which a weighted lottery would be used, including the specific categories of students the weighted lottery would favor;
(2) Evidence that (a) the use of a weighted lottery is necessary to comply with Federal or State law; or (b) the State permits the use of a weighted lottery under the circumstances in which a weighted lottery is proposed to be used (
(3) Information concerning the mechanisms that exist (if any) for an oversight entity (
(4) Information concerning how the use of a weighted lottery for a permitted purpose is within the scope and objectives of the proposed project; and
(5) Information concerning the amount or range of lottery weights that will be employed or permitted and the rationale for these weights.
(k) Describe how the proposed new or substantially expanded charter schools that are considered to be LEAs under State law, or the LEAs in which the new or substantially expanded charter schools are located, will comply with sections 613(a)(5) and 613(e)(1)(B) of the Individuals with Disabilities Education Act (IDEA) (for additional information on IDEA, please see
(l) Provide information on any significant compliance issues identified within the past three years for each school managed by the applicant, including compliance issues in the areas of student safety, financial management, and statutory or regulatory compliance.
(m) For each charter school currently operated or managed by the applicant, provide the following information: the year founded, the grades currently served, the number of students, the address, the percentage of students in each subgroup of students described in section 1111(b)(2)(C)(v)(II) of the ESEA, results on the State assessment for the past three years (if available) by subgroup, attendance rates, student attrition rates for the past three years, and (if the school operates a 12th grade) high school graduation rates and college attendance rates (maintaining standards to protect personally identifiable information).
The Secretary encourages applicants to also provide suspension and expulsion rates by each subgroup for the past three years (if available) for each charter school currently operated or managed by the applicant.
(n) Provide objective data showing applicant quality. In particular, the Secretary requires the applicant to provide the following data:
(1) Performance (school-wide and by subgroup) for the past three years (if available) on statewide tests of all charter schools operated or managed by the applicant as compared to all students in other schools in the State or States at the same grade level, and as compared with other schools serving similar demographics of students (maintaining standards to protect personally identifiable information);
(2) Annual student attendance and retention rates (school-wide and by subgroup) for the past three years (or over the life of the school, if the school has been open for fewer than three years), and comparisons with other similar schools (maintaining standards to protect personally identifiable information); and
(3) Where applicable and available, high school graduation rates, college attendance rates, and college persistence rates (school-wide and by subgroup) for the past three years (if available) of students attending schools operated or managed by the applicant, and the methodology used to calculate these rates (maintaining standards to protect personally identifiable information). When reporting data for schools in States that may have particularly demanding or low standards of proficiency, applicants are invited to discuss how their academic success might be considered against applicants from across the country.
(o) Provide such other information and assurances as the Secretary may require.
2.
In evaluating an application, the Secretary considers the following criteria:
(a)
In determining the quality of the applicant, the Secretary considers the following factors—
(1) The degree, including the consistency over the past three years, to which the applicant has demonstrated success in significantly increasing student academic achievement and attainment for all students, including, as applicable, educationally disadvantaged students served by the charter schools operated or managed by the applicant (20 points).
(2) Either—
(i) The degree, including the consistency over the past three years, to which the applicant has demonstrated success in closing historic achievement gaps for the subgroups of students described in section 1111(b)(2)(C)(v)(II) of the ESEA at the charter schools operated or managed by the applicant, or
(ii) The degree, including the consistency over the past three years, to which there have not been significant achievement gaps between any of the subgroups of students described in section 1111(b)(2)(C)(v)(II) of the ESEA at the charter schools operated or managed by the applicant and to which significant gains in student academic achievement have been made with all populations of students served by the charter schools operated or managed by the applicant (15 points).
(3) The degree, including the consistency over the past three years, to which the applicant has achieved results (including performance on statewide tests, annual student attendance and retention rates, high school graduation rates, college attendance rates, and college persistence rates where applicable and available) for low-income and other educationally disadvantaged students served by the charter schools operated or managed by the applicant that are significantly above the average academic achievement results for such students in the State (15 points).
(b)
The contribution the proposed project will make in assisting educationally disadvantaged students served by the applicant to meet or exceed State academic content standards and State student academic achievement standards, and to graduate college- and career-ready. When responding to this selection criterion, applicants must discuss the proposed locations of schools to be created or substantially expanded and the student populations to be served.
The Secretary encourages applicants to describe their prior success in improving educational achievement and outcomes for educationally disadvantaged students, including students with disabilities and English learners. In addition, the Secretary encourages applicants to address how they will ensure that all eligible students with disabilities receive a free appropriate public education and how the proposed project will assist educationally disadvantaged students, including students with disabilities and English learners, in mastering State academic content standards and State student academic achievement standards.
(c)
The Secretary considers the quality of the design of the proposed project. In determining the quality of the design of the proposed project, the Secretary considers the extent to which the goals, objectives, and outcomes to be achieved by the proposed project are clearly specified, measurable, and attainable. Applicants proposing to open schools serving substantially different populations than those currently served by the model for which they have demonstrated evidence of success must address the attainability of outcomes given this difference.
(d)
The Secretary considers the quality of the management plan and personnel to replicate and substantially expand high-quality charter schools (as defined in this notice). In determining the quality of the management plan and personnel for the proposed project, the Secretary considers—
(1) The adequacy of the management plan to achieve the objectives of the proposed project on time and within budget, including clearly defined responsibilities, timelines, and milestones for accomplishing project tasks (4 points).
(2) The business plan for improving, sustaining, and ensuring the quality and performance of charter schools created or substantially expanded under these grants beyond the initial period of Federal funding in areas including, but not limited to, facilities, financial management, central office, student academic achievement, governance, oversight, and human resources of the charter schools (4 points).
(3) A multi-year financial and operating model for the organization, a demonstrated commitment of current and future partners, and evidence of broad support from stakeholders critical to the project's long-term success (4 points).
(4) The plan for closing charter schools supported, overseen, or managed by the applicant that do not meet high standards of quality (2 points).
(5) The qualifications, including relevant training and experience, of the project director, chief executive officer or organization leader, and key project personnel, especially in managing projects of the size and scope of the proposed project (6 points).
(e)
The Secretary considers the quality of the evaluation to be conducted of the proposed project. In determining the quality of the evaluation, the Secretary considers the extent to which the methods of evaluation include the use of objective performance measures that are clearly related to the intended outcomes of the project and will produce quantitative and qualitative data.
3.
In addition, in making a competitive grant award, the Secretary also requires various assurances including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department of Education (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
4.
1.
If your application is not evaluated or not selected for funding, we notify you.
2.
We reference the regulations outlining the terms and conditions of an award in the
3.
(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multi-year award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
4.
(a) Program Performance Measures. The goal of the CSP is to support the creation and development of a large number of high-quality charter schools that are free from State or local rules that inhibit flexible operation, are held accountable for enabling students to reach challenging State performance standards, and are open to all students. The Secretary has two performance indicators to measure progress towards this goal: (1) the number of charter schools in operation around the Nation, and (2) the percentage of fourth- and eighth-grade charter school students who are achieving at or above the proficient level on State assessments in mathematics and reading/language arts. Additionally, the Secretary has established the following measure to examine the efficiency of the CSP: Federal cost per student in implementing a successful school (defined as a school in operation for three or more consecutive years).
(b) Project-Specific Performance Measures. Applicants must propose project-specific performance measures and performance targets consistent with the objectives of the proposed project. Applications must provide the following information as directed under 34 CFR 75.110(b) and (c):
(1) Performance measures. How each proposed performance measure (as defined in this notice) would accurately measure the performance of the project and how the proposed performance measure would be consistent with the performance measures established for the program funding the competition.
(2) Baseline data. (i) Why each proposed baseline (as defined in this notice) is valid; or (ii) If the applicant has determined that there are no established baseline data for a particular performance measure, an explanation of why there is no established baseline and of how and when, during the project period, the applicant would establish a valid baseline for the performance measure.
(3) Performance targets. Why each proposed performance target (as defined in this notice) is ambitious (as defined in this notice) yet achievable compared to the baseline for the performance
The Secretary encourages applicants to consider measures and targets tied to their grant activities (for instance, if grant funds will support professional development for teachers and other staff, applicants should include measures related to the outcomes for the professional development), as well as to student academic achievement during the grant period. The measures should be sufficient to gauge the progress throughout the grant period, and show results by the end of the grant period.
For technical assistance in developing effective performance measures, applicants are encouraged to review information provided by the Department's Regional Educational Laboratories (RELs). The RELs seek to build the capacity of States and school districts to incorporate data and research into education decision-making. Each REL provides research support and technical assistance to its region but makes learning opportunities available to educators everywhere. For example, the REL Northeast and Islands has created the following resource on logic models:
(4) The applicant must also describe in the application: (i) the data collection and reporting methods the applicant would use and why those methods are likely to yield reliable, valid, and meaningful performance data, and (ii) the applicant's capacity to collect and report reliable, valid, and meaningful performance data, as evidenced by high-quality data collection, analysis, and reporting in other projects or research.
If the applicant does not have experience with collection and reporting of performance data through other projects or research, the applicant should provide other evidence of capacity to successfully carry out data collection and reporting for their proposed project.
All grantees must submit an annual performance report with information that is responsive to these performance measures.
5.
If you use a TDD or a TTY, call the FRS, toll free, at 1–800–877–8339.
You may also access documents of the Department published in the
U.S. Department of Energy.
Notice of availability and public hearings.
The U.S. Department of Energy (DOE) announces the availability of the “
DOE invites interested Members of Congress, state and local governments, other Federal agencies, American Indian tribal governments, organizations, and members of the public to provide comments on the Draft EIS during the 60-day public comment period. The public comment period starts on June 12, 2015, with the publication in the
Locations, dates, and start time for the public hearings are listed in the
Requests to provide oral comments at the public hearings may be made at the time of the hearing(s).
Written comments on the Draft EIS may be provided on the NECPL EIS Web site at
Mr. Brian Mills at the addresses above, or at 202–586–8267.
The public hearings will consist of the formal taking of comments with transcription by a court stenographer. The hearings will provide interested parties the opportunity to make comments for consideration in the preparation of the Final EIS.
The locations, dates, and starting times of the public hearings are listed in the table below:
Copies of the Draft EIS have been distributed to appropriate members of Congress, state and local government officials, American Indian tribal governments, and other Federal agencies, groups, and interested parties. Printed copies of the document may be obtained by contacting Mr. Mills at the above address. Copies of the Draft EIS and supporting documents are also available for inspection at the following locations:
The Draft EIS is also available on the EIS Web site at
Take notice that the Commission received the following electric corporate filings:
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: 5 p.m. ET 6/18/15.
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 date(s). 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:
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 received the following electric rate filings:
Take notice that the Commission received the following electric securities filings:
Take notice that the Commission received the following public utility holding company 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:
Environmental Protection Agency (EPA).
Notice of data availability.
The Environmental Protection Agency (EPA) is providing notice that two chapters of the current EPA Air Pollution Control Cost Manual (“Control Cost Manual”) have been revised and updated. The EPA is requesting comment on the update of these two chapters, both of which deal with oxides of nitrogen (NOx) emissions control measures, and the supporting data and methods applied.
Comments must be received on or before August 11, 2015. Please refer to
Submit your comments, identified by Docket ID No. EPA–HQ–OAR–2015–0341, by one of the following methods:
•
•
•
•
•
For questions on the EPA Air Pollution Control Cost Manual update and on how to submit comments, contact Larry Sorrels, Health and Environmental Impacts Division, Environmental Protection Agency, C439–02, 109 T.W. Alexander Drive, Research Triangle Park, NC 27709; telephone number: (919) 541–5041; fax number: (919) 541–0839; email address:
The EPA is requesting comment on the EPA Air Pollution Control Cost Manual update; in particular, on the specific Control Cost Manual chapters included in this notice.
1.
2.
a. Identify the notification by docket number and other identifying information (subject heading,
b. Explain your comments, why you agree or disagree; suggest alternatives and substitute data that reflects your requested changes.
c. Describe any assumptions and provide any technical information and/or data that you used.
d. Provide specific examples to illustrate your concerns, and suggest alternatives.
e. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
f. Make sure to submit your comments by the comment period deadline identified.
The EPA is requesting comment on two revised chapters of the EPA Air Pollution Control Cost Manual. The Control Cost Manual contains individual chapters on control measures, with data and equations available to aid users to estimate the capital costs for installation and annual costs for operation and maintenance of these measures. The Control Cost Manual is used by the EPA for estimating the impacts of rulemakings, and serves as a basis for sources to estimate costs of controls that are best available control technology (BACT) under the New Source Review (NSR), and best available retrofit technology (BART) under the Regional Haze Program, and for other programs.
The two revised Control Cost Manual chapters are the selective non-catalytic reduction (SNCR) and the selective catalytic reduction (SCR) chapters (Section 4, Chapters 1 and 2, respectively). The current Cost Manual version (sixth edition) is available at
To help focus review of the SNCR and SCR chapters, we offer the following list of questions that the agency is particularly interested in addressing through this notice, although commenters are welcome to address any aspects of these chapters. Please provide supporting data for responses to these questions, and other aspects of the chapters, as mentioned above.
(1) What is a reasonable estimate of equipment life (defined as design or operational life) for this control measure?
(2) How do the costs of SNCR installation and operation differ between the electric power sector and industrial sources?
(3) What is a reasonable estimate of contingency, whether it be for one or more types, for this control measure?
(1) What is a reasonable estimate of equipment life (defined as design or operational life) for this control measure?
(2) How do the costs of SCR installation and operation differ between the electric power sector and industrial sources?
(3) What are typical SCR costs for catalyst replacement? In particular, please comment on the two different approaches for estimating catalyst replacement costs in this chapter. What are typical SCR costs for catalyst regeneration?
(4) What is a reasonable estimate of contingency, whether it be for one or more types, for this control measure?
Environmental Protection Agency (EPA).
Notice.
As required by section 9(a)(2) of the Federal Advisory Committee Act (FACA), we are giving notice that EPA recently established the Chemical Safety Advisory Committee (CSAC). The purpose of the CSAC is to provide expert scientific advice, information, and recommendations to the Office of Pollution Prevention and Toxics (OPPT). The major objective is to provide advice and recommendations on: The scientific basis for risk assessments, methodologies, and pollution prevention measures or approaches. EPA has determined that this federal advisory committee is necessary and in the public interest and will assist the EPA in performing its duties and responsibilities. Copies of the CSAC charter will be filed with the appropriate congressional committees and the Library of Congress. EPA invites the public to nominate experts to be considered for the Chemical Safety Advisory Committee.
Comments must be received on or before July 13, 2015.
Submit your nominations, identified by docket identification (ID) number EPA–HQ–OPPT–2015–0233, by one of the following methods:
•
•
•
Additional instructions on visiting the docket, along with more information about dockets generally, is available at
Laura Bailey, (7201M), Office of Science Coordination and Policy (OSCP), Office of Chemical Safety and Pollution Prevention (OCSPP), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460–0001, email address:
This action is directed to the public in general. This action may, however, be of interest to those involved in the manufacture, processing, distribution, disposal, and/or interested in the assessment of risks involving chemical substances and mixtures. Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
This committee is being established under FACA, 5 U.S.C. Appendix 2.
The CSAC was established under FACA section 9(a) to provide advice and recommendations on the scientific basis for risk assessments, methodologies, and pollution prevention measures or approaches.
OPPT manages programs under the Toxic Substances Control Act (TSCA), 15 U.S.C. 2601
The CSAC will be composed of approximately ten members who will serve as Regular Government Employees (RGEs) or Special Government Employees (SGEs). The CSAC expects to meet in person or by electronic means (
Nominations for membership are being solicited through publication of this document in the
Nominations should include candidates who have demonstrated high levels of competence, knowledge, and expertise in scientific/technical fields relevant to chemical risk assessment and pollution prevention. To the extent feasible, the members will include representation of the following disciplines, including, but not limited to: toxicology, pathology, environmental toxicology and chemistry, exposure assessment, and related sciences,
In selecting members, EPA will also consider the differing perspectives and breadth of collective experience needed to address EPA's charge to the CSAC, as well as the following:
Demonstrated ability to work constructively and effectively in a committee setting;
Absence of financial conflicts of interest or the appearance of lack of impartiality;
Skills and experience working on committees and advisory panels;
Background and experiences that would contribute to the diversity of viewpoints on the committee,
Willingness to commit adequate time for the thorough review of materials provided to the committee; and
Availability to participate in committee meetings.
Names, affiliations and a brief biographical sketch of the nominees selected to serve on the CSAC will be available on the EPA Web site.
5 U.S.C. Appendix 2.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency is planning to submit an information collection request (ICR), “Risk Management Program Requirements and Petitions to Modify the List of Regulated Substances under section 112(r) of the Clean Air Act (CAA).” (EPA ICR No. 1656.15, OMB Control No. 2050–0144) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. Before doing so, EPA is soliciting public comments on specific aspects of the proposed information collection as described below. This is a proposed extension of the ICR, which is currently approved through December 31, 2015. 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.
Comments must be submitted on or before August 11, 2015.
Submit your comments, referencing Docket ID No. EPA–HQ–OAR–2003–0052, online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
James Belke, Office of Emergency Management, mail code 5104A, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: (202) 564–8023; fax number: (202) 564–2625; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Pursuant to section 3506(c)(2)(A) of the PRA, EPA is soliciting comments and information to enable it to: (i) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (ii) evaluate the accuracy of the Agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (iii) enhance the quality, utility, and clarity of the information to be collected; and (iv) 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,
Part 68 requires that sources with more than a threshold quantity of a regulated substance in a process develop and implement a risk management program and submit a risk management plan to EPA. EPA uses risk management plans to conduct oversight of regulated sources, and to communicate information concerning them to federal, state, and local agencies and the public, as appropriate.
The compliance schedule for the part 68 requirements was established by rule on June 20, 1996. The burden to sources that are currently covered by part 68, for initial rule compliance, including rule familiarization and program implementation was accounted for in previous ICRs. Sources submitted their first RMPs by June 21, 1999. For most sources, the next compliance deadlines occurred thereafter at five year intervals—in 2004, 2009, and 2014. A source submitting an RMP update to comply with their five-year compliance deadline will often submit their updated RMP several days or weeks early to ensure it is received by EPA before their deadline—these sources are assigned a new five-year deadline based off of the actual date of their most recent submission. Therefore, resubmissions tend to occur in “waves” peaking each
In this ICR, EPA has accounted for burden for new sources that may become subject to the regulations, currently covered sources with compliance deadlines in this ICR period (2016 to 2018), sources that are out of compliance since the last regulatory deadline but are expected to comply during this ICR period, and sources that have deadlines beyond this ICR period but are required to comply with certain prevention program documentation requirements during this ICR period.
Notice: 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:
Pursuant to the provisions of the “Government in the Sunshine Act” (5 U.S.C. 552b), notice is hereby given that the Federal Deposit Insurance Corporation's Board of Directors will meet in open session at 10:00 a.m. on Tuesday, June 16, 2015, to consider the following matters:
Disposition of minutes of previous Board of Directors' Meetings.
Memorandum and resolution re: Regulatory Capital Rules: Regulatory Capital, Revisions Applicable to Banking Organizations Subject to the Advanced Approaches Risk-Based Capital Rule.
Memorandum and resolution re: Final Rule to Implement Requirements of the Biggert-Waters Flood Insurance Reform Act and the Homeowner Flood Insurance Affordability Act.
Summary reports, status reports, reports of the Office of Inspector General, and reports of actions taken pursuant to authority delegated by the Board of Directors.
Memorandum and resolution re: Deposit Insurance Assessments for Small Banks.
This Board meeting will be Webcast live via the Internet and subsequently made available on-demand approximately one week after the event. Visit
The FDIC will provide attendees with auxiliary aids (
Requests for further information concerning the meeting may be directed to Mr. Robert E. Feldman, Executive Secretary of the Corporation, at 202–898–7043.
FEDERAL DEPOSIT INSURANCE CORPORATION.
The companies listed in this notice have applied to the Board for approval, pursuant to the Home Owners' Loan Act (12 U.S.C. 1461
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the HOLA (12 U.S.C. 1467a(e)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 10(c)(4)(B) of the HOLA (12 U.S.C. 1467a(c)(4)(B)). Unless otherwise noted, nonbanking activities will be conducted throughout the United States.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than July 9, 2015.
A. Federal Reserve Bank of Cleveland (Nadine Wallman, Vice President) 1455 East Sixth Street, Cleveland, Ohio 44101–2566:
1.
Civilian Board of Contract Appeals, GSA.
Notice of request for comments regarding a reinstatement to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat has submitted to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement regarding the Civilian Board of Contract Appeals (CBCA) Rules of Procedure. A notice was published in the
Submit comments on or before: July 13, 2015.
Submit comments identified by Information Collection IC 3090–0221, Civilian Board of Contract Appeals Rules of Procedure, by any of the following methods:
• Regulations.gov:
• Mail: General Services Administration, Regulatory Secretariat Division (MVCB), 1800 F Street NW., Washington, DC, 20405. ATTN: Ms. Flowers/IC 3090–0221, Civilian Board of Contract Appeals Rules of Procedure.
J. Gregory Parks, Chief Counsel, Civilian Board of Contract Appeals, 1800 F Street NW., Washington, DC 20405, telephone 202–606–8800 or via email to
The CBCA requires the information collected in order to conduct proceedings in contract appeals and petitions, and cost applications. Parties include those persons or entities filing appeals, petitions, cost applications, and government agencies.
Public comments are particularly invited on: Whether this collection of information is necessary and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate,
Section 426 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), as amended, 42 U.S.C. 5189d authorizes the Federal Emergency Management Agency (FEMA) and the U.S. Department of Health Services' Administration for Children and Families (ACF) to provide Immediate Disaster Case Management (IDCM) services under the federal Disaster Case Management Program (DCMP).
The use of the Electronic Case Management Record System (ECMRS) is aligned with Executive Order of the President 13589 and the memorandum to the Heads of Executive Departments and Agencies M–12–12 from the Office of Management and Budget to “Promote Efficient Spending to Support Agency Operations.”
The primary purpose of the information collection pertains to ACF/OHSEPR's initiative to improve the intake process and delivery of case management services to individuals and households impacted by a disaster. Further, the information collection will be used to support ACF/OHSEPR's goal to quickly identify critical gaps, resources, needs, and services to support State, local and non-profit capacity for disaster case management and to augment and build capacity where none exists.
There are two versions of this Paper Reduction Act request: (1) paper intake assessment that will be used until ECMRS is implemented and operational and (2) Electronic Case Record platform. The ECMRS will greatly reduce respondent burden through built-in algorithms that will streamline response options and patterns. All information gathered will be exclusively used to inform the delivery of disaster case management services and programmatic strategies and improvements.
ACF is requesting that OMB grant a 180 day approval for this information collection under procedures for emergency processing by June 19, 2015. A copy of this information collection, with applicable supporting documentation, may be obtained by calling the Administration for Children and Families, Reports Clearance Officer, Robert Sargis at (202) 690–7275.
Comments and questions about the information collection described above should be directed to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for ACF, Office of Management and Budget, Paperwork Reduction Project, 725 17th Street NW., Washington, DC 20503; FAX: (202) 395–7285; email:
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a collection of information entitled, “Waivers of Invivo Demonstration of Bioequivalence of Animal Drugs in Soluble Powder Oral Dosage Form and Type A Medicated Articles” has been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995.
FDA PRA Staff, Office of Operations, Food and Drug Administration, 8455 Colesville Rd., COLE–14526, Silver Spring, MD 20993–0002,
On April 24, 2015, the Agency submitted a proposed collection of information entitled, “Waivers of Invivo Demonstration of Bioequivalence of Animal Drugs in Soluble Powder Oral Dosage Form and Type A Medicated
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a guidance for industry #218 (GFI #218) entitled “Cell-Based Products for Animal Use.” FDA is aware that many potential veterinary therapies may be produced using cell-based products. GFI #218 describes FDA's Center for Veterinary Medicine's current thinking on cell-based products for animal use that meet the definition of a new animal drug. This guidance is for persons developing, manufacturing, or marketing cell-based products, including “animal stem cell-based products”.
Submit either electronic or written comments on Agency guidances at any time.
Submit written requests for single copies of the guidance to the Policy and Regulations Staff (HFV–6), Center for Veterinary Medicine, Food and Drug Administration, 7519 Standish Pl., Rockville, MD 20855. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Submit electronic comments on the guidance to
Lynne Boxer, Center for Veterinary Medicine (HFV–114), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 240–402–0611,
In the
This level 1 guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on Cell-Based Products for Animal Use. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in 21 CFR part 514 and 21 CFR 511.1 have been approved under OMB control numbers 0910–0032 and 0910–0117, respectively.
Interested persons may submit either electronic comments regarding this document to
Persons with access to the Internet may obtain the guidance at either
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a collection of information entitled “Food Allergen Labeling and Reporting” has been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995.
FDA PRA Staff, Office of Operations, Food and Drug Administration, 8455 Colesville Rd., COLE–14526, Silver Spring, MD 20993–0002,
On March 30, 2015, the Agency submitted a proposed collection of information entitled “Food Allergen Labeling and Reporting” to OMB for review and clearance under 44 U.S.C. 3507. 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. OMB has now approved the information collection and has assigned OMB control number 0910–0792. The approval expires on May 31, 2018. A copy of the supporting statement for this information collection is available on the Internet at
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 July 13, 2015.
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.
This collection of information implements section 518(e) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360h(e)) and part 810 (21 CFR part 810), medical device recall authority provisions. Section 518(e) of the FD&C Act provides FDA with the authority to issue an order requiring an appropriate person, including manufacturers, importers, distributors, and retailers of a device, if FDA finds that there is reasonable probability that the device intended for human use would cause serious adverse health consequences or death, to: (1) Immediately cease distribution of such device; (2) immediately notify health professionals and device-user facilities of the order; and (3) instruct such professionals and facilities to cease use of such device.
Further, the provisions under section 518(e) of the FD&C Act set out the following three-step procedure for issuance of a mandatory device recall order:
• If there is a reasonable probability that a device intended for human use would cause serious, adverse health consequences or death, FDA may issue a cease distribution and notification order requiring the appropriate person to immediately:
○ Cease distribution of the device,
○ notify health professionals and device user facilities of the order, and
○ instruct those professionals and facilities to cease use of the device;
• FDA will provide the person named in the cease distribution and notification order with the opportunity for an informal hearing on whether the order should be modified, vacated, or amended to require a mandatory recall of the device; and
• After providing the opportunity for an informal hearing, FDA may issue a mandatory recall order if the Agency determines that such an order is necessary.
The information collected under the recall authority provisions will be used by FDA to do the following: (1) Ensure that all devices entering the market are safe and effective; (2) accurately and immediately detect serious problems with medical devices; and (3) remove dangerous and defective devices from the market.
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 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 July 13, 2015.
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.
Under sections 513(e) and (f), 514(b), 515(b), and 520(
The reclassification procedure regulation requires the submission of specific data when a manufacturer is petitioning for reclassification. This includes a “Supplemental Data Sheet,” Form FDA 3427, and a “General Device Classification Questionnaire,” Form FDA 3429. Both forms contain a series of questions concerning the safety and effectiveness of the device type.
In the
The reclassification provisions of the FD&C Act serve primarily as a vehicle for manufacturers to seek reclassification from a higher to a lower class, thereby reducing the regulatory requirements applicable to a particular device type, or to seek reclassification from a lower to a higher class, thereby increasing the regulatory requirements applicable to that device type. If approved, petitions requesting classification from class III to class II or class I provide an alternative route to market in lieu of premarket approval for class III devices. If approved, petitions requesting reclassification from class I or II, to a different class, may increase requirements.
In the
The comment refers to changes to the form FDA 3429 as proposed by the commenter in a citizen petition (FDA–2014–P–0283–0001), which was subsequently denied by FDA in a final response letter to the petitioner (FDA–2014–P–0283–0003). Because the proposed changes have already been denied through the citizen petition process, we have not made changes to this information collection based on the comment.
The Center for Devices and Radiological Health (CDRH) has continually maintained contact with industry. Informal communications concerning the importance and effect of reclassification are provided primarily through trade organizations, and via CDRH's Web site. The consensus from the Agency's most recent contact with these trade organizations is that they are in favor of the program. The trade organizations involved are AdvaMed, the Food and Drug Law Institute (FDLI), and the National Electrical Manufacturers Association (NEMA):
AdvaMed, Tara Federici, 1030 15th Street NW., suite 1100, Washington, DC 20005, 202–452–8240;
Food and Drug Law Institute (FDLI), 1000 Vermont Ave. NW., suite 1200, Washington, DC 20005, 202–371–1420; and National Electrical Manufacturers Association (NEMA), 1300 North 17th Street, suite 1847, Rosslyn, VA 22209, 703–841–3200.
FDA estimates the burden of this collection of information as follows:
Based on reclassification petitions received in the last 3 years, FDA anticipates that six petitions will be submitted each year. The time required to prepare and submit a reclassification petition, including the time needed to assemble supporting data, averages 500 hours per petition. This average is based upon estimates by FDA administrative and technical staff who: (1) Are familiar with the requirements for submission of a reclassification petition, (2) have consulted and advised manufacturers on these requirements, and (3) have reviewed the documentation submitted.
This document 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 and the collections of information in 21 CFR part 814, subparts A through E, have been approved under OMB control number 0910–0231.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that it has received a petition requesting exemption from the premarket notification requirements for an electric positioning chair with a motorized positioning control that is intended for medical purposes and that can be adjusted to various positions. The device is used to provide stability for patients with athetosis (involuntary spasms) and to alter postural positions. FDA is publishing this notice to obtain comments in accordance with procedures established by the Food and Drug Administration Modernization Act of 1997 (FDAMA).
Submit either electronic or written comments by July 13, 2015.
You may submit comments, identified by Docket No. FDA–2015–P–1197, by any of the following methods:
Submit electronic comments in the following way:
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Submit written submissions in the following way:
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Jismi Johnson, Center for Devices and Radiological Health (CDRH), Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 1524, Silver Spring, MD 20993–0002, 301–796–6424,
Under section 513 of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 360c), FDA must classify devices into one of three regulatory classes: Class I, class II, or class III. FDA classification of a device is determined by the amount of regulation necessary to provide a reasonable assurance of safety and effectiveness. Under the Medical Device Amendments of 1976 (1976 amendments) (Pub. L. 94–295), as amended by the Safe Medical Devices Act of 1990 (Pub. L. 101–629), devices are to be classified into class I (general controls) if there is information showing that the general controls of the FD&C Act are sufficient to assure safety and effectiveness; into class II (special controls) if general controls, by themselves, are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls to provide such assurance; and into class III (premarket approval) if there is insufficient information to support classifying a device into class I or class II and the device is a life sustaining or life supporting device, or is for a use which is of substantial importance in preventing impairment of human health or presents a potential unreasonable risk of illness or injury.
Most generic types of devices that were on the market before the date of the 1976 amendments (May 28, 1976) (generally referred to as preamendments devices) have been classified by FDA under the procedures set forth in section 513(c) and (d) of the FD&C Act through the issuance of classification regulations into one of these three regulatory classes. Devices introduced into interstate commerce for the first time on or after May 28, 1976 (generally referred to as postamendments devices), are classified through the premarket notification process under section
On November 21, 1997, the President signed into law FDAMA (Pub. L. 105–115). Section 206 of FDAMA, in part, added a new section, 510(m), to the FD&C Act. Section 510(m)(1) of the FD&C Act requires FDA, within 60 days after enactment of FDAMA, to publish in the
Section 510(m)(2) of the FD&C Act provides that 1 day after date of publication of the list under section 510(m)(1), FDA may exempt a device on its own initiative or upon petition of an interested person if FDA determines that a 510(k) is not necessary to provide reasonable assurance of the safety and effectiveness of the device. This section requires FDA to publish in the
There are a number of factors FDA may consider to determine whether a 510(k) is necessary to provide reasonable assurance of the safety and effectiveness of a class II device. These factors are discussed in the guidance the Agency issued on February 19, 1998, entitled “Procedures for Class II Device Exemptions from Premarket Notification, Guidance for Industry and CDRH Staff.” That guidance is available through the Internet at
FDA has received the following petition requesting an exemption from premarket notification for a class II device: Brian Orwat, Stryker Medical, 3800 East Centre Ave., Portage, MI 49002 for its electric positioning chair classified under 21 CFR 890.3110.
Interested persons may submit either electronic comments regarding this document to
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a draft guidance for industry entitled “Assessment of Male-Mediated Developmental Risk for Pharmaceuticals.” This draft guidance provides recommendations to sponsors for assessing risks to embryo/fetal development resulting from administration of an active pharmaceutical ingredient (API) to males either through an effect on the male germ cell or from fetal exposure following seminal transfer of a potentially developmental toxicant to pregnant females. The need for measures to mitigate the risk to embryo/fetal development posed by males participating in clinical trials is also addressed.
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 August 11, 2015.
Submit written requests for single copies of the draft guidance to the Division of Drug Information, Center for Drug Evaluation and Research, Food and Drug Administration, 10001 New Hampshire Ave., Hillandale Building, 4th Floor, Silver Spring, MD 20993–0002. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Submit electronic comments on the draft guidance to
Lynnda Reid, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 5388, Silver Spring, MD 20993–0002, 301–796–0984.
FDA is announcing the availability of a draft guidance for industry entitled “Assessment of Male-Mediated Developmental Risk for Pharmaceuticals.” This guidance presents an overview of FDA's current approach to assessing potential risks associated with pharmaceutical use in male patients. Current regulatory guidance exists regarding the need to assess the genotoxic and embryo/fetal developmental toxicity potential of pharmaceuticals before their administration to pregnant women and females of reproductive potential. However, there is a lack of consistency in clinical trial protocol designs and labeling documents regarding pregnancy risk for sexual partners of men being administered an API. The conceptus of a female sexual partner may be subject to developmental risk associated with
This draft guidance provides recommendations for addressing the potential for male-mediated adverse effects on pregnancy outcome for sponsors developing an investigational drug. Topics covered include: (1) Factors that investigators should consider when testing a new API in males, (2) nonclinical studies relevant to the assessment of male-mediated developmental risks, and (3) measures to prevent pregnancy or seminal transfer to a pregnant sexual partner when risk is either unknown or anticipated.
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 current thinking of FDA on the assessment of male-mediated developmental risk for pharmaceuticals. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This guidance refers to previously approved collections of information that 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 312 have been approved under OMB control number 0910–0014.
Interested persons may submit either electronic comments regarding this document to
Persons with access to the Internet may obtain the document at either
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) has determined the regulatory review period for XELJANZ and is publishing this notice of that determination as required by law. FDA has made the determination because of the submission of an application to the Director of the U.S. Patent and Trademark Office (USPTO), Department of Commerce, for the extension of a patent which claims that human drug product.
Submit electronic comments to
Beverly Friedman, Office of Management, Food and Drug Administration, 10001 New Hampshire Ave., Hillandale Campus, Rm. 3180, Silver Spring, MD 20993, 301–796–7900.
The Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. L. 98–417) and the Generic Animal Drug and Patent Term Restoration Act (Pub. L. 100–670) generally provide that a patent may be extended for a period of up to 5 years so long as the patented item (human drug product, animal drug product, medical device, food additive, or color additive) was subject to regulatory review by FDA before the item was marketed. Under these acts, a product's regulatory review period forms the basis for determining the amount of extension an applicant may receive.
A regulatory review period consists of two periods of time: A testing phase and an approval phase. For human drug products, the testing phase begins when the exemption to permit the clinical investigations of the drug becomes effective and runs until the approval phase begins. The approval phase starts with the initial submission of an application to market the human drug product and continues until FDA grants permission to market the drug product. Although only a portion of a regulatory review period may count toward the actual amount of extension that the Director of USPTO may award (for example, half the testing phase must be subtracted as well as any time that may have occurred before the patent was issued), FDA's determination of the length of a regulatory review period for a human drug product will include all of the testing phase and approval phase as specified in 35 U.S.C. 156(g)(1)(B).
FDA has approved for marketing the human drug product XELJANZ (tofacitinib citrate). XELJANZ is indicated for the treatment of adult patients with moderately to severely active rheumatoid arthritis who have had an inadequate response or intolerance to methotrexate. Subsequent to this approval, the USPTO received a patent term restoration application for XELJANZ (U.S. Patent No. RE41,783) from Pfizer Inc., and the USPTO requested FDA's assistance in determining this patent's eligibility for patent term restoration. In a letter dated March 26, 2014, FDA advised the USPTO that this human drug product had undergone a regulatory review period and that the approval of XELJANZ represented the first permitted commercial marketing or use of the product. Thereafter, the USPTO requested that FDA determine the product's regulatory review period.
FDA has determined that the applicable regulatory review period for XELJANZ is 3,947 days. Of this time, 3,564 days occurred during the testing phase of the regulatory review period, while 383 days occurred during the approval phase. These periods of time were derived from the following dates:
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3.
This determination of the regulatory review period establishes the maximum potential length of a patent extension. However, the USPTO applies several statutory limitations in its calculations of the actual period for patent extension. In its application for patent extension, this applicant seeks 5 years of patent term extension.
Anyone with knowledge that any of the dates as published are incorrect may submit to the Division of Dockets Management (see
Interested persons may submit to the Division of Dockets Management (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a guidance for industry (GFI) #221 entitled “Recommendations for Preparation and Submission of Animal Food Additive Petitions.” This guidance describes the types of information that FDA's Center for Veterinary Medicine recommends for inclusion in food additive petitions submitted for food additives intended for use in food for animals. It is intended to help the petitioner submit this information in a consistent and appropriate manner.
Submit either electronic or written comments on Agency guidances at any time.
Submit written requests for single copies of the guidance to the Policy and Regulations Staff (HFV–6), Center for Veterinary Medicine, Food and Drug Administration, 7519 Standish Pl., Rockville, MD 20855. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Submit electronic comments on the guidance to
Center for Veterinary Medicine, Division of Animal Feeds (HFV–220), Food and Drug Administration, 7519 Standish Pl., Rockville, MD 20855, 240–402–7077;
In the
FDA received four comments on the draft guidance and considered those comments as we finalized the guidance. The guidance announced in this notice finalizes the draft guidance dated September 2013.
This level 1 guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on recommendations for preparation and submission of animal food additive petitions. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in 21 CFR 571.1 and 571.6 have been approved under OMB control number 0910–0546.
Interested persons may submit either electronic comments regarding this document to
Persons with access to the Internet may obtain the guidance at either
Notice is hereby given of a change in the meeting of the National Institute of Neurological Disorders and Stroke Special Emphasis Panel, July 09, 2015, 09:00 a.m. to July 10, 2015, 01:00 p.m., The Fairmont Washington, DC, 2401 M Street NW., Washington, DC 20037 which was published in the
The meeting notice is amended to change the location of the meeting from The Fairmont Washington DC to the Hyatt Regency Bethesda. The date and time remain the same. The meeting is closed to the public.
Notice is hereby given of a change in the meeting of the Center for Scientific Review Special Emphasis Panel, June 25, 2015, 11:00 a.m. to June 25, 2015, 12:00 p.m., National Institutes of Health, 6701 Rockledge Drive, Bethesda, MD, 20892 which was published in the
The meeting will be held on June 24, 2015. The meeting time and location remain the same. The meeting is closed to the public.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Carol Hamelink, Ph.D., Scientific Review Officer, Center for Scientific Review, National Institutes of Health, 6701 Rockledge Drive, Room 4192, MSC 7850, Bethesda, MD 20892, (301) 213–9887,
In accordance with Title 41 of the U.S. Code of Federal Regulations, Section 102–3.65(a), notice is hereby given that the Charter for the Advisory Committee to the Director, National Institutes of Health, was renewed for an additional two-year period on May 31, 2015.
It is determined that the Advisory Committee to the Director, National Institutes of Health, is in the public interest in connection with the performance of duties imposed on the National Institutes of Health by law, and that these duties can best be performed through the advice and counsel of this group.
Inquiries may be directed to Jennifer Spaeth, Director, Office of Federal Advisory Committee Policy, Office of the Director, National Institutes of Health, 6701 Democracy Boulevard, Suite 1000, Bethesda, Maryland 20892 (Mail code 4875), Telephone (301) 496–2123, or
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of meetings of the Board of Scientific Counselors for Clinical Sciences and Epidemiology, National Cancer Institute and the Board of Scientific Counselors for Basic Sciences, National Cancer Institute.
The meetings will be closed to the public as indicated below in accordance with the provisions set forth in section 552b(c)(6), Title 5 U.S.C., as amended for the review, discussion, and evaluation of individual intramural programs and projects conducted by the National Cancer Institute, including consideration of personnel qualifications and performance, and the competence of individual investigators, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications/contract proposals and the discussions
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
The Office of Intergovernmental Affairs, DHS.
Notice of open teleconference federal advisory committee meeting.
The Homeland Security Advisory Council (HSAC) will meet via teleconference for the purpose of reviewing and deliberating on recommendations by the HSAC CBP Integrity Advisory Panel.
The HSAC conference call will take place from 4 p.m. to 5 p.m. EDT on June 29, 2015. The meeting is scheduled for one hour and may end early if all business is completed before 5 p.m. EDT.
The HSAC meeting will be held via teleconference. Members of the public interested in participating may do so by following the process outlined below (see “Public Participation”). Written comments must be submitted and received by Thursday, June 25, 2015. Comments must be identified by Docket No. DHS–2015–0030 and may be submitted by
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Jay Visconti at
Notice of this meeting is given under Section 10(a) of the Federal Advisory Committee Act (FACA), Public Law 92–463 (5 U.S.C. App.) requires each FACA committee meeting to be open to the public.
The HSAC provides organizationally independent, strategic, timely, specific, and actionable advice and recommendations for the consideration of the Secretary of the Department of Homeland Security (DHS) on matters related to homeland security. The Council is comprised of leaders of local law enforcement, first responders, state and local government, the private sector, and academia.
The HSAC will review and deliberate on the CBP Integrity Advisory Panel interim findings and recommendations.
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 property is described as for “off-site use only” recipients of the property will be required to relocate the building to their own site at their own expense. Homeless assistance providers interested in any such property should send a written expression of interest to HHS, addressed to: Ms. Theresa M. Ritta, Chief Real Property Branch, the Department of Health and Human Services, Room 5B–17, Parklawn Building, 5600 Fishers Lane, Rockville, MD 20857, (301) 443–2265 (This is not a toll-free number.) HHS will mail to the interested provider an application packet, which will include instructions for completing the application. In order to maximize the opportunity to utilize a suitable property, providers should submit their written expressions of interest as soon as possible. For complete details concerning the processing of applications, the reader is encouraged to refer to the interim rule governing this program, 24 CFR part 581.
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 (
South Carolina
Fish and Wildlife Service, Interior.
Notice of availability; request for comments.
We, the U.S. Fish and Wildlife Service (Service), have received an application from Na Pua Makani Power Partners, LLC (applicant), for an incidental take permit (ITP) under the Endangered Species Act of 1973, as amended (ESA). The applicant is requesting an ITP to authorize take of one threatened and six endangered species (“covered species”). If issued, the ITP would authorize incidental take of the covered species that may occur as a result of the construction and operation of the Na Pua Makani Wind Energy Project (Project). The ITP application includes a draft Habitat Conservation Plan (HCP) describing the applicant's actions and the measures the applicant will implement to minimize, mitigate, and monitor incidental take of the covered species. The Service also announces the availability of a draft Environmental Impact Statement (EIS) that has been prepared in response to the permit application in accordance with requirements of the National Environmental Policy Act (NEPA). We are making the ITP application, including the draft HCP and the draft EIS, available for public review and comment.
To ensure consideration, please send your written comments by August 11, 2015.
To request further information or submit written comments, please use one of the following methods, and note that your information request or comments are in reference to the Na Pua Makani HCP, draft EIS, and the proposed issuance of the ITP:
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Ms. Jodi Charrier (Renewable Energy Coordinator) or Mr. Aaron Nadig (Oahu, Kauai, American Samoa Geographic Deputy Field Supervisor), U.S. Fish and Wildlife Service (see
We have received an application from Na Pua Makani Power Partners, LLC (applicant), a subsidiary of Champlin Hawaii Wind Holdings, LLC, for an incidental take permit (ITP) under the ESA (16 U.S.C. 1531
Section 9 of the ESA prohibits take of fish and wildlife species listed as endangered or threatened under section 4 of the ESA. Under the ESA, the term “take” means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct (16 U.S.C. 1532(19)). The term “harm,” as defined in our regulations, includes significant habitat modification or degradation that results in death or injury to listed species by significantly impairing essential behavioral patterns, including breeding, feeding, or sheltering (50 CFR 17.3). The term “harass” is defined in our regulations as to carry out actions that create the likelihood of injury to listed species to such an extent as to significantly disrupt normal behavioral patterns, which include, but are not limited to, breeding, feeding, or sheltering (50 CFR 17.3).
However, under specified circumstances, the Service may issue permits that authorize take of federally listed species, provided the take is incidental to, but not the purpose of, an otherwise lawful activity. Regulations governing permits for endangered and threatened species are at 50 CFR 17.22 and 17.32, respectively. Section 10(a)(1)(B) of the ESA contains provisions for issuing such incidental take permits to non-Federal entities for the take of endangered and threatened species, provided the following criteria are met:
(1) The taking will be incidental;
(2) The applicant will prepare a conservation plan that, to the maximum extent practicable, identifies the steps the applicant will take to minimize and mitigate the impact of such taking;
(3) The applicant will ensure that adequate funding for the plan will be provided;
(4) The taking will not appreciably reduce the likelihood of the survival and recovery of the species in the wild; and
(5) The applicant will carry out any other measures that the Service may require as being necessary or appropriate for the purposes of the plan.
The applicant proposes to construct and operate the wind energy generation Project on approximately 707 acres of public and private lands near the town of Kahuku on the island of Oahu, Hawaii. The western portion of the Project would be located on about 254 acres of State of Hawaii lands managed by the Department of Land and Natural Resources (DLNR). The eastern portion of the Project would be located on about 452 acres of land owned by the Malaekahana Hui West, LLC. Additional parcels would be used to access the Project, for which the applicant would utilize temporary entry permits, licenses or easements.
The proposed Project would have a generating capacity of up to approximately 25 megawatts (MW) and would supply wind-generated electricity to the Hawaii Electric Company (HECO). The Project would consist of up to 10 wind turbine generators (WTGs), 1 permanent un-guyed lattice-frame meteorological tower, up to 5.5 miles of new and existing access roads, an operations and maintenance facility, electrical collection and interconnection infrastructure, an electrical substation, and a temporary laydown area. The applicant is considering a variety of WTG models ranging in height and generating capacity. Project WTGs could range in generating capacity from 1.7 MW models to 3.3 MW, and the maximum blade tip height could range from 427 feet to 512 feet above ground level. The applicant will select the most appropriate WTGs prior to construction.
The proposed Project area is surrounded by agricultural farm lands to the north; residential housing, community infrastructure, and agricultural farm lands to the east; a mixture of agricultural farm lands and undeveloped forest lands to the south; and undeveloped forest lands to the west. The James Campbell National Wildlife Refuge is approximately 0.75 mile to the north, and the Malaekahana State Recreation Area is 0.1 mile to the east. The operational 30–MW Kahuku wind project abuts the proposed Project area to the northwest.
The proposed Project is located on Oahu, where Hawaiian hoary bats are known to have collided with wind turbine structures at the existing 30–MW Kahuku and 69–MW Kawailoa wind projects. The Hawaiian goose and Hawaiian hoary bat are also known to have collided with wind turbine structures at the existing 30–MW Kaheawa I and the 21–MW Kaheawa II wind projects on Maui. The Hawaiian hoary bat is also known to have collided with wind turbine structures at the existing the 21–MW Auwahi wind project on Maui. The Hawaiian goose occurs in the vicinity of the proposed Project and may collide with Project structures. Acoustic monitoring indicates that the Hawaii hoary bat flies in the area proposed for wind turbine development, and that this species may roost in the Project site. Although there have been no known occurrences of Newell's shearwaters, Hawaiian stilts, Hawaiian coots, Hawaiian moorhens, or Hawaiian ducks colliding with wind turbine structures within the State of Hawaii, these covered species may be affected by the applicant's activities associated with the construction and operation of the Project.
The applicant has developed a draft HCP that addresses the incidental take of the seven covered species that may occur as a result of the construction and operation of the Project over a period of 21 years. The draft HCP addresses proposed measures the applicant will implement to minimize, mitigate, and monitor incidental take of the covered species. The applicant has also applied for a State of Hawaii incidental take license under Hawaii State law.
To offset anticipated take, the applicant is proposing mitigation measures on Oahu that include: (1) Funding research to support management of Newell's shearwaters; (2) fencing and predator control to conserve the Hawaiian goose at James Campbell National Wildlife Refuge; (3) a combination of bat research and native forest restoration and management to increase Hawaiian hoary bat habitat; (4) acoustic surveys to document the occupancy of the Hawaiian hoary bat; and (5) fencing and public outreach at Hamakua Marsh to benefit conservation of the Hawaiian stilt, Hawaiian coot, Hawaiian moorhen and the Hawaiian duck. This HCP incorporates adaptive management provisions to allow for modifications to the mitigation and monitoring measures as knowledge is gained during implementation of the HCP.
The Service proposes to approve the HCP and to issue an ITP with a term of 21 years to the applicant for incidental take of the covered species caused by covered activities associated with the construction and operation of the Project, if permit issuance criteria are met.
The development of the draft HCP and the proposed issuance of an ITP under this plan is a Federal action that triggers the need for compliance with NEPA (42 U.S.C. 4321
The proposed action alternative is construction and operation of the Project, implementation of the HCP, and issuance of the ITP.
Under the no-action alternative, the proposed Project would not be constructed, the proposed HCP would not be implemented, and no ITP would be issued.
The larger wind energy generation project alternative would include the construction and operation of a larger generation facility of up to 42 MW. This alternative would consist of up to 12 WTGs, each with a generating capacity of up to 3.3 MW, implementation of a HCP, and issuance of the ITP.
You may submit your comments and materials by one of the methods listed in the
All comments and materials we receive become part of the public record associated with this action. Before including your address, phone number, email address, or other personally identifiable information in your comments, you should be aware that your entire comment—including your personally identifiable information—may be made publicly available at any time. While you can ask us in your comment to withhold your personally identifiable information from public review, we cannot guarantee that we will be able to do so. All submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, will be made available for public disclosure in their entirety. Comments and materials we receive, as well as supporting documentation we use in preparing the EIS, will be available for public inspection by appointment, during normal business hours, at our Pacific Islands Field Office (see
We will evaluate the permit application, associated documents, and public comments in reaching a final decision on whether the application meets the requirements of section 10(a) of the ESA (16 U.S.C. 1531
We provide this notice in accordance with the requirements of section 10(c) of the ESA and its implementing regulations (50 CFR 17.22 and 17.32) and NEPA and its implementing regulations (40 CFR 1506.6).
Fish and Wildlife Service, Interior.
Notice of intent to prepare an environmental impact statement; notice of scoping meeting and request for comments.
We, the U.S. Fish and Wildlife Service (Service), advise the public that we intend to prepare an environmental impact statement (EIS) to evaluate the impacts of several alternatives relating to the proposed issuance of Endangered Species Act (ESA) Incidental Take Permits (Permit(s) or ITP(s)) under the Midwest Wind Energy Multi-Species Habitat Conservation Plan (MSHCP). We also provide this notice to announce a public scoping period.
The MSHCP is being prepared by the Service and their planning partners for wind energy development within an eight-state Plan Area. The activities covered under the MSHCP (“Covered Activities”) include the construction, operation, maintenance, and decommissioning of wind energy facilities within portions of the Plan Area where ESA incidental take coverage may be considered, as well as activities associated with the management of mitigation lands. The planning partners have requested incidental take coverage for eight species in the MSHCP (“Covered Species”), including six species that are federally listed, one species that is not federally listed but may become listed during the term of the MSHCP, and the bald eagle (
The public scoping period begins with the publication of this notice in the
• July 13, 2015—Elliott Recreation Center, 1000 E. 14th Street, Minneapolis, Minnesota, 5 to 7 p.m.
• July 14, 2015—Warner Park Community Center, 1625 Northpost Drive, Madison, Wisconsin, 5 to 7 p.m.
• July 15, 2015—Iowa State University Memorial Union, Campanile Room, 2229 Lincoln Way, Ames, Iowa, 5 to 7 p.m.
• July 16, 2015—Battle High School, Commons, 7575 East Street Charles Road, Columbia, Missouri, 5 to 7 p.m.
• July 20, 2015—Letts Community Center, 1220 West Kalamazoo Street, Lansing, Michigan, 5 to 7 p.m.
• July 21, 2015—Columbus Downtown High School, Commons, 364 South 4th Street, Columbus, Ohio, 5 to 7 p.m.
• July 22, 2015—World Sports Park, Ballroom, 1313 South Post Road, Indianapolis, Indiana, 5 to 7 p.m.
• July 23, 2015—Illinois Wesleyan University Memorial Center, Young Main Lounge, 104 E. University Avenue, Bloomington, Illinois, 5 to 7 p.m.
The scoping meetings will provide the public an opportunity to ask questions, discuss issues with Service and State staff regarding the EIS, and provide written comments.
In addition, the Service will host an online webinar on July 28, 2015 at 1:00 p.m. central time. Information on how to participate in the webinar is provided on the Internet at:
To request further information or submit written comments, please use one of the following methods:
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Rick Amidon, Ecological Services, at the address shown above or at (612) 713–5164 (telephone). If you use a telecommunications device for the deaf, please call the Federal Information Relay Service at (800) 877–8339.
We publish this notice under the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321
The primary purpose of the scoping process is for the public and other agencies to assist in developing the EIS by identifying important issues and alternatives related to the MSHCP and the Service's proposed action (issuance of ITPs under the MSHCP).
Section 9 of the ESA prohibits “take” of fish and wildlife species listed as endangered under section 4 (16 U.S.C. 1538, 1533, respectively). The ESA implementing regulations extend, under certain circumstances, the prohibition of take to threatened species (50 CFR 17.31). Under section 3 of the ESA, the term “take” means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or attempt to engage in any such conduct (16 U.S.C. 1532(19)). The term “harm” is defined by regulation as an act which actually kills or injures wildlife. Such act may include significant habitat modification or degradation where it actually kills or injures wildlife by significantly impairing essential behavioral patterns, including breeding, feeding, or sheltering (50 CFR 17.3). The term “harass” is defined in the regulations as an intentional or negligent act or omission which creates the likelihood of injury to wildlife by annoying it to such an extent as to significantly disrupt normal behavioral patterns which include, but are not limited to, breeding, feeding, or sheltering (50 CFR 17.3).
Under section 10(a) of the ESA, the Service may issue permits to authorize incidental take of listed fish and wildlife species. “Incidental take” is defined by the ESA as take that is incidental to, and not the purpose of, carrying out an otherwise lawful activity. Section 10(a)(1)(B) of the ESA contains provisions for issuing ITPs to non-Federal entities for the take of endangered and threatened species, provided the following criteria are met:
• The taking will be incidental;
• The applicant will, to the maximum extent practicable, minimize and mitigate the impact of such taking;
• The applicant will develop a HCP and ensure that adequate funding for the plan will be provided;
• The taking will not appreciably reduce the likelihood of the survival and recovery of the species in the wild; and
• The applicant will carry out any other measures that the Secretary may require as being necessary or appropriate for the purposes of the HCP.
Regulations governing permits for endangered and threatened species are at 50 CFR 17.22 and 17.32.
Eagles are protected under the Eagle Act, which prohibits take and disturbance of individuals and nests. “Take” under the Eagle Act includes any actions that pursue, shoot, shoot at, poison, wound, kill, capture, trap, collect, destroy, molest, and disturb eagles. “Disturb” is further defined in 50 CFR 22.3 as to agitate or bother a bald or golden eagle to a degree that causes, or is likely to cause, based on the best scientific information available, (1) injury to an eagle, (2) a decrease in its productivity, by substantially interfering with normal breeding, feeding, or sheltering behavior, or (3) nest abandonment, by substantially interfering with normal breeding, feeding, or sheltering behavior. 50 CFR 22.11 allows Eagle Act take authorization to be extended to permittees authorized to take eagles by an ITP issued pursuant to section 10(a)(1)(B) of the ESA. Take coverage for bald eagles provided through an ITP applies for the duration of the permit, or until the amount or level of take authorized has been met, provided the permittee complies with all terms and conditions provided in the ITP.
The MSHCP is being prepared by the Service and their planning partners for wind energy development within an eight-state Plan Area. The planning partners include the conservation agencies for seven of the eight states within the Plan Area, the American Wind Energy Association, a consortium of wind energy companies, and The Conservation Fund. The following summarizes information provided in the draft MSHCP.
The MSHCP Plan Area encompasses all lands within the political boundary of Region 3 of the Service, which includes eight states: Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin. The geographic area where incidental take authorization would be allowed under the MSHCP (“Covered Lands”) are a subset of the Plan Area and specifically exclude lands that are within: (a) 20 miles of
The MSHCP does not preclude the development of wind energy projects outside of Covered Lands; however, those projects would not be eligible for participation in the MSHCP. Mitigation measures under the MSHCP (
Covered Activities under the MSHCP include actions necessary to construct, operate, maintain and repair, decommission and reclaim, and repower commercial multi-turbine wind energy projects with Covered Lands. Covered Activities also include management of compensatory mitigation lands and monitoring. The MSHCP anticipates 33,000 megawatts (MW) of new wind energy may be installed within the Covered Lands over the term of the permit(s). New wind energy development would vary by state. The actual implemented build-out of new wind development projects may be less than the maximum anticipated build-out, depending on the number and generation capacity of wind energy projects that are issued take authorizations under the MSHCP. The Plan Area also currently supports approximately 13,681 MW of installed wind energy. Existing commercial multi-turbine wind facilities would be able to “opt in” to the MSHCP if they meet all of the requirements of the MSHCP for existing facilities and implement the required avoidance, minimization, and mitigation measures. Repowering of existing commercial wind energy facilities would also be included. There would be no limit on the number of qualifying existing wind energy facilities that may opt-in to the MSHCP.
The MSHCP would cover eight species that are subject to injury or mortality at wind turbine facilities, including six federally listed species and two unlisted species. The six federally listed species covered under the MSHCP include: Indiana bat (
The proposed permit term under the MSHCP is 45 years. During the first 15 years, proposed and existing commercial multi-wind energy projects may apply for and receive take authorizations under the MSHCP. The duration of take authorizations issued to new projects would be 30 years from the time project operations commence or up to the 45 year term of the MSHCP. The duration of take authorizations issued to existing commercial multi-turbine wind energy projects would extend from the time of issuance until the project is decommissioned and reclaimed up to a period of 30 years.
The MSHCP would be implemented as both a “template” HCP for wind energy project proponents and a “programmatic” HCP implemented through a “master permittee.” Under the template HCP, the Service would directly issue individual permits to applicants that agree to implement the MSHCP. Under the programmatic HCP, the Service would issue a permit to a master permittee, who would be responsible for issuing certificates of inclusion to wind energy companies that agree to implement the MSHCP at their facility. Issuance of certificates of inclusion by the master permittee would be completed in coordination with, and with concurrence from, the Service. The master permittee is anticipated to be comprised of a Board with representation from the wind energy industry and wind energy development-related conservation interests.
NEPA (42 U.S.C. 4321
The EIS will consider the impacts of the proposed action—the issuance of section 10(a)(1)(B) permits under the ESA on the human environment. The EIS will also include analysis of a reasonable range of alternatives to the proposed action. Alternatives considered in the EIS may include, but are not limited to, variations in the permit term or permit structure; the No Surprises timeframe allowed under the ITPs; the level of take allowed; the level, location, or type of conservation, monitoring, or mitigation provided in the MSHCP; the scope of Covered Activities; the list of Covered Species; or a combination of these factors. Additionally, a No Action Alternative will be included. Under the No Action Alternative, the Service would not issue ITPs, and wind energy developers would be obligated to prepare an independent Section 10(a)(1)(B) application and/or eagle permit application; avoid incidental take of federally-listed species and bald eagle; or be subject to enforcement action by the Service.
The EIS will identify and describe direct, indirect, and cumulative impacts on biological resources, land use, air quality, water quality, water resources, socioeconomics, climate, and other environmental resources that could occur with the implementation of the proposed action and alternatives. The Service will also identify measures, consistent with NEPA and other relevant considerations of national policy, to avoid or minimize any significant effects of the proposed action on the quality of the human environment. Following completion of the environmental review, the Service will publish a notice of availability and a request for comment on a draft EIS, which will include a draft of the proposed MSHCP.
We request data, comments, new information, or suggestions from the public, other concerned governmental agencies, the scientific community, Tribes, industry, or any other interested party on this notice. We will consider these comments in developing the draft EIS. We seek specific comments on:
1. Biological information and relevant data concerning Covered Species;
2. Additional information concerning the range, distribution, population size, and population trends of Covered Species;
3. Direct, indirect, and cumulative impacts that implementation of the proposed Covered Activities could have on endangered, threatened, and other Covered Species, and their communities or habitats;
4. Other possible alternatives to the proposed action that the Service should consider;
5. Other current or planned activities in the subject area and their possible impacts on Covered Species;
6. The presence of archaeological sites, buildings and structures, historic events, sacred and traditional areas, and other historic preservation concerns, which are required to be considered in project planning by the National Historic Preservation Act; and
7. Identification of any other environmental issues that should be considered with regard to the proposed MSHCP and permit action.
You may submit your comments and materials by one of the methods listed above in the
Comments and materials we receive, as well as supporting documentation we use in preparing the EIS, will be available for public inspection by appointment, during normal business hours, at the Services Midwest Regional Office in Bloomington, Minnesota. (see
See
Persons needing reasonable accommodations in order to attend and participate in the public meetings should contact the Midwest Region using one of the methods listed above in
We provide this notice under section 10 of the ESA (16 U.S.C. 1531
Fish and Wildlife Service, Interior.
Notice of availability; request for public comments.
The U.S. Department of the Interior (DOI), acting through the U.S. Fish and Wildlife Service (FWS); the Nottawaseppi Huron Band of the Potawatomi Tribe; and the Match-E-Be-Nash-She-Wish Band of the Pottawatomi Indians have written a Draft Damage Assessment and Restoration Plan and Environmental Assessment (Draft Plan), which describes proposed alternatives for restoring injured natural resources and compensating for losses resulting from the discharges of oil from Enbridge's Line 6B oil pipeline near Marshall, Michigan, in July 2010. The Draft Plan was prepared in accordance with the Oil Pollution Act of 1990 (OPA) and the National Environmental Policy Act (NEPA). The purpose of this notice is to inform the public of the availability of the Draft Plan and to seek written comments.
Written comments must be postmarked no later than July 27, 2015.
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DOI, acting through FWS; the Nottawaseppi Huron Band of the Potawatomi Tribe; and the Match-E-Be-Nash-She-Wish Band of the Pottawatomi Indians have written a Draft Damage Assessment and Restoration Plan and Environmental Assessment (Draft Plan), which describes proposed alternatives for restoring injured natural resources and compensating for losses resulting from the discharges of oil from Enbridge's Line 6B oil pipeline near Marshall, Michigan, which occurred July 25–26, 2010. The Draft Plan was prepared in accordance with the Oil Pollution Act of 1990 (OPA) and the National Environmental Policy Act (NEPA). DOI and the two tribes prepared this Draft Plan in cooperation with our co-Trustees: The Department of Commerce (DOC), acting through the National Oceanic and Atmospheric Administration (NOAA), and the State of Michigan, acting through the Michigan Department of Environmental Quality (MDEQ), the Michigan Department of Natural Resources (MDNR), and the Michigan Department of Attorney General (MDAG). The purpose of this notice is to inform the public of the availability of the Draft Plan and to seek written comments. This notice is provided pursuant to Natural Resource Damage Assessment and Restoration (NRDAR) regulations
The DOI (represented by the FWS), the DOC (represented by the NOAA), the Nottawaseppi Huron Band of the Potawatomi Tribe, the Match-E-Be-Nash-She-Wish Band of the Pottawatomi Indians, and the State of Michigan (the latter acting through MDEQ, MDNR, and MDAG) are Trustees for natural resources considered in this Draft Plan, pursuant to subpart G of the National Oil and Hazardous Substances Pollution Contingency Plan (40 CFR 300.600, 300.605, and 300.610) and Executive Order 12580. The Trustees followed the NRDAR regulations found at 15 CFR part 990 and the NEPA regulations found at 40 CFR parts 1500–1508 for the development of the Draft Plan. The Trustees will consider all public comments received during the public comment as we proceed to finalize the Draft Plan. The Draft Plan will be finalized prior to implementation of restoration. Any significant additions or modifications to the Final Plan that become necessary as restoration actions proceed will be made available for public review before any changes in restoration actions are undertaken.
The goal of NRDAR under the Oil Pollution Act of 1990 (33 U.S.C. 2701
In this case, the Trustees worked together in a cooperative process to identify appropriate restoration activities to address natural resource injuries caused by discharges of oil from Enbridge's Line 6B pipeline near Marshall, Michigan. The results of this administrative process are contained in the Draft Plan, which is a planning and decision document being published for public review under OPA and NEPA. The Draft Plan describes the injuries that occurred as a result of the discharges of oil, how the Trustees estimated damages, how those damages will be addressed through proposed restoration alternatives, and what the expected environmental impacts of the proposed projects would be. By law, natural resource damages received must be used to restore, rehabilitate, replace, and/or acquire the equivalent of those injured natural resources.
Interested members of the public are invited to review and comment on the Plan. Copies can be requested from the address and Web site listed above. Comments on the Draft Plan should be sent to the U.S. Fish and Wildlife Service (see
The Trustees' practice is to make comments, including names and home addresses of respondents, available for public review during regular business hours. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that the entire comment, including your personal identifying information, may be available at any time. While individual respondents may request that the Fish and Wildlife Service withhold their personal identifying information from public review, we cannot guarantee we will be able to do so.
This notice is provided pursuant to NRDAR regulations (15 CFR 990.23 and 990.55(c)) and NEPA regulations (40 CFR 1506.6).
Fish and Wildlife Service, Interior.
Notice of receipt of applications for permit.
We, the U.S. Fish and Wildlife Service, invite the public to comment on the following applications to conduct certain activities with endangered species or marine mammals. With some exceptions, the Endangered Species Act (ESA) and Marine Mammal Protection Act (MMPA) prohibit activities with listed species unless Federal authorization is acquired that allows such activities.
We must receive comments or requests for documents on or before July 13, 2015. We must receive requests for marine mammal permit public hearings, in writing, at the address shown in the
Brenda Tapia, U.S. Fish and Wildlife Service, Division of Management Authority, Branch of Permits, MS: IA, 5275 Leesburg Pike, Falls Church, VA 22041; fax (703) 358–2281; or email
Brenda Tapia, (703) 358–2104 (telephone); (703) 358–2281 (fax);
Send your request for copies of applications or comments and materials concerning any of the applications to the contact listed under
Please make your requests or comments as specific as possible. Please confine your comments to issues for which we seek comments in this notice, and explain the basis for your comments. Include sufficient information with your comments to allow us to authenticate any scientific or commercial data you include.
The comments and recommendations that will be most useful and likely to influence agency decisions are: (1) Those supported by quantitative information or studies; and (2) Those that include citations to, and analyses of, the applicable laws and regulations. We will not consider or include in our administrative record comments we
Comments, including names and street addresses of respondents, will be available for public review at the street address listed under
To help us carry out our conservation responsibilities for affected species, and in consideration of section 10(a)(1)(A) of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
The applicant requests a permit to import one female captive-born mandrill (
The applicant requests a permit to import one male and one female captive-born mandrill (
The applicant requests a permit to import 12 live gavials (
The applicant requests a permit to import four male captive-born African wild dogs (
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for leopard
The applicant request amendment of their captive-bred registration under 50 CFR 17.21(g) to add the following species: White-nape crane (
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for the barasingha (
The applicant requests a permit authorizing interstate and foreign commerce, export, and cull of excess barasingha (
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for the radiated tortoise (
On May 27, 2015, we published a
The following applicants each request a permit to import the sport-hunted trophy of one male bontebok (
Applicant: Andrew Gwynn, Anna, TX; PRT–64739B
Applicant: Tadd Tellepsen, Houston, TX; PRT–65907B
Applicant: Marion Smith, Prairie City, IA; PRT–66658B
Applicant: James McDonald, Odessa, TX; PRT–63770B
The applicant requests an amendment of the permit to harass Pacific walrus (
Concurrent with publishing this notice in the
Bureau of Indian Affairs, Interior.
Notice.
This notice publishes amendments to the Confederated Tribes of the Umatilla Indian Reservation Liquor Code. This codification amends the existing Confederated Tribes of the Umatilla Indian Reservation Liquor Code, enacted by the Board of Trustees of the Confederated Tribes of the Umatilla Indian Reservation, which was published in the
Gregory Norton, Division of Tribal Government Services Officer, Northwest Regional Office, Bureau of Indian Affairs, 911 NE 11th Avenue, Portland, OR 97232–4169, Telephone: (503) 231–6723, Fax: (503) 231–2201; or Laurel Iron Cloud, Chief, Division of Tribal Government Services, Office of Indian Services, Bureau of Indian Affairs, 1849 C Street NW., MS–4513–MIB, Washington, DC 20240, Telephone: (202) 513–7641.
Pursuant to the Act of August 15, 1953, Public Law 83–277, 67 Stat. 586, 18 U.S.C. 1161, as interpreted by the Supreme Court in Rice v. Rehner, 463 U.S. 713 (1983), the Secretary of the Interior shall certify and publish in the
This notice is published in accordance with the authority delegated by the Secretary of the Interior to the Assistant Secretary—Indian Affairs. I certify that the Board of Trustees of the Confederated Tribes of the Umatilla Indian Reservation duly adopted amendments to the Confederated Tribes of the Umatilla Indian Reservation Liquor Code by Resolution No. 15–019 on March 23, 2015.
A. The introduction, possession, and sale of liquor on Indian reservations has historically been recognized as a matter of special concern to Indian tribes and to the United States. The control of liquor on the Umatilla Indian Reservation remains exclusively subject to the legislative enactments of the Confederated Tribes in its exercise of its governmental powers over the Reservation, and the United States.
B. Federal law prohibits the introduction of liquor into Indian Country (18 U.S.C. 1154), and authorized tribes to decide when and to what extent liquor transactions, sales, possession and service shall be permitted on their reservation (18 U.S.C. 1161).
C. The Board of Trustees, as the governing body of the Confederated Tribes pursuant to Article VI, § 1 of the Constitution and Bylaws of the Confederated Tribes, have adopted Resolutions to permit the sale and service of liquor at the Wildhorse Resort & Casino and at Coyote Business Park as provided in this Code, but at no other locations.
D. Pursuant to the authority in Article VI, § 1(a) of the Confederated Tribes' Constitution, the Board of Trustees has the authority “to represent the [Confederated] Tribes and to negotiate with the Federal, State and local governments on projects and legislation that affect the [Confederated] Tribes”.
E. Pursuant to the authority in Article VI, § 1(d) of the Confederated Tribes' Constitution, the Board of Trustees has the authority “to promulgate and enforce ordinances governing the conduct of all persons and activities within the boundaries of the Umatilla Indian Reservation, providing for the procedure of the Board of Trustees, and carrying out any powers herein conferred upon the Board of Trustees”.
F. The enactment of this Liquor Code to govern liquor sales and service on the Umatilla Indian Reservation will increase the ability of the Confederated Tribes to control Reservation liquor distribution, sales, service and possession, and at the same time will provide an important source of revenue for the continued operation of Tribal government and the delivery of governmental services, as well as provide an amenity to customers of enterprises of the Confederated Tribes.
G. The Confederated Tribes have entered into a Memorandum of Understanding (MOU) with the Oregon Liquor Control Commission to deal with governmental issues associated with the licensing and regulation of liquor sales on the Umatilla Indian Reservation.
A. Unless otherwise required by the context, the following words and phrases shall have the designated meanings.
1. “Alcohol”. That substance known as ethyl alcohol, hydrated oxide or ethyl, spirits or wine as defined herein, which is commonly produced by the
2. “Coyote Business Park”. Shall included Coyote Business Park North, South and East, but shall not include the Arrowhead Travel Plaza.
3. “Wildhorse Chief Executive Officer”. That person appointed by the Confederated Tribes to manage the Wildhorse Resort & Casino.
4. “Liquor” or “Liquor Products”. Includes the four varieties of liquor herein defined (alcohol, spirits, wine, and beer) and all fermented, spirituous, vinous, or malt liquor, or a combination thereof, and mixed liquor, a part of which is fermented, spirituous, vinous, or malt liquor or otherwise intoxicating in every liquid or solid or semi-solid or other substance patented or not containing alcohol, spirits, wine, or beer, and all drinks of potable liquids and all preparations or mixtures capable of human consumption, and any liquid, semi-solid, solid, or other substance, which contains more than one percent (1%) of alcohol by weight shall be conclusively deemed to be intoxicating.
5. “Wildhorse Resort & Casino”. Shall include the casino, hotels, golf course (including club house), cineplex, RV park and future facilities that become a part of the Wildhorse Resort & Casino located on the Umatilla Indian Reservation.
6. “Sale” and “Sell”. Includes exchange, barter, and traffic; and also the supplying or distribution by any means whatsoever, of liquor or any liquid known or described as beer or by any name whatever commonly used to describe malt or brewed liquor or wine, by any person to any other person; and also includes the supply and distribution to any other person.
7. “Spirits”. Any beverage which contains alcohol obtained by distillation, including wines exceeding seventeen percent (17%) of alcohol by weight.
8. “Wine”. Any alcoholic beverage obtained by fermentation of fruits, grapes, berries, or any other agricultural product containing sugar, to which any saccharin substances may have been added before, during or after fermentation, and containing not more than seventeen percent (17%) of alcohol by weight, including sweet wines fortified with wine spirits, such as port, sherry, muscatel, and anglican, not exceeding seventeen percent (17%) of alcohol by weight.
To the extent permitted by applicable law, the Confederated Tribes asserts jurisdiction to determine whether liquor sales and service are permitted within the boundaries of the Umatilla Indian Reservation. As provided in section 1.06 of this Code, liquor sales and service is only permitted at the Wildhorse Resort & Casino facilities and in the Coyote Business Park under this Code. Nothing in this Code is intended nor shall be construed to limit the jurisdiction of the Confederated Tribes to regulate liquor sales and service on all lands within the boundaries of the Umatilla Indian Reservation.
All prior codes, ordinances, resolutions and motions of the Confederated Tribes regulating, authorizing, prohibiting, or in any way dealing with the sale or service of liquor are hereby repealed and are of no further force or effect to the extent they are inconsistent or conflict with the provisions of this Code. Specifically, amendments to the Criminal Code to make it consistent with this Liquor Code have been approved by Resolution 05–095 (October 3, 2005). No Tribal business licensing law or other Tribal law shall be applied in a manner inconsistent with the provisions of this Code.
A. Liquor may be offered for sale and may be served on the Umatilla Indian Reservation only at the following locations:
1. At the Wildhorse Resort & Casino.
2. At the Coyote Business Park by any Coyote Business Park lessee if liquor sales and service is permitted in the lease between the lessee and the Confederated Tribes.
A. General Prohibitions. The commercial introduction of liquor for sales and service, other than as permitted by this Code, is prohibited within the Umatilla Indian Reservation, and is hereby declared an offense under Tribal law. Federal liquor laws applicable to Indian Country shall remain applicable to any person, act, or transaction which is not authorized by this Code and violators of this Code shall be subject to federal prosecution as well as to legal action in accordance with the law of the Confederated Tribes.
B. Age Restrictions. No person shall be authorized to serve liquor unless they are at least 21 years of age. No person may be served liquor unless they are 21 years of age.
C. Off Premises Consumption of Liquor.
1. All liquor sales and service authorized by this Code at the Wildhorse Resort & Casino shall be fully consumed at the Wildhorse Resort & Casino as set forth in section 1.06 of this Code
a) Patrons at Wildhorse restaurants may be permitted to remove a partially consumed bottle of wine from the restaurant if the wine is served in conjunction with the patron's meal, the patron is not a minor and the patron is not visibly intoxicated.
b) Organizers of meetings or conventions at Wildhorse may be permitted to offer or award liquor, including wine, to meeting and convention participants, provided that the participant is not a minor nor visibly intoxicated, and such liquor or wine may be removed from the Wildhorse premises by the participant so long as the liquor or wine is not opened.
2. Liquor sales and service at Coyote Business Park shall be conducted in strict compliance with the lease between the Coyote Business Park lessee and the Confederated Tribes.
D. No Credit Liquor Sales. The sales and service of liquor authorized by this Code shall be upon a cash basis only. For purposes of this Code, payment for liquor on a cash basis shall include payment by cash, credit card, or check.
A. Authorized liquor sales and service on the Umatilla Indian Reservation shall comply with Oregon State liquor law standards to the extent required by 18 U.S.C. 1161.
B. Wildhorse Resort & Casino. The Wildhorse Chief Executive Officer shall be responsible for ensuring that all OLCC license requirements are satisfied, that the license(s) is renewed on an annual basis, and that all reasonable and necessary actions are taken to sell and serve liquor to Wildhorse patrons in a manner consistent with this Code, applicable State law, and the Tribal-State Compact. The Wildhorse Chief Executive Officer shall also be authorized to purchase liquor from the State or other source for sale and service within the Wildhorse Resort & Casino. The Wildhorse Chief Executive Officer is further authorized to treat as a casino expense any license fees associated with the OLCC liquor license.
C. Coyote Business Park. The Coyote Business Park lessee authorized to sell
Any person or entity possessing, selling, serving, bartering, or manufacturing liquor products in violation of any part of this Code shall be subject to a civil fine of not more than $500 for each violation involving possession, but up to $5,000 for each violation involving selling, bartering, or manufacturing liquor products in violation of this Code, and violators may be subject to exclusion from the Umatilla Indian Reservation. In addition, persons or entities subject to the criminal jurisdiction of the Confederated Tribes who violate this Code shall be subject to criminal punishment as provided in the Criminal Code. All contraband liquor shall be confiscated by the Umatilla Tribal Police Department (UTPD). The Umatilla Tribal Court shall have exclusive jurisdiction to enforce this Code and the civil fines, criminal punishment and exclusion authorized by this section.
Nothing in this Code is intended or shall be construed as a waiver of the sovereign immunity of the Confederated Tribes. No manager or employee of the Confederated Tribes or the Wildhorse Resort & Casino shall be authorized, nor shall they attempt, to waive the sovereign immunity of the Confederated Tribes pursuant to this Code.
If any provision or provisions in this Code are held invalid by a court of competent jurisdiction, this Code shall continue in effect as if the invalid provision(s) were not a part hereof.
This Code shall be effective following approval by the Board of Trustees and approval by the Secretary of the Interior or his/her designee and publication in the
Bureau of Land Management, Interior.
Notice.
The purpose of this notice is to inform the public and interested State and local government officials of the filing of Plats of Survey in Nevada.
Unless otherwise stated filing is effective at 10 a.m. on the dates indicated below.
Michael O. Harmening, Chief, Branch of Geographic Sciences, Bureau of Land Management, Nevada State Office, 1340 Financial Blvd., Reno, NV 89502–7147, phone: 775–861–6490. 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.
1. The Plat of Survey of the following described lands was officially filed at the Bureau of Land Management (BLM) Nevada State Office, Reno, Nevada on January 12, 2015:
The plat, in 1 sheet, representing the dependent resurvey of a portion of Mineral Survey No. 1905, in Township 6 South, Range 70 East, Mount Diablo Meridian, under Group No. 931, was accepted January 12, 2015. This survey was executed to meet certain administrative needs of the Bureau of Land Management.
2. The Plat of Survey of the following described lands was officially filed at the BLM Nevada State Office, Reno, Nevada on March 2, 2015:
The plat, in 1 sheet, representing the dependent resurvey of a portion of the subdivisional lines, Mineral Survey No. 3808, and portions of Mineral Survey No. 3961, in Township 46 North, Range 39 East, of the Mount Diablo Meridian, Nevada, under Group No. 939, was accepted March 2, 2015. This survey was executed to meet certain administrative needs of the Bureau of Land Management.
3. The Plat of Survey of the following described lands was officially filed at the BLM Nevada State Office, Reno, Nevada on April 8, 2015:
The plat, in 2 sheets, representing the retracement of a portion of the south boundary, a portion of the subdivisional lines, the subdivision of sections 29 and 32, and metes-and-bounds surveys, in Township 6 South, Range 61 East, of the Mount Diablo Meridian, Nevada, under Group No. 925, was accepted April 8, 2015. This survey was executed to meet certain administrative needs of the Bureau of Land Management.
4. The Plat of Survey of the following described lands was officially filed at the BLM Nevada State Office, Reno, Nevada on April 8, 2015:
The plat, in 1 sheet, representing the dependent resurvey of a portion of the subdivisional lines, and the subdivision of section 5, in Township 7 South, Range 61 East, of the Mount Diablo Meridian, Nevada, under Group No. 934, was accepted April 8, 2015. This survey was executed to meet certain administrative needs of the Bureau of Land Management.
5. The Plat of Survey of the following described lands was officially filed at the BLM Nevada State Office, Reno, Nevada on April 9, 2015:
The plat, in 2 sheets, representing the dependent resurvey of a portion of the south boundary, a portion of the subdivisional lines, the subdivision of section 36 and a metes-and-bounds survey in section 36, in Township 21 South, Range 63 East, of the Mount Diablo Meridian, Nevada, under Group No. 940, was accepted April 9, 2015. This survey was executed to meet certain administrative needs of the Bureau of Land Management.
The surveys listed above are now the basic record for describing the lands for all authorized purposes. These records have been placed in the open files in the BLM Nevada State Office and are available to the public as a matter of information. Copies of the surveys and related field notes may be furnished to the public upon payment of the appropriate fees.
Bureau of Land Management, Interior.
Notice of availability.
The Bureau of Land Management (BLM) announces the availability of the Record of Decision (ROD) for the Approved Resource Management Plan (RMP) for the John Day Basin planning area located in northern central Oregon. The Oregon/Washington State Director signed the ROD on April 28, 2015, which constitutes the final decision of the BLM and makes the Approved RMP effective immediately.
Copies of the ROD/Approved RMP are available upon request from the Central Oregon Field Manager, Prineville District Office, Bureau of Land Management, 3050 NE Third Street, Prineville, OR 97754, or via the internet at
Teal Purrington, Planning and Environmental Coordinator; telephone, 541–416–6700; address, Prineville District Office, Bureau of Land Management, 3050 NE Third Street, Prineville, OR 97754; email,
Interaction with the public regarding this RMP began in early 2006 and included dozens of public meetings and workshops. The BLM worked with cooperators from six Federal agencies, including the National Marine Fisheries Service and the U.S. Fish and Wildlife Service; three state agencies; and eight county governments. The BLM also consulted, on a government-to-government basis, with three federally recognized tribes with interests in the planning area. The RMP provides management direction for 456,600 acres of public land. The Approved RMP describes the actions that will meet desired resource conditions for soil, vegetation, water quality, aquatic habitat, and wildlife habitat; protects cultural resources, visual resources, Wild and Scenic River values, Wilderness areas, and Areas of Critical Environmental Concern; and provides opportunities for recreation, transportation, livestock grazing, rights-of-way, and energy and mineral development. The preferred alternative published October 2008 in the Draft RMP/Environmental Impact Statement (EIS) was carried forward as the Proposed RMP in the Final EIS with minor modifications. The Proposed RMP/EIS was published in April 2012, and the BLM received three protest letters. After careful consideration of all points raised in those protests, the BLM Director concluded that the BLM followed all applicable laws, regulations, policies, and pertinent resource considerations in developing the proposed plan. Responses were sent from the BLM Director to all protesting parties to address their concerns. The BLM's protest summary report is available on the Prineville District Web page at:
The Governor of Oregon was provided a formal, 60-day review period to determine if the Proposed RMP/EIS is consistent with existing state or local plans, programs, or policies. No inconsistencies were identified. In preparing the Approved RMP, the BLM applied the seasonal wildlife closures considered in Alternatives 4 and 5 to the 3,970-acre area identified as an Open Off-highway Vehicle (OHV) designation in the Rudio Mountain area. As a result, the OHV designation was also changed to Limited. All other changes were minor editorial modifications.
There are several implementation decisions in the Approved RMP which are appealable under 43 CFR part 4: (a) Limits on decibels, hours of operation, and class of OHV at Little Canyon Mountain; (b) interim management plan for Spring Basin Wilderness; (c) interim management direction for the portion of the North Fork John Day River determined to be suitable for designation as a Wild and Scenic River; (d) management plan for the existing wild and scenic river designations on the John Day River; (e) seasonal area and route closures; and (f) decisions identifying routes of travel for motorized vehicles. Any party adversely affected may appeal within 30 days of publication of this Notice of Availability. The appeal should state the specific decision(s) being appealed. The appeal must be filed with the Central Oregon Field Manager at the above listed address. Please consult the appropriate regulations (43 CFR part 4, subpart E) for further appeal requirements.
40 CFR 1506.6.
Bureau of Land Management, Interior.
30-Day notice and request for comments.
The Bureau of Land Management (BLM) has submitted an information collection request to the Office of Management and Budget (OMB) to approve the information collection (IC) described below. In compliance with the Paperwork Reduction Act of 1995, we invite the general public and other Federal agencies to submit comments on this IC to OMB.
The OMB is required to respond to this information collection request within 60 days but may respond after 30 days. For maximum consideration, written comments should be received on or before July 13, 2015.
Please submit comments directly to the Desk Officer for the Department of the Interior (OMB #1004–XXXX), Office of Management and Budget, Office of Information and Regulatory Affairs, fax 202–395–5806, or by electronic mail at
Please indicate “Attn: 1004–XXXX” regardless of the form of your comments.
Shannon Bassista, Upper Snake Field Office, at (208) 524–7552. Persons who use a telecommunication device for the deaf may call the Federal Information Relay Service at 1–800–877–8339, to leave a message for Ms. Bassista. You may also review the information collection request online at
The Paperwork Reduction Act (44 U.S.C. 3501–3521) and OMB regulations at 5 CFR part 1320 provide that an agency may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. Until OMB approves a collection of information, you are not obligated to respond. In order to obtain and renew an OMB control number, Federal agencies are required to seek public comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d) and 1320.12(a)).
As required at 5 CFR 1320.8(d), the BLM published a 60-day notice in the
1. Whether the collection of information is necessary for the proper functioning of the BLM, including whether the information will have practical utility;
2. The accuracy of the BLM's estimate of the burden of collecting the information, including the validity of the methodology and assumptions used;
3. The quality, utility and clarity of the information to be collected; and
4. How to minimize the information collection burden on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other forms of information technology.
Please send comments as directed under
The following information pertains to this request:
The estimated burdens are itemized in the following table:
Bureau of Land Management, Interior.
Notice of intent.
In compliance with the National Environmental Policy Act of 1969, as amended (NEPA), and the Federal Land Policy and Management Act of 1976, as amended (FLPMA), the Bureau of Land Management (BLM) Salt Lake Field Office (SLFO), Salt Lake City, Utah, intends to prepare a Resource Management Plan (RMP) Amendment with an associated Environmental Assessment (EA) for target shooting in the Eastern Lake Mountains area. This notice is announcing the beginning of the scoping process to solicit public comments and identify issues.
This notice initiates the public scoping process for the RMP amendment with an associated EA. Comments on issues to be considered may be submitted in writing until July 13, 2015. The date(s) and location(s) of any scoping meetings will be announced at least 15 days in advance through local news media, newspapers and the BLM Web site at:
You may submit comments on issues and planning criteria related to the Eastern Lake Mountains Plan Amendment/EA by any of the following methods:
• Web site:
• Email:
• Fax: 801–977–4397 or
• Mail: BLM–SLFO, 2370 South Decker Lake Boulevard, West Valley City, Utah 84119
Documents pertinent to this proposal may be examined at the SLFO located at 2370 South Decker Lake Boulevard, West Valley City, Utah 84119.
Pam Schuller, Planning and Environmental Coordinator, telephone 801–977–4377; address BLM–SLFO, 2370 South Decker Lake Boulevard, West Valley City, Utah 84119; email:
This document provides notice that the BLM SLFO, Salt Lake City, Utah, intends to prepare an RMP amendment with an associated EA for the Eastern Lake Mountains area, announces the beginning of the scoping process, and seeks public input on issues and planning criteria. The planning area is located in Utah County, Utah, and encompasses approximately 8,124 acres of public land. The purpose of the public scoping process is to determine relevant issues that will influence the scope of the environmental analysis, including alternatives, and guide the planning process. Preliminary issues for the plan amendment area have been identified by BLM personnel; Federal, State, and local government agencies; and other stakeholders. The issues identified to date include: target shooting, public health and safety, and protection of cultural resources.
Preliminary planning criteria include:
• The RMP amendment will address BLM-administered lands only.
• The RMP amendment will make land use planning decisions specific to potential closure or restrictions of target shooting to determine the desired future condition and uses of these public lands.
• The RMP amendment will utilize a collaborative and multi-jurisdictional approach to determine the desired future condition of public lands.
• The RMP amendment will comply with NEPA, FLPMA, and other applicable laws, executive orders, regulations and policy.
• The RMP amendment will recognize valid and existing rights.
You may submit comments on issues and planning criteria in writing to the BLM at any public scoping meeting, or you may submit them to the BLM using one of the methods listed in the
The BLM will utilize and coordinate the NEPA scoping process to help fulfill the public involvement process under section 106 of the National Historic Preservation Act (54 U.S.C. 306108) as provided in 36 CFR 800.2(d)(3). The information about historic and cultural resources within the area potentially affected by the proposed action will assist the BLM in identifying and evaluating impacts to such resources.
The BLM will consult with Native American tribes on a government-to-government basis in accordance with Executive Order 13175 and other policies. Tribal concerns, including impacts on Indian trust assets and potential impacts to cultural resources, will be given due consideration.
Federal, State, and local agencies, along with tribes and other stakeholders that may be interested in or affected by the proposed action that the BLM is evaluating, are invited to participate in the scoping process and, if eligible, may request, or be requested by the BLM, to participate in the development of the environmental analysis as a cooperating agency.
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.
The minutes and list of attendees for each scoping meeting will be available to the public and open for 30 days after the meeting to any participant who wishes to clarify the views he or she expressed. The BLM will evaluate identified issues to be addressed in the plan, and will place them into one of three categories:
1. Issues to be resolved in the plan amendment;
2. Issues to be resolved through policy or administrative action; or
3. Issues beyond the scope of this plan amendment.
The BLM will explain in the Draft RMP Amendment/Draft EA why an issue was placed in category two or three. The public is also encouraged to help identify any management questions and concerns that should be addressed in the plan. The BLM will work collaboratively with interested parties to identify the management decisions that are best suited to local, regional, and national needs and concerns.
The BLM will use an interdisciplinary approach to develop the plan amendment in order to consider the variety of resource issues and concerns identified. Specialists with expertise in the following disciplines will be involved in the planning process: outdoor recreation, archaeology, rangeland management, wildlife, fire management, realty, and hazardous materials.
40 CFR 1501.7 and 43 CFR 1610.2.
Bureau of Land Management, Interior.
Notice.
The purpose of this action is to inform the public that the Department of the Interior, Bureau of Land Management (BLM), will conduct a Phase B sale and auction of crude helium for Fiscal Year (FY) 2016 delivery. For purposes of the Phase B sale, the BLM is seeking comments regarding the methods BLM should use to arrive at the sale price of the helium; the auction format BLM should follow in selling helium; who will be allowed to purchase helium; and the process BLM should follow for allocating helium.
Comments regarding the helium sale and auction must be received by the BLM on or before July 13, 2015.
You may submit your comments in one of two ways. You may mail comments to Bureau of Land Management, Amarillo Field Office, 801 S. Fillmore, Suite 500, Amarillo, TX 79101, Attention: Helium Sale and Auction; or email them to
Robert Jolley, Amarillo Field Manager, at 806–356–1002. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339. The FIRS is available 24 hours a day, 7 days a week, to leave a message. You will receive a reply during normal business hours.
Background: In October 2013, Congress passed the Helium Stewardship Act of 2013 (the “Act”), Public Law 113–40. Beginning in FY 2014, the Act requires the Department of the Interior, through the BLM Director, to offer for sale and auction annually a portion of the helium reserves owned by the United States and stored underground in the Cliffside Gas Field, which is near Amarillo, Texas. 50 U.S.C. 167d(b).
On July 22, 2014, the BLM published a “Final Notice for Implementation of Helium Stewardship Act Sales and Auctions” in the
Comments requested: The BLM is specifically seeking comments on elements of the FY 2016 sale and auction that differ from the process described the 2014 Final Notice. These include:
a. The process for arriving at the price for helium to be sold at the Phase B auction and sale, as described in section 1.01 of this Notice;
b. The format of the auction, as described in section 1.04 of this Notice;
c. Who will be allowed to purchase helium in the FY 2016 Phase B sale, as described in section 2.01 of this Notice; and
d. The process for allocating helium for the FY 2016 Phase B sale, as described in section 2.02 of this Notice.
Any comments regarding the sale or auction will be reviewed by the BLM State Director or other authorized official of the Department of the Interior, who may sustain, vacate, or modify the sale or auction. After consideration of comments on this notice and comments on a proposed new form of the helium storage contract, the BLM will publish a final notice of the FY 2016 sale and auction. 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 may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
Volumes Offered in the FY 2016 Helium Auction and Sale: Table 1 identifies the volumes to be offered for auction and sale in FY 2015 for FY 2016 delivery.
1.01 What is the minimum FY 2016 Phase B auction price and minimum FY 2016 Phase B sales price, and how were those prices determined? Under the Act (50 U.S.C. 167d(b)), there are two occasions when helium is sold in Phase B: A public auction for qualified bidders (“Phase B auction”) and a sale of helium to persons who have the ability to accept delivery of crude helium from the Federal Helium System (“Phase B sale”).
The minimum FY 2016 Phase B auction reserve price is $100 per Mcf (one thousand cubic feet of gas measured at standard conditions of 14.65 psia and 60 degrees Fahrenheit). The BLM will calculate the FY 2016 Phase B sale price using the weighted average price of the crude helium sold in the FY 2016 Phase B auction. If there are no successful sales during the FY 2016 Phase B auction, all helium volume offered in the auction will be added to the Phase B sale at a market-based survey price or calculated average price under 50 U.S.C. 167d (b)(7)(B) or (C), respectively.
1.02 What will happen to the helium offered but not sold in the helium auction? Any volume of helium offered but not sold in the FY 2016 Phase B auction will be added to the 600 MMcf available for sale and will be offered for sale in the FY 2016 Phase B sale.
1.03 When will the sale and auction take place? The BLM intends to offer helium for FY 2016 according to the following tentative schedule. This schedule may be adjusted based upon the timing of the required notices and complexity of comments received.
1.04 What is the auction format? The auction will be a live auction, held at the Amarillo Field Office in Amarillo, Texas. The procedures for the auction and the pre-bid qualification form will be available after publication of a Final Notice. The Final Notice will include a web link. Please call BLM at 806–356–1001 if you have any questions relating to the auction.
1.05 Who is qualified to purchase helium at the Phase B auction? Only “qualified bidders,” as defined in 50 U.S.C. 167(9), may participate in and purchase helium at the Phase B auction. The BLM will make the final determination of who is a qualified bidder using the Act's definition of a
1.06 How many helium lots does the BLM anticipate offering at the FY 2016 Phase B auction? The BLM anticipates auctioning 300 MMcf in a total of 18 lots for FY 2016. The lots would be divided as follows:
1.07 What must I do to bid at auction? The BLM will describe the live auction procedures, including detailed bidding instructions and pre-bid registration requirements, on its Web page at a web link that will be included in the Final Notice. The Final Notice will contain information regarding the time and location of the auction, process for notification of winning bidders, payments, and how to make such payments.
1.08 When will helium that is purchased at sale or won at auction be available in the purchaser's storage account? The BLM will transfer the volumes purchased in the FY 2016 Phase B auction and sale to the buyers' storage accounts beginning on the first day of the month following receipt of payment.
2.01 Who will be allowed to purchase helium in the FY 2016 Phase B sale? Any person (including individuals, corporations, partnerships, or other entities) with the ability to accept delivery of crude helium from the Federal Helium Pipeline (as defined in 50 U.S.C. 167(2)) may purchase helium in the FY 2016 Phase B sale.
2.02 How will the helium sold in the FY 2016 Phase B sale be allocated among the persons with the ability to take helium? Any person desiring to participate in the FY 2016 Phase B sale needs to report its excess refining capacity and operational capacity by August 14, 2015 using the Excess Refining Capacity form, which can be downloaded at
2.03 How does a person apply for access to the Federal Helium Pipeline for the purpose of taking crude helium? The steps for taking crude helium are provided in the BLM's Helium Operations Web site at
2.04 What will happen if one or more persons request an amount other than the person's share of the volume offered for sale? If one or more persons requests less than its share or their shares, any other person(s) that request(s) more than its share or their shares will be allowed to purchase the excess volume based on the proportionate shares of operational capacity of all persons requesting more than their initial shares.
2.05 What will happen if the total amount requested by persons is less than the 600 MMcf offered in the FY 2016 Phase B sale? Any excess volume not sold in the FY 2016 Phase B sale will be available for future sale or auction.
2.06 Do you have a hypothetical example of how the FY 2016 Phase B Sale would be conducted? A hypothetical example of how the Phase B Sale will be conducted is available at the Helium Operations Web site at:
3.01 When will I receive helium that I purchase in a sale or win based on a successful auction bid? Helium purchased at the FY 2016 sale or won at the FY 2016 auction will be delivered starting October 1, 2015, in accordance with the crude helium storage contract. The intent is to ensure delivery of all helium purchased at sale or auction up to the BLM's production capability for the year.
3.02 How will the BLM prioritize delivery? The Act, at 50 U.S.C. 167d(b)(1)(D) and (b)(3), gives priority to Federal In-Kind helium (
Supplementary documents referenced in this Notice are available at the BLM helium operations Web site at:
a. Table of Projected Volumes for Sales and Auctions for Delivery for FY 2017–FY 2021 (informational);
b. Hypothetical example of how the FY 2016 Phase B Sale would be conducted (informational);
c. The Helium Stewardship Act of 2013, 50 U.S.C. 167;
d. FY 2014 Helium Auction Notice;
e. Helium Storage Contract; and
f. Required forms for helium reporting.
The Helium Stewardship Act of 2013, Public Law 113–40, codified to various sections in 50 U.S.C. 167–167q.
Bureau of Land Management, Interior.
Notice.
The Bureau of Land Management, Albuquerque District and Rio Puerco Field Offices located at 435 Montaño NE., Albuquerque, New Mexico is relocating to 100 Sun Avenue NE., Suite 330, Albuquerque, New Mexico.
The Albuquerque District and Rio Puerco Field Offices are scheduled to move June 26, 2015, through June 28, 2015, and will be open for business on Monday, June 29, 2015.
Danette Herrera, Administrative Officer, at (505) 761–8952, BLM Albuquerque District Office, Albuquerque, New Mexico 87107. 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 service 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.
The BLM will meet its goals of improving overall efficiency and reducing costs by co-locating with the USDA Forest Service.
National Park Service, Interior.
Notice; cancellation of meeting.
In accordance with the Federal Advisory Committee Act (5 U.S.C. Appendix 1–16), notice is hereby given that the June 16, 2015, meeting of the Big Cypress National Preserve Off-Road Vehicle Advisory Committee previously announced in the
J.D. Lee, Acting Superintendent, Big Cypress National Preserve, 33100 Tamiami Trail East, Ochopee, Florida 34141–1000, or via telephone (239) 695–1103.
The Committee was established (
Nominations for the following properties being considered for listing or related actions in the National Register were received by the National Park Service before May 16, 2015. Pursuant to section 60.13 of 36 CFR part 60, written comments are being accepted concerning the significance of the nominated properties under the National Register criteria for evaluation. Comments may be forwarded by United States Postal Service, to the National Register of Historic Places, National Park Service, 1849 C St. NW., MS 2280, Washington, DC 20240; by all other carriers, National Register of Historic Places, National Park Service, 1201 Eye St. NW., 8th Floor, Washington, DC 20005; or by fax, 202–371–6447. Written or faxed comments should be submitted by June 29, 2015. 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.
National Park Service, Interior.
Meeting Notice.
This notice announces the 2015 schedule of meetings for the Wekiva River System Advisory Management Committee.
The meetings are scheduled for: September 1, 2015, and November 4, 2015. Both meetings will begin at 3:00 p.m. and will end by 5:00 p.m. (EASTERN)
All scheduled meetings will be held at the Wekiwa Springs State Park, 1800 Wekiwa Circle, Apopka, Florida 32712. Call (407) 884–2006 or visit online at
Jaime Doubek-Racine, Community Planner and Designated Federal Officer, Rivers, Trails, and Conservation Assistance Program, Florida Field Office, Southeast Region, 5342 Clark Road, PMB #123, Sarasota, Florida 34233, or via telephone (941) 685–5912.
The Wekiva River System Advisory Management Committee was established by Public Law 106–299 to assist in the development of the comprehensive management plan for the Wekiva River System and provide advice to the Secretary in carrying out management responsibilities of the Secretary under the Wild and Scenic Rivers Act (16 U.S.C. 1274). Efforts have been made locally to ensure that the interested public is aware of the meeting dates.
The scheduled meetings will be open to the public. Each scheduled meeting will result in decisions and steps that advance the Wekiva River System Advisory Management Committee towards its objective of managing and implementing projects developed from the Comprehensive Management Plan for the Wekiva Wild and Scenic River. Any member of the public may file with the Committee a written statement concerning any issues relating to the development of the Comprehensive Management Plan for the Wekiva Wild and Scenic River. The statement should be addressed: Wekiva River System Advisory Management Committee, National Park Service, 5342 Clark Road, PMB #123, Sarasota, Florida 34233.
Before including your address, telephone number, email address, or other personal identifying information in your comments, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
National Park Service, Interior.
Request for nominations and meeting cancellation.
The National Park Service, U.S. Department of the Interior, proposes to appoint new members to the Na Hoa Pili O Kaloko-Honokohau (The Friends of Kaloko-Honokohau), an Advisory Commission for the park. The Superintendent, Kaloko-Honokohau National Historical Park, acting as administrative lead, is requesting nominations for qualified persons to serve as members of the Advisory Commission.
In accordance with the Federal Advisory Committee Act (5 U.S.C. Appendix 1–16), notice is hereby given that the August 7, 2015, meeting of the Advisory Commission previously announced in the
Nominations must be postmarked by July 13, 2015.
Nominations should be sent to Tammy Duchesne, Superintendent, Kaloko-Honokohau National Historical Park, 73–4786 Kanalani Street, Suite #14, Kailua-Kona, HI 96740.
Jeff Zimpfer, National Park Service, Environmental Protection Specialist, Kaloko-Honokohau National Historical Park, 73–4786 Kanalani St., #14, Kailua Kona, HI 96740, telephone number (808) 329–6881, ext. 1500, or email
The Kaloko-Honokohau National Historical Park and the Advisory Commission were established by Public Law 95–625, November 10, 1978, as amended.
The purpose of the Advisory Commission is to advise the Director of the National Park Service with respect to the historical, archeological, cultural, and interpretive programs of the Park. The Commission is to afford particular emphasis to the quality of traditional native Hawaiian cultural practices demonstrated in the Park.
The Advisory Commission consists of nine members, each appointed by the Secretary of the Interior, and four ex officio non-voting members. All nine Secretarial appointees must be residents of the State of Hawaii, and at least six of those appointees must be native Hawaiians. Native Hawaiians are defined as any lineal descendents of the race inhabiting the Hawaiian Islands prior to the year 1778. At least five members will be appointed from nominations received from Native Hawaiian organizations to represent the interests of those organizations. The other four members will represent other Native Hawaiian interests. The nine voting members will be appointed for 5-year terms.
The four ex officio members include the Park Superintendent, the Pacific West Regional Pacific Islands Director, one person appointed by the Governor of Hawaii, and one person appointed by the Mayor of the County of Hawaii. The Secretary of the Interior shall designate one member of the Commission to be Chairman.
No member may serve more than one term consecutively. Any vacancy in the Commission shall be filled by appointment for the remainder of the term.
We are currently seeking nominations five nomination as follows: (1) Three members to represent Native Hawaiian interests and (2) two members from nominations received from Native
Nominations should be typed and must include each of the following:
A. Brief summary of no more than two (2) pages explaining the nominee's suitability to serve on the Commission.
B. Resume or curriculum vitae.
C. At least one (1) letter of reference.
Members of the Commission will receive no pay, allowances, or benefits by reason of their service on the Commission. However, while away from their homes or regular places of business in the performance of services for the Commission as approved by the Designated Federal Officer, members will be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in Government service are allowed such expenses under Section 5703 of Title 5 of the United States Code.
Individuals who are Federally registered lobbyists are ineligible to serve on all FACA and non-FACA boards, committees, or councils in an individual capacity. The term “individual capacity” refers to individuals who are appointed to exercise their own individual best judgment on behalf of the government, such as when they are designated Special Government Employees, rather than being appointed to represent a particular interest.
All required documents must be compiled and submitted in one complete nomination package. Incomplete submissions (missing one or more of the items described above) will not be considered.
Nominations should be postmarked no later than July 13, 2015, to Tammy Duchesne, Superintendent, Kaloko-Honokohau National Historical Park, 73–4786 Kanalani Street, Suite #14, Kailua-Kona, HI 96740.
Office of the Secretary, Office of Natural Resources Revenue (ONRR), Interior.
Notice.
Final regulations for valuing gas produced from Indian leases, published August 10, 1999, require ONRR to determine major portion prices and notify industry by publishing the prices in the
The due date to pay additional royalties based on the major portion prices is August 31, 2015.
Michael Curry, Manager, Denver B, Western Audit & Compliance, ONRR; telephone (303) 231–3741; fax number (303) 231–3473; email
On August 10, 1999, ONRR published a final rule titled “Amendments to Gas Valuation Regulations for Indian Leases” effective January 1, 2000 (64 FR 43506). The gas valuation regulations apply to all gas production from Indian (Tribal or allotted) oil and gas leases, except leases on the Osage Indian Reservation.
The regulations require ONRR to publish major portion prices for each designated area not associated with an index zone for each production month beginning January 2000, as well as the due date for additional royalty payments. See 30 CFR 1206.174(a)(4)(ii). If you owe additional royalties based on a published major portion price, you must submit to ONRR by the due date an amended Form ONRR–2014, Report of Sales and Royalty Remittance. If you do not pay the additional royalties by the due date, ONRR will bill you late payment interest under 30 CFR 1218.54. The interest will accrue from the due date until ONRR receives your payment and an amended Form ONRR–2014. The table below lists the major portion prices for all designated areas not associated with an index zone. The due date is the end of the month following 60 days after the publication date of this notice.
For information on how to report additional royalties due to major portion prices, please refer to our Dear Payor letter dated December 1, 1999, on the ONRR Web site at
United States International Trade Commission.
Notice.
The Commission hereby gives notice of the scheduling of the final phase of antidumping and countervailing duty investigation Nos. 701–TA–524–525 and 731–TA–1260–1261 (Final) pursuant to the Tariff Act of 1930 (“the Act”) to determine whether an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of certain welded line pipe from Korea and Turkey, provided for in subheadings 7305.11, 7305.12, 7305.19, and 7306.19 of the Harmonized Tariff Schedule of the United States, preliminarily determined by the Department of Commerce to be sold at less-than-fair-value and imports of certain welded line pipe from Turkey preliminarily determined to have been subsidized by the government of Turkey.
Angela Newell ((202) 708–5409), Office of Investigations, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202–205–1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202–205–2000. General information concerning the Commission may also be obtained by accessing its internet server (
For further information concerning the conduct of this phase of the investigations, hearing procedures, and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A and C (19 CFR part 207).
Additional written submissions to the Commission, including requests pursuant to section 201.12 of the Commission's rules, shall not be accepted unless good cause is shown for accepting such submissions, or unless the submission is pursuant to a specific request by a Commissioner or Commission staff.
In accordance with sections 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigations must be served on all other parties to the investigations (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined to review in part a final initial determination (“ID”) issued by the presiding administrative law judge (“ALJ”). On review, the Commission determined to vacate the ALJ's findings on one issue and to correct a typographical error. The Commission has found no violation of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, in this investigation. The investigation is terminated.
Robert Needham, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 708–5468. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205–2000. General information concerning the Commission may also be obtained by accessing its Internet server (
The Commission instituted this investigation on April 14, 2014, based on a complaint filed by FMC Corporation (“FMC”) on March 5, 2014. 79 FR 20907–08. The complaint alleges violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337 (“section 337”), in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain sulfentrazone active ingredient and formulated sulfentrazone compositions made by a process that infringes certain claims of U.S. Patent No. 7,169,952 (“the '952 patent”). The Commission's notice of investigation named as respondents Beijing Nutrichem Science and Technology Stock Co., Ltd., of Beijing, China (“Beijing Nutrichem”); Summit Agro USA, LLC, of Cary, North Carolina; Summit Agro North America, Holding Corporation of New York, New York; and Jiangxi Heyi Chemicals Co. Ltd. of Jiujiang City, China.
On April 10, 2015, the ALJ issued her final ID finding no violation of section 337. She found that, under her claim constructions, there was insufficient evidence to conclude that the respondents infringed the asserted claims or that FMC satisfied either the technical prong or the economic prong of the domestic industry requirement. She further found that the respondents showed by clear and convincing evidence that the asserted claims of the '952 patent are invalid under 35 U.S.C. 102(g).
On April 22, 2015, FMC filed a timely petition for review challenging nearly all of the ID's findings. On April 30, 2015, the respondents and the Commission investigative attorney timely opposed FMC's petition.
Having examined the record of this investigation, including the ALJ's final ID, the petition for review, and the responses thereto, the Commission has determined to review the final ID in part. The Commission has determined to review and set aside the ALJ's findings on the economic prong of the domestic industry requirement
The Commission has also determined to review the the ALJ's construction of “a temperature in the range of about 120 °C to about 160 °C” because it contains a typographical error. The ALJ cites the Commission's affirmance of her construction of the claim phrase during the temporary phrase of this investigation, but adds the word “about” to her quotation of the Commission's construction and to her final construction. Because the ID indicates the intent to be consistent with the Commission's construction, the Commission finds that the inclusion of the word “about” in the construction is a typographical error. On review, the Commission finds that “a temperature in the range of about 120 °C to about 160 °C” means “a temperature in the range of 120 °C (+/−2.5 °C) to 160 °C (+/−2.5 °C).” This minor change does not impact any of the ALJ's findings on infringement, invalidity, or the technical prong of the domestic industry requirement.
The Commission has determined not to review the remaining findings in the ID.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in Part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
On June 8, 2015, the Department of Justice lodged a proposed Consent Decree with the United States District Court for the Western District of Michigan in the lawsuit entitled
The United States, the State of Michigan, the Nottawaseppi Huron Band of the Potawatomi Indians and the Match-E-Be-Nash-E-Wish Band of the Pottowatomi filed this action seeking damages under the Oil Pollution Act for injuries to natural resources that occurred as a result of discharges of oil into Talmadge Creek, the Kalamazoo River and adjoining shorelines following a July 2010 rupture of the Line 6B oil pipeline owned and operated by various Enbridge entities. The State of Michigan also asserts claims for natural resource damages under State law.
Under the proposed Consent Decree, seven affiliated Enbridge entities (“Enbridge”) will pay $1,484,952, plus interest, to reimburse past natural resource damage assessment costs incurred by federal natural resource trustees and an additional $150,000, plus interest, to reimburse natural resource damage assessment costs incurred by the two Tribes. The Consent Decree also requires Enbridge to complete a number of natural resource damage restoration projects in accordance with workplans and schedules established or approved under a separate State Consent Judgment in
The publication of this notice opens a period for public comment on the proposed Consent Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division and should refer to
During the public comment period, the proposed Consent Decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $10.75 (25 cents per page reproduction cost) payable to the United States Treasury.
Notice.
The Department of Labor (DOL) is submitting the Employee Benefits Security Administration (EBSA) sponsored information collection request (ICR) titled, “Employee Retirement Income Security Act of 1974 Technical Release 91–1,” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before July 13, 2015.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL–EBSA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202–395–5806 (this is not a toll-free number); or by email:
Contact Michel Smyth by telephone at 202–693–4129, TTY 202–693–8064, (these are not toll-free numbers) or by email at
This ICR seeks to extend PRA authority for the Employee Retirement Income Security Act of 1974 (ERISA) Technical Release 91–1 information collection. The subject information collection requirements arise from ERISA section 101(e), which establishes notice requirements that must be satisfied before an employer may transfer excess assets from a defined benefit pension plan to a retiree health benefit account, as permitted under conditions set forth in Internal Revenue Code of 1986 as amended section 420.
ERISA Technical Release 91–1 provides guidance on how to satisfy the subject ERISA notice requirements. The Release made two changes in the statutory requirements for the second type of notice. First, it required the notice to include a filing date and the intended asset transfer date. The Release also simplified the statutory filing requirements by providing that filing with the DOL would be deemed sufficient notice to both the DOL and the Department of the Treasury. ERISA section 101(e) authorizes this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on June 30, 2015. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
National Endowment for the Arts, National Foundation on the Arts and Humanities.
Notice of meeting.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92–463), as amended, notice is hereby given that 20 meetings of the Arts Advisory Panel to the National Council on the Arts will be held by teleconference from the National Endowment for the Arts, Constitution Center, 400 7th St. SW., Washington, DC 20506 as follows (all meetings are Eastern time and ending times are approximate):
Further information with reference to these meetings can be obtained from Ms. Kathy Plowitz-Worden, Office of Guidelines & Panel Operations, National Endowment for the Arts, Washington, DC 20506;
The closed portions of meetings are for the purpose of Panel review, discussion, evaluation, and recommendations on financial assistance under the National Foundation on the Arts and the Humanities Act of 1965, as amended, including information given in confidence to the agency. In accordance with the determination of the Chairman of February 15, 2012, these sessions will be closed to the public pursuant to subsection (c)(6) of section 552b of title 5, United States Code.
Nuclear Regulatory Commission.
Exemption; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is granting exemptions in response to a request from Southern California Edison Company (SCE or the licensee) regarding certain emergency planning (EP) requirements. The exemptions will eliminate the requirements to maintain formal offsite radiological emergency plans and reduce the scope of the onsite EP activities at the San Onofre Nuclear Generating Station (SONGS), Units 1, 2, and 3, and the Independent Spent Fuel Storage Installation (ISFSI), based on the reduced risks of accidents that could result in an offsite radiological release at the decommissioning nuclear power reactors. Provisions would still exist for offsite agencies to take protective actions, using a comprehensive emergency management plan to protect public health and safety, if protective actions were needed in the event of a very unlikely accident that could challenge the safe storage of spent fuel.
Please refer to Docket ID NRC–2015–0093 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
• 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.
Thomas Wengert, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–415–4037; email:
The SONGS Units 1, 2, and 3, are decommissioning power reactors located in San Diego County, California. The licensee, SCE, is the holder of SONGS Facility Operating License Nos. DPR–13, NPF–10, and NPF–15. The licenses provide, among other things, that the facility is subject to all rules, regulations, and orders of the NRC now or hereafter in effect.
SONGS Unit 1 was permanently shut down in 1993. On June 12, 2013 (ADAMS Accession No. ML131640201), the licensee provided the certifications that SONGS Units 2 and 3, had permanently ceased power operations. On June 28 (ADAMS Accession No. ML13183A391), and July 22, 2013 (ADAMS Accession No. ML13204A304), the licensee provided certifications that all fuel had been permanently removed from the SONGS Units 3 and 2, reactors, respectively. As a permanently shutdown and defueled facility, and pursuant to section 50.82(a)(2) of Title 10 of the
During normal power reactor operations, the forced flow of water through the reactor coolant system (RCS) removes heat generated by the reactor. The RCS, operating at high temperatures and pressures, transfers this heat through the steam generator tubes converting non-radioactive feedwater to steam, which then flows to the main turbine generator to produce electricity. Many of the accident scenarios postulated in the updated safety analysis reports (USARs) for operating power reactors involve failures or malfunctions of systems that could affect the fuel in the reactor core, which in the most severe postulated accidents, would involve the release of some fission products into the environment. With the permanent cessation of reactor operations at SONGS and the permanent removal of the fuel from the reactor vessels, such accidents are no longer possible. The reactors, RCS, and supporting systems are no longer in operation and have no function related to the storage of the irradiated fuel. Therefore, postulated accidents involving failure or malfunction of the reactors, RCS, or supporting systems are no longer applicable.
The EP requirements of 10 CFR 50.47, “Emergency plans,” and appendix E to 10 CFR part 50, “Emergency Planning and Preparedness for Production and Utilization Facilities,” continue to apply to nuclear power reactors that have permanently ceased operation and have removed all fuel from the reactor vessel. There are no explicit regulatory provisions distinguishing EP requirements for a power reactor that is permanently shut down and defueled from those for a reactor that is authorized to operate. To reduce or eliminate EP requirements that are no longer necessary due to the decommissioning status of the facility, SCE must obtain exemptions from those EP regulations. Only then can SCE modify the SONGS emergency plan to reflect the reduced risk associated with the permanently shutdown and defueled condition of SONGS .
By letter dated March 31, 2014 (ADAMS Accession No. ML14092A332), “Emergency Planning Exemption Request,” SCE requested exemptions from certain EP requirements of 10 CFR part 50 for SONGS. More specifically, SCE requested exemptions from certain planning standards in 10 CFR 50.47(b) regarding onsite and offsite radiological emergency plans for nuclear power reactors; from certain requirements in 10 CFR 50.47(c)(2) that require establishment of plume exposure and ingestion pathway emergency planning zones for nuclear power reactors; and from certain requirements in 10 CFR part 50, appendix E, Section IV, which establishes the elements that make up the content of emergency plans. In letters dated September 9, October 2, October 7, October 27, November 3, and December 15, 2014 (ADAMS Accession Nos. ML14258A003, ML14280A265, ML14287A228, ML14303A257, ML14309A195, and ML14351A078, respectively), SCE provided responses to the NRC staff's requests for additional information (RAI) concerning the proposed exemptions. In addition, SCE submitted a letter dated October 6, 2014, which contains security-related information, and is therefore withheld from public disclosure. The December 15, 2014, letter is a redacted, publicly-available version of this letter.
The information provided by SCE included justifications for each exemption requested. The exemptions requested by SCE would eliminate the requirements to maintain formal offsite radiological emergency plans, reviewed by the Federal Emergency Management Agency (FEMA) under the requirements of 44 CFR part 350, and reduce the scope of onsite EP activities. The SCE stated that application of all of the standards and requirements in 10 CFR 50.47(b), 10 CFR 50.47(c), and 10 CFR part 50, appendix E is not needed for adequate emergency response capability, based on the substantially lower onsite and offsite radiological consequences of accidents still possible at the permanently shutdown and defueled facility as compared to an operating facility. If offsite protective actions were needed for a very unlikely accident that could challenge the safe storage of spent fuel at SONGS, provisions exist for offsite agencies to take protective actions using a comprehensive emergency management plan (CEMP) under the National Preparedness System to protect the health and safety of the public. A CEMP in this context, also referred to as an emergency operations plan (EOP), is addressed in FEMA's Comprehensive Preparedness Guide 101, “Developing and Maintaining Emergency Operations Plans.” Comprehensive Preparedness Guide 101 is the foundation for State, territorial, Tribal, and local EP in the United States. It promotes a common understanding of the fundamentals of
In accordance with 10 CFR 50.12, “Specific exemptions,” the Commission may, upon application by any interested person or upon its own initiative, grant exemptions from the requirements of 10 CFR part 50 when: (1) The exemptions are authorized by law, will not present an undue risk to public health or safety, and are consistent with the common defense and security; and (2) any of the special circumstances listed in 10 CFR 50.12(a)(2) are present. These special circumstances include, among other things, that the application of the regulation in the particular circumstances would not serve the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule.
As noted previously, the current EP regulations contained in 10 CFR 50.47(b) and appendix E to 10 CFR part 50 apply to both operating and shutdown power reactors. The NRC has consistently acknowledged that the risk of an offsite radiological release at a power reactor that has permanently ceased operations and removed fuel from the reactor vessel is significantly lower, and the types of possible accidents are significantly fewer, than at an operating power reactor. However, current EP regulations do not recognize that once a power reactor permanently ceases operation, the risk of a large radiological release from a credible emergency accident scenario is reduced. The reduced risk is largely the result of the low frequency of credible events that could challenge the SFP structure, and the reduced decay heat and reduced short-lived radionuclide inventory due to decay. The NRC's NUREG/CR–6451, “A Safety and Regulatory Assessment of Generic BWR and PWR Permanently Shutdown Nuclear Power Plants,” dated August 31, 1997 (ADAMS Accession No. ML082260098) and NUREG–1738, “Technical Study of Spent Fuel Pool Accident Risk at Decommissioning Nuclear Power Plants,” dated February 28, 2001 (ADAMS Accession No. ML010430066), confirmed that for permanently shutdown and defueled power reactors bounded by the assumptions and conditions in the reports, the risk of offsite radiological release is significantly less than that for an operating power reactor.
In the past, EP exemptions similar to those requested by SCE, have been granted to licensees of permanently shutdown and defueled power reactors. However, the exemptions did not relieve the licensees of all EP requirements. Rather, the exemptions allowed the licensees to modify their emergency plans commensurate with the credible site-specific risks that were consistent with a permanently shutdown and defueled status. Specifically, for previous permanently shutdown and defueled power reactors, the basis for the NRC staff's approval of the exemptions from certain EP requirements was based on the licensee's demonstration that: (1) The radiological consequences of design-basis accidents would not exceed the limits of the U.S. Environmental Protection Agency's (EPA) Protective Action Guidelines (PAGs) at the exclusion area boundary, and (2) in the unlikely event of a beyond-design-basis accident resulting in a loss of all modes of heat transfer from the fuel stored in the SFP, there is sufficient time to initiate appropriate mitigating actions, and if needed, for offsite authorities to implement offsite protective actions using a CEMP approach to protect the health and safety of the public. Based on precedent exemptions, the site-specific analysis should show that there is sufficient time following a loss of SFP coolant inventory until the onset of fuel damage to implement onsite mitigation of the loss of SFP coolant inventory and if necessary, to implement offsite protective actions. To meet this criterion, the staff accepted in precedent exemptions that the time should exceed 10 hours from the loss of coolant until the fuel temperature reaches 900 degrees Celsius (°C), assuming no air cooling.
The NRC staff reviewed the licensee's justification for the requested exemptions against the criteria in 10 CFR 50.12(a) and determined, as described below, that the criteria in 10 CFR 50.12(a) are met, and that the exemptions should be granted. An assessment of the SCE EP exemptions is described in SECY–14–0144, “Request by Southern California Edison for Exemptions from Certain Emergency Planning,” dated December 17, 2014 (ADAMS Accession No. ML14251A554). The Commission approved the NRC staff's recommendation to grant the exemptions in the staff requirements memorandum to SECY–14–0144, dated March 2, 2015 (ADAMS Accession No. ML15061A521). Descriptions of the specific exemptions requested by SCE and the NRC staff's basis for granting each exemption are provided in SECY–14–0144 and summarized in a table at the end of this document. The staff's detailed review and technical basis for the approval of the specific EP exemptions, requested by SCE, are provided in the NRC staff's safety evaluation dated June 4, 2015 (ADAMS Accession No. ML15082A204).
The licensee has proposed exemptions from certain EP requirements in 10 CFR 50.47(b), 10 CFR 50.47(c)(2), and 10 CFR part 50, appendix E, Section IV, which would allow SCE to revise the SONGS Emergency Plan to reflect the permanently shutdown and defueled condition of the station. As stated above, in accordance with 10 CFR 50.12, the Commission may, upon application by any interested person or upon its own initiative, grant exemptions from the requirements of 10 CFR part 50. The NRC staff has determined that granting of the licensee's proposed exemptions will not result in a violation of the Atomic Energy Act of 1954, as amended, or the NRC's regulations. Therefore, the exemptions are authorized by law.
As stated previously, SCE provided analyses that show the radiological consequences of design-basis accidents will not exceed the limits of the EPA PAGs at the exclusion area boundary. Therefore, formal offsite radiological emergency plans required under 10 CFR part 50 are no longer needed for protection of the public beyond the exclusion area boundary, based on the radiological consequences of design-basis accidents still possible at SONGS.
Although very unlikely, there is one postulated beyond-design-basis accident that might result in significant offsite radiological releases. However, NUREG–1738 confirms that the risk of beyond-design-basis accidents is greatly reduced at permanently shutdown and defueled reactors. The NRC staff's analyses in NUREG–1738 concludes that the event sequences important to risk at permanently shutdown and defueled power reactors are limited to large earthquakes and cask drop events. For EP assessments, this is an important difference relative to operating power reactors, where typically a large number
Therefore, granting exemptions to eliminate the requirements of 10 CFR part 50 to maintain offsite radiological emergency plans and to reduce the scope of onsite EP activities will not present an undue risk to the public health and safety.
The requested exemptions by SCE only involve EP requirements under 10 CFR part 50 and will allow SCE to revise the SONGS Emergency Plan to reflect the permanently shutdown and defueled condition of the facility. Physical security measures at SONGS are not affected by the requested EP exemptions. The discontinuation of formal offsite radiological emergency plans and the reduction in scope of the onsite EP activities at SONGS will not adversely affect SCE's ability to physically secure the site or protect special nuclear material. Therefore, the proposed exemptions are consistent with the common defense and security.
Special circumstances, in accordance with 10 CFR 50.12(a)(2)(ii), are present whenever application of the regulation in the particular circumstances is not necessary to achieve the underlying purpose of the rule. The underlying purposes of 10 CFR 50.47(b), 10 CFR 50.47(c)(2), and 10 CFR part 50, appendix E, Section IV, are to provide reasonable assurance that adequate protective measures can and will be taken in the event of a radiological emergency, to establish plume exposure and ingestion pathway emergency planning zones for nuclear power plants, and to ensure that licensees maintain effective offsite and onsite radiological emergency plans. The standards and requirements in these regulations were developed by considering the risks associated with operation of a power reactor at its licensed full-power level. These risks include the potential for a reactor accident with offsite radiological dose consequences.
As discussed previously in Section III of this document, because SONGS Units 1, 2, and 3 are permanently shutdown and defueled, there is no longer a risk of offsite radiological release from a design-basis accident and the risk of a significant offsite radiological release from a beyond-design-basis accident is greatly reduced when compared to the risk at an operating power reactor. In a letter dated March 31, 2014 (ADAMS Accession No. ML14092A332), the licensee provided analyses to demonstrate that the radiological consequences of design-basis accidents at SONGS will not exceed the limits of the EPA PAGs at the exclusion area boundary. The NRC staff has confirmed the reduced risks at SONGS by comparing the generic risk assumptions in the analyses in NUREG–1738 to site-specific conditions at SONGS; and has determined that the risk values in NUREG–1738 bound the risks presented by SONGS. In addition, the significant decay of short-lived radionuclides that has occurred since the January 2012 shutdown provides assurance in other ways. As indicated by the results of research conducted for NUREG–1738 and more recently, for NUREG–2161, “Consequence Study of a Beyond-Design-Basis Earthquake Affecting the Spent Fuel Pool for a U.S. Mark I Boiling Water Reactor” (ADAMS Accession No. ML15255A365), while other consequences can be extensive, accidents from SFPs with significant decay time have little potential to cause offsite early fatalities, even if the formal offsite radiological EP requirements were relaxed. The SCE's analysis of a beyond-design-basis accident involving a complete loss of SFP water inventory, where adequate fuel handling building air exchange with the environment and air cooling of the stored fuel is available, shows that by August 31, 2014, air cooling of the spent fuel assemblies was sufficient to keep the fuel within a safe temperature range, indefinitely, without fuel cladding damage or offsite radiological release.
The only analyzed beyond-design-basis accident scenario that progresses to a condition where a significant offsite release might occur, involves the very unlikely event where the SFP drains in such a way that all modes of cooling or heat transfer are assumed to be unavailable, which is postulated to result in an adiabatic heatup of the spent fuel. The SCE's analysis of this beyond-design-basis accident shows that as of October 12, 2014, more than 17 hours would be available between the time the fuel is initially uncovered (at which time adiabatic heatup is conservatively assumed to begin), until the fuel cladding reaches a temperature of 1652 degrees Fahrenheit (°F) (900 ºC), which is the temperature associated with rapid cladding oxidation and the potential for a significant radiological release. This analysis conservatively does not include the period of time from the initiating event causing a loss of SFP water inventory until all cooling means are lost.
The NRC staff has verified SCE's analyses and its calculations. The analyses provide reasonable assurance that in granting the requested exemptions to SCE, there is no design-basis accident that will result in an offsite radiological release exceeding the EPA PAGs at the exclusion area boundary. In the unlikely event of a beyond-design-basis accident affecting the SFP that results in a complete loss of heat removal via all modes of heat transfer, there will be well over 10 hours available before an offsite release might occur and, therefore, at least 10 hours to initiate appropriate mitigating actions to restore a means of heat removal to the spent fuel. If a radiological release were projected to occur under this unlikely scenario, a minimum of 10 hours is considered sufficient time for offsite authorities to implement protective actions using a CEMP approach to protect the health and safety of the public.
Exemptions from the offsite EP requirements in 10 CFR part 50 have previously been approved by the NRC when the site-specific analyses show that at least 10 hours are available following a loss of SFP coolant inventory accident with no air cooling (or other methods of removing decay heat) until cladding of the hottest fuel assembly reaches the zirconium rapid oxidation temperature. The NRC staff concluded in its previously granted exemptions, as it does with the SCE-requested EP exemptions, that if a minimum of 10 hours are available to initiate mitigative actions consistent with plant conditions, or if needed, for offsite authorities to implement protective actions using a CEMP approach, then formal offsite radiological emergency plans, required under 10 CFR part 50, are not necessary at permanently shutdown and defueled power reactors.
Additionally, in its letters to the NRC dated October 6, 2014, and December 15, 2014, SCE described the SFP makeup strategies that could be used in
For all the reasons stated above, the NRC staff concludes that application of certain requirements in 10 CFR 50.47(b), 10 CFR 50.47(c)(2), and 10 CFR part 50, appendix E, as summarized in the table at the end of this document, is not necessary to achieve the underlying purpose of these regulations and, therefore, satisfies the special circumstances in 10 CFR 50.12(a)(2)(ii). The staff further concludes that the exemptions granted by this action will maintain an acceptable level of emergency preparedness at SONGS and provide reasonable assurance that adequate offsite protective measures, if needed, can and will be taken by State and local government agencies using a CEMP approach, in the unlikely event of a radiological emergency at the SONGS facility. Since the underlying purposes of the rules, as exempted, would continue to be achieved, even with the elimination of the requirements under 10 CFR part 50 to maintain formal offsite radiological emergency plans and the reduction in the scope of the onsite EP activities at SONGS, the special circumstances required by 10 CFR 50.12(a)(2)(ii) exist.
In accordance with 10 CFR 51.31(a), the Commission has determined that the granting of these exemptions will not have a significant effect on the quality of the human environment, as discussed in the NRC staff's Environmental Assessment and Finding of No Significant Impact published on April 17, 2015 (80 FR 21271).
Accordingly, the Commission has determined, pursuant to 10 CFR 50.12(a), that SCE's request for exemptions from certain EP requirements in 10 CFR 50.47(b), 10 CFR 50.47(c)(2), and 10 CFR part 50, appendix E, Section IV, and as summarized in the table at the end of this document, are authorized by law, will not present an undue risk to the public health and safety, and are consistent with the common defense and security. Also, special circumstances are present. Therefore, the Commission hereby grants SCE exemptions from certain EP requirements of 10 CFR 50.47(b), 10 CFR 50.47(c)(2), and 10 CFR part 50, appendix E, Section IV, as discussed and evaluated in detail in the staff's safety evaluation dated June 4, 2015. The exemptions are effective as of June 4, 2015.
For the Nuclear Regulatory Commission.
June 15, 22, 29, July 6, 13, 20, 2015.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
There are no meetings scheduled for the week of June 15, 2015.
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of June 29, 2015.
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of July 13, 2015.
There are no meetings scheduled for the week of July 20, 2015
The schedule for Commission meetings is subject to change on short notice. For more information or to verify the status of meetings, contact Glenn Ellmers at 301–415–0442 or via email at
The NRC Commission Meeting Schedule can be found on the Internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301–415–1969), or email
Nuclear Regulatory Commission.
Renewal of existing information collection; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) invites public comment on the renewal of Office of Management and Budget (OMB) approval for an existing collection of information. The information collection is entitled, “NRC Form 748, National Source Tracking Transaction Report.”
Submit comments by August 11, 2015. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
You may submit comments by any of the following methods:
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For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Tremaine Donnell, Office of Information Services, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–415–6258; email:
Please refer to Docket ID NRC–2015–0005 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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Please include Docket ID NRC–2015–0005 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.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the NRC is requesting public comment on its intention to request the OMB's approval for the information collection summarized below.
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The NRC is seeking 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 estimate of the burden of the information collection 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 on respondents be minimized, including the use of automated collection techniques or other forms of information technology?
For the Nuclear Regulatory Commission.
Overseas Private Investment Corporation (OPIC).
Notice and request for comments.
Under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35), agencies are required to publish a Notice in the
Comments must be received within sixty (60) calendar days of publication of this Notice.
Mail all comments and requests for copies of the subject form to OPIC's Agency Submitting Officer: James Bobbitt, Overseas Private Investment Corporation, 1100 New York Avenue NW., Washington, DC 20527. See
OPIC Agency Submitting Officer: James Bobbitt, (202) 336–8558.
All mailed comments and requests for copies of the subject form should include form number OPIC–129 on both the envelope and in the subject line of the letter. Electronic comments and requests for copies of the subject form may be sent to
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning an amendment to Priority Mail Contract 66 negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202–789–6820.
On June 5, 2015, the Postal Service filed notice that it has agreed to an Amendment to the existing Priority Mail Contract 66 negotiated service agreement approved in this docket.
The Postal Service also filed the unredacted Amendment and supporting financial information under seal. The Postal Service seeks to incorporate by reference the Application for Non-Public Treatment originally filed in this docket for the protection of information that it has filed under seal.
The Amendment concerns price changes.
The Postal Service intends for the Amendment to become effective one business day after the date that the Commission completes its review of the Notice.
The Commission invites comments on whether the changes presented in the Postal Service's Notice are consistent with the policies of 39 U.S.C. 3632, 3633, or 3642, 39 CFR 3015.5, and 39 CFR part 3020, subpart B. Comments are due no later than June 15, 2015. The public portions of these filings can be accessed via the Commission's Web site (
The Commission appoints Cassie D'Souza to represent the interests of the general public (Public Representative) in this docket.
1. The Commission reopens Docket No. CP2014–2 for consideration of matters raised by the Postal Service's Notice.
2. Pursuant to 39 U.S.C. 505, the Commission appoints Cassie D'Souza 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 June 15, 2015.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Contract 125 to the competitive product list. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202–789–6820.
In accordance with 39 U.S.C. 3642 and 39 CFR 3020.30
The Postal Service contemporaneously filed a redacted contract related to the proposed new product under 39 U.S.C. 3632(b)(3) and 39 CFR 3015.5.
To support its Request, the Postal Service filed a copy of the contract, a copy of the Governors' Decision authorizing the product, proposed changes to the Mail Classification Schedule, a Statement of Supporting Justification, a certification of compliance with 39 U.S.C. 3633(a), and an application for non-public treatment of certain materials. It also filed supporting financial workpapers.
The Commission establishes Docket Nos. MC2015–54 and CP2015–82 to consider the Request pertaining to the proposed Priority Mail Contract 125 product and the related contract, respectively.
The Commission invites comments on whether the Postal Service's filings in the captioned dockets are consistent with the policies of 39 U.S.C. 3632, 3633, or 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comments are due no later than June 15, 2015. The public portions of these filings can be accessed via the Commission's Web site (
The Commission appoints James F. Callow to serve as Public Representative in these dockets.
1. The Commission establishes Docket Nos. MC2015–54 and CP2015–82 to consider the matters raised in each docket.
2. Pursuant to 39 U.S.C. 505, James F. Callow is appointed to serve as an officer of the Commission to represent
3. Comments are due no later than June 15, 2015.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The principal purpose of the proposed rule change is to revise the ICC Risk Management Framework to incorporate certain risk model enhancements. These revisions do not require any changes to the ICC Clearing Rules (“Rules”).
In its filing with the Commission, ICC 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. ICC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of these statements.
ICC proposes revising the ICC Risk Management Framework to incorporate risk model enhancements related to the General Wrong Way Risk (“GWWR”) methodology. ICC believes such revisions will facilitate the prompt and accurate clearance and settlement of securities transactions and derivative agreements, contracts, and transactions for which it is responsible. The proposed revisions are described in detail as follows.
The proposed changes to the ICC Risk Management Framework extend the GWWR framework to the portfolio level. Currently, there exists no Clearing Participant-level cumulative GWWR requirement incorporated in the Jump-to-Default calculations. The uncollateralized WWR exposure of a Risk Factor needs to exceed its corresponding WWR threshold in order to trigger WWR collateralization. The proposed enhancement is introduced to account for the potential accumulation of portfolio WWR through Risk Factor specific WWR exposures. Under the proposed approach, if the cumulative uncollateralized exposure exceeds a pre-determined portfolio GWWR threshold, the amount above the threshold is collateralized.
Section 17A(b)(3) of the Act requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and, to the extent applicable, derivative agreements, contracts, and transactions
ICC does not believe the proposed rule change will have any impact, or impose any burden, on competition. The risk model enhancements apply uniformly across all market participants. Therefore, ICC does not believe the proposed rule change imposes any burden on competition that is inappropriate in furtherance of the purposes of the Act.
Written comments relating to the proposed rule change have not been solicited or received. ICC will notify the Commission of any written comments received by ICC.
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, 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 comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ICC–2015–009 and should be submitted on or before July 6, 2015.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
In notice document 2015–13175, appearing on pages 31439–31440 in the issue of Tuesday, June 2, 2015, make the following correction:
On page 31440, in the first column, on the last line, “June 22, 2015.” should read “June 23, 2015.”
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
CBOE proposes to amend certain of its rules to expire CBOE Volatility Index (“VIX”) options every week. The text of the proposed rule change is available on the Exchange's Web site
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
In February 2006, CBOE began trading options that expire monthly on the CBOE Volatility Index (“VIX”), which measures a 30-day period of implied volatility. Last year, CBOE introduced weekly expiring options on the CBOE Short-Term Volatility Index (“VXST”), which measures a nine-day implied volatility period.
In its capacity as the Reporting Authority, CBOE enhanced the VIX Index (cash/spot value) to include P.M.-settled S&P 500 Index End-of-Week expirations (“SPXWs”) in 2014.
Currently, standard VIX options expire once a month. The last trading day for expiring VIX options is the business day immediately prior to their expiration date. The expiration date for VIX options is pegged to the standard (third Friday) SPX option expiration in the subsequent month. Specifically, the expiration date is on the Wednesday that is 30 days prior to the third Friday of the calendar month immediately following the month in which the VIX option expires. This standard Wednesday VIX option expiration is changed if the Friday in the subsequent month is an Exchange holiday to be the business day that is thirty days prior to the Exchange business day immediately preceding that Friday. CBOE (as the Reporting Authority for VIX options) calculates the exercise settlement value for expiring VIX options on their expiration date.
The Exchange proposes to now expire VIX options each Wednesday.
In order to expire 30-day VIX options weekly, CBOE proposes to amend Rule 24.9(a)(5) in several ways. First, the Exchange notes that Rule 24.9(a)(5) is styled, “Method of Determining Day that Exercise Settlement Value will be Calculated and of Determining Expiration Date and Last Trading Day for Options on Volatility Indexes that Measure a 30-Day Volatility Period (
Second, the Exchange proposes to also add the following 3 new subheadings as subparagraphs A, B and C, respectively, to Rule 24.9(a)(5): Method of Determining Day that Exercise Settlement Value will be Calculated, Special Opening Quotation and Expiration Date and Last Trading Day. The Exchange believes that the proposed addition of these subheadings would help to clarify that new subparagraphs B and C would apply to all Volatility index options.
Third, under proposed new subparagraph A, the Exchange proposes to add new subparagraph (i) styled “Volatility Index Options (Other than VIX Options,
Fourth, CBOE proposes to add new subparagraph A(ii) to Rule 24.9(a)(5) styled “CBOE Volatility Index (“VIX”) Options,” which would read as follows:
The exercise settlement value of a VIX option for all purposes under these Rules and the Rules of the Clearing Corporation, shall be calculated on the specific date (usually a Wednesday) identified in the option symbol for the series. If that Wednesday or the Friday that is 30 days following that Wednesday is an Exchange holiday, the exercise settlement value shall be calculated on the business day immediately preceding that Wednesday.
The Exchange notes that Rule 24.9(a)(5) is cross-referenced in Rule 6.2B.08, which sets forth the days on which Modified Opening Procedures are used for Hybrid classes and series that are used to calculated volatility indexes. Rule 24.9(a)(5) is identified in Rule 6.2B.08 in order to determine the specific days on which the Modified Opening Procedures are utilized. Expiring 30-day VIX options weekly would result in the Modified Opening Procedures being used more frequently for the constituent options series used to calculate the exercise settlement values for the proposed new 30-day VIX weekly expirations.
Fifth, the Exchange proposes to amend Rule 24.9(a) by adding an additional paragraph (under proposed new subparagraph B “Special Opening Quotation”) that provides detailed information about the “time to expiration” input. Specifically, the paragraph would provide as a follows:
The “time to expiration” used to calculate the SOQ shall account for the actual number of days and minutes until expiration for the constituent option series. For example, if the Exchange announces that the opening of trading in the constituent option series is delayed, the amount of time until expiration for the constituent option series used to calculate the exercise settlement value would be reduced to reflect the actual opening time of the constituent option series. Another example would be when the Exchange is closed on a Wednesday due to an Exchange holiday, the amount of time until expiration used to calculate the exercise settlement value would be increased to reflect the extra calendar day between the day that the exercise settlement value is calculated and the day on which the constituent option series expire.
In support of this proposed change, the Exchange states that similar language about the above description of the “time to expiration” input for VIX options is already set forth in CBOE Regulatory Circular
The Exchange also proposes to take this opportunity to make the following minor amendments to Rule 24.9(a)(6): (i) Modification to the title of that Rule, (ii) addition of similar subheadings throughout that Rule, and (iii) revision to the Wednesday holiday example provided under the proposed new subheading “Special Opening Quotation.” The Exchange proposes to make these changes in order to conform Rule 24.9(a)(6) with the proposed new structure and formatting of Rule
Sixth, as to Rule 24.9(a)(5), the Exchange proposes to add a sentence to address when the last trading day is moved because of an Exchange holiday. Specifically, the sentence would provide that the last trading day would be the day immediately preceding the last regularly scheduled trading day. As with the “time to expiration” input proposed addition, this proposed sentence is similar to language that is set forth in Rule 24.9(a)(6). The Exchange is proposing to take this opportunity to marry up Rule 24.9(a)(5) with Rule 24.9(a)(6), as applicable here.
The Exchange is currently permitted to list up to 12 standard (monthly) VIX expirations.
To effectuate this change, the Exchange proposes to amend Rule 24.9(a)(2) to expressly provide for these VIX expirations. The Exchange also proposes to take this opportunity to clean up and stream line this subparagraph (a)(2) to Rule 24.9. No substantive changes are being proposed by these reorganizational amendments.
Currently, the Exchange may list new series in VIX options up to the fifth business day prior to expiration. The Exchange proposes to amend Rule 24.9(.01)(c) to permit new series to be added up to and including on the last day of trading for an expiring VIX option contract. In support of this change, the Exchange states that this listing ability is similar to the series setting schedule for other types of weekly expirations, including VXST options.
Finally, the Exchange proposes to amend Rule 24.9.01(l) by breaking out VIX options separately from other volatility index options under new subparagraph (ii). New subparagraph (ii) would provide, Notwithstanding paragraphs (a) and (l)(i), the interval between strike prices for CBOE Volatility Index (VIX) options will be $0.50 or greater where the strike price is less than $75, $1 or greater where the strike price is $200 or less and $5 or greater where the strike price is more than $200.
The Exchange notes that the strike setting parameters set forth in the proposed paragraph are already permitted for VIX options.
CBOE has analyzed its capacity and represents that it believes the Exchange and the Options Price Reporting Authority (“OPRA”) have the necessary systems capacity to handle the additional traffic associated with the listing of new series that would result from the expiring VIX options weekly. Because the proposal is limited to a single class, the Exchange believes that the additional traffic that would be generated from the introduction of weekly 30-Day VIX option series would be manageable.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
Specifically, the Exchange believes that there is an unmet market demand for options that expire each week that measure a 30-day volatility period. By permitting VIX options to expire every week, CBOE hopes to respond to that unmet market demand.
The success of CBOE's VIX options that measure a 30-day period illustrate the prominence that volatility products have taken over the past several years. CBOE seeks to enlarge its suite of volatility offerings by introducing weekly expiring series that would provide investors with a 30-day VIX contract that expires every week. CBOE believes that expiring 30-day VIX options weekly would provide investors with additional opportunities to manage 30-day volatility risk each week.
CBOE has many years of history and experience in conducting surveillance for volatility index options trading to draw from in order to detect manipulative trading in the proposed new 30-day weekly VIX series. Additionally, the Exchange represents that it has the necessary systems capacity to support the addition of weekly 30-day VIX expirations.
The Exchange believes that the proposed non-substantive changes to Rules 24.9(a)(5) and 24.9(a)(6) would be beneficial to market participants and users of CBOE's Rulebook because there would be parallel structure between two rule provisions that address same topics but for different option classes. The Exchange also believes that these proposed changes would generally
CBOE 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. Specifically, CBOE believes that the permitting 30-day VIX options to expire weekly would enhance competition among market participants and would provide a new weekly expiration that can compete with other weekly options to the benefit of investors and the marketplace.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
A. By order approve or disapprove 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, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
U.S. Small Business Administration.
Notice.
The U.S. Small Business Administration (SBA) announces the 2015 Startup in a Day Competition—Dream Big Model, pursuant to the America Competes Act, to spur the development, implementation, and improvement of online tools that will let entrepreneurs learn about the business startup process in their area, including how to register and apply for all required local licenses and permits—all in one day or less.
The submission period for entries begins 12:00 p.m. EDT, June 11, 2015 and ends July 13, 2015 at 11:59 p.m. EDT. Winners will be announced no later than August 31, 2015.
For further information, please contact the U.S. Small Business Administration, Startup in a Day—IGA, 409 Third Street SW., Washington, DC 20416, (202) 205–7364,
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In conjunction with the Startup in a Day Competition, President Barack Obama is asking cities and Native American Communities across America to take a pledge to support entrepreneurs in their area by making it easier to start a business (for the text of this pledge, see
An additional aim of this competition is to stimulate economic development in certain Priority Communities. For purposes of the Startup in a Day Competition—Dream Big Model, Priority Communities are those cities and Native American Communities that fall into one or more of the following categories:
• Rural/Non-Metropolitan: Cities or Native American Communities that have a population of less than 50,000. For cities, please reference
• High Poverty: Cities or Native American Communities where 20 percent or more of residents are below the poverty level. For cities, please reference
• Veterans Economic Community: Being an official participant in the Veterans Economic Communities Initiative. To view the list of participating cities, please go to
• Promise Zone: Being officially designated as a Promise Zone. To view the list of designated Promise Zones and lead organizations, please go to
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3.
• A letter or signed statement by the city or Native American Community representative, council, or equivalent approving or authorizing the entry on behalf of the city or Native American Community.
(i) Briefly describe your city or Native American Community and its story (include applicable data from the most current source (
(ii) Describe the demand for registering and obtaining permits, resources, etc. for small businesses in your city or Native American Community (include quantitative analysis).
(i) Describe the current process, including the problems/obstacles, an entrepreneur experiences while trying to register and obtain permits, resources, etc. as a small businesses in your city or Native American Community.
(ii) Describe the solution that would solve the problems/obstacles described above, if awarded a prize.
(i) Outline the anticipated timeframe for implementing the solution described above.
(ii) Describe the top five (5) metrics relevant to outputs and outcomes that would measure your city's or Native American Community's success in solving the stated problems/obstacles.
(iii) Describe any additional resources that will need to be leveraged, including partnerships, to fully implement the proposed solution.
• Part IV: Service to Priority Communities as Defined in Item 1 (up to 10 bonus points . . . five (5) points for each eligible Priority Community to be served, up to two (2) communities).
(i) State the Priority Community to be served.
(ii) Briefly describe the Priority Community in your city (include applicable data from the most current sources (
(iii) Describe the demand from the Priority Community for registering small businesses and/or obtaining permits, resources, etc. in your city or Native American Community (include quantitative analysis).
• Part V: Taking the Startup in a Day Pledge (five (5) bonus points). Cities and Native American Communities that sign the Startup in a Day Pledge (for the text of the pledge, see
• Part VI: Outline a budget for the proposed solution including, but not limited to expenses and any additional funding and/or support required to fully implement the solution.
Proposals may not include any confidential and/or proprietary information and must be formatted as follows:
○ Length: No more than two (2) pages to answer Parts I–III. No more than one (1) page to answer Part IV, one (1) page to answer Part V, and one (1) page to answer Part VI.
○ Spacing: 1.5 lines.
○ Paper Size: 8.5 x 11 with three-quarter (.75) inch margins on all sides.
○ Font and Font Size: Calibri, 11 point.
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Because the subject of this competition is not just the development of online tools to streamline the business startup process, but also the implementation and improvement of such tools, prizes will be disbursed in three payments. The first payment, equal to 60 percent of a winner's total prize amount, will be disbursed once all initial requirements (
Regardless of the length of the period of operation on which they are based, the written assessment must be submitted to SBA no later than 15 months after a winner receives its first prize payment. The written assessments, or portions thereof, may be made public. Further guidance regarding the format and means of submission of these assessments will be provided to winners prior to their acceptance of prizes.
All prizes will be paid via the Automated Clearing House (ACH) and winners will be required to create an account in the System for Award Management (SAM) in order to receive their prizes.
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Award Approving Official: Christopher L. James, Associate Administrator, U.S. Small Business Administration, 409 Third Street SW., Washington, DC 20416.
15 U.S.C.§ 3719.
U.S. Small Business Administration.
Notice.
The U.S. Small Business Administration (SBA) announces the 2015 Startup in a Day Competition—Start Small Model, pursuant to the
The submission period for entries begins 12:00 p.m. EDT, June 11, 2015 and ends July 13, 2015 at 11:59 p.m. EDT. Winners will be announced no later than August 31, 2015.
For further information, please contact the U.S. Small Business Administration, Startup in a Day—IGA, 409 Third Street SW., Washington, DC 20416, (202) 205–7364,
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In conjunction with the Startup in a Day Competition, President Barack Obama is asking cities and Native American Communities across America to take a pledge to support entrepreneurs in their area by making it easier to start a business (for the text of this pledge, see
An additional aim of this competition is to stimulate economic development in certain Priority Communities. For purposes of the Startup in a Day Competition—Start Small Model, Priority Communities are those cities that fall into one or more of the following categories (
• Rural/Non-Metropolitan: Cities having a population of less than 50,000. Please reference
• High Poverty: Cities where 20 percent or more of residents are below the poverty level. Please reference
• Veterans Economic Community: Being an official participant in the Veterans Economic Communities Initiative. To view the list of participating cities, please go to
• Promise Zone: Being officially designated as a Promise Zone. To view the list of designated Promise Zones and lead organizations, please go to
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• A letter or signed statement by the city or Native American Community representative, council, or equivalent approving or authorizing the entry on behalf of the city or Native American Community.
• Part I: City or Native American Community Description (20 points)
(i) Briefly describe your city or Native American Community and its story (include applicable data from the most current source (
(ii) Describe the demand for registering and obtaining permits, resources, etc. for small businesses in your city or Native American Community (include quantitative analysis).
• Part II: Problem(s) and Solution(s) (40 points)
(i) Describe the current process, including the problems/obstacles, an entrepreneur experiences while trying to register and obtain permits, resources, etc. as a small businesses in your city or Native American Community.
(ii) Describe the solution that would solve the problems/obstacles described above, if awarded a prize.
• Part III: Implementation (40 points)
(i) Outline the anticipated timeframe for implementing the solution described above.
(ii) Describe the top five (5) metrics relevant to outputs and outcomes that
(iii) Describe any additional resources that will need to be leveraged, including partnerships, to fully implement the proposed solution.
• Part IV: Service to Priority Communities as Defined in Item 1 (up to 10 bonus points . . . five (5) points for each eligible Priority Community to be served, up to two (2) communities)
(i) State the Priority Community to be served.
(ii) Briefly describe the Priority Community in your city (include applicable data from the most current sources (
(iii) Describe the demand from the Priority Community for registering small businesses and/or obtaining permits, resources, etc. in your city (include quantitative analysis).
• Part V: Taking the Startup in a Day Pledge (five (5) bonus points). Cities and Native American Communities that agree to the Startup in a Day Pledge (for the text of the pledge, see
Proposals may not include any confidential and/or proprietary information and must be formatted as follows:
○ Length: No more than two (2) pages to answer Parts I–III. No more than one (1) page to answer Part IV and one (1) page to answer Part V.
○ Spacing: 1.5 lines
○ Paper Size: 8.5 × 11 with three-quarter (.75) inch margins on all sides
○ Font and Font Size: Calibri, 11 point
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Because the subject of this competition is not just the development of online tools to streamline the business startup process, but also the implementation and improvement of such tools, prizes will be disbursed in two payments. The first payment, equal to 80 percent of a winner's total prize amount, will be disbursed once all initial requirements (
Regardless of the length of the period of operation on which they are based, the written assessment must be submitted to SBA no later than 15 months after a winner receives its first prize payment. The written assessments, or portions thereof, may be made public. Further guidance regarding the format and means of submission of these assessments will be provided to winners prior to their acceptance of prizes.
All prizes will be paid via the Automated Clearing House (ACH) and winners will be required to create an account in the System for Award Management (SAM) in order to receive their prizes.
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Award Approving Official: Christopher L. James, Associate Administrator, U.S. Small Business Administration, 409 Third Street SW., Washington, DC 20416.
15 U.S.C. 3719.
Federal Aviation Administration, DOT.
Notice of intent.
The FAA is issuing this notice to advise the public that an Environmental Impact Statement (EIS) will be prepared for proposed improvements to the Norfolk International Airport (ORF).
In October 2008, the Norfolk Airport Authority (NAA), owner and operator of ORF, prepared a Master Plan Update (MPU) to document changes occurring “in Airport facilities and activity that have taken place since the 1995 Master Plan Update,” to “provide the Authority with a development plan for the Airport through 2024,” and to address compliance shortfalls with published safety standards. Following the MPU, NAA prepared technical documents that focused on the potential construction of a replacement secondary runway. The first was the December 2008 Supplemental Technical Analyses for the Proposed Secondary Runway at Norfolk International Airport and the second was the December 2009 Justification for Proposed Runway 5R/23L. In 2008 NAA also developed an Airport Layout Plan (ALP) that evaluated and noted future development needs at ORF. The ALP included a Capital Improvement Program (CIP) for the Airport to address Federal Aviation Administration (FAA) design standards for the Airport's existing crosswind Runway 14/32. During its planning process, NAA explored a number of alternatives to meet FAA design standards while also providing the flexibility needed to operate without interruption during various conditions. These alternatives included the potential construction of a replacement secondary runway as well as improvements to the existing crosswind Runway 14/32. The FAA will evaluate and consider the Airport's MPU, ALP, and associated planning efforts when considering reasonable and feasible alternatives for the ORF EIS.
Based on these previous planning efforts, the primary components of NAA's proposed project at ORF include:
• Decommissioning and demolition of Runway 14/32
• Constructing a relocated secondary runway parallel to and separated by 876 feet from the existing Runway 5/23. The proposed Runway 5R/23L would be 6,500 feet long by 150 feet wide.
The purpose of the proposed project is:
• To meet relevant FAA airfield safety standards and enhance airfield safety without reducing runway availability. Relevant airfield safety standards include:
○ Runway Safety Area, which is designed to provide additional safety in the event an aircraft leaves the runway;
○ Runway Protection Zone, which is area at ground level prior to the threshold or beyond the runway end to enhance the safety and protection of people and property on the ground; and
○ Runway Object Free Area, which is designed to provide an area clear of objects surrounding a runway.
• To enhance operational efficiency and maintain airfield utility while considering surrounding airspace and ORF's critical design aircraft.
• To provide a safe, efficient southern vehicular access, on Airport property, to the Airport's terminal area.
The proposed project is needed to address the following four primary areas of deficiency at ORF:
• Runway 14/32 does not meet the FAA design standards discussed above for several reasons, including, but not limited to, the location of Robin Hood Road and Lake Whitehurst near the Runway 14 end.
• The current airfield configuration limits operational efficiency, safety and flexibility due to secondary runway length and challenges in taxiing from the airfield layout.
• Provide a flexible two-runway airfield system for aircraft operators and air traffic controllers. Incremental changes over time have severely decreased ORF's ability to remain flexible with increasing airspace conflicts from surrounding military facilities.
• Robin Hood Road, the secondary (southern) access to the Airport, has safety and functional deficiencies. Specifically, several curves in the on-airport section of Robin Hood Road can be improved through a redesign of the roadway.
Marcus Brundage, Project Manager, Federal Aviation Administration, Washington Airports District Office, 23723 Air Freight Lane, Suite 210, Dulles, Virginia 20166.
Telephone (703) 661–1365.
The FAA, in consultation with the NAA, will prepare an EIS for the proposed project. The EIS will evaluate a range of alternatives to address FAA design standards for the secondary Runway 14/32. The alternatives to be considered will include the No Build Alternative and a variety of build alternatives, including NAA's proposed alternative as detailed in the 2008 Master Plan Update. The EIS would also evaluate any alternatives identified during the Scoping process to address the project need.
The FAA intends to use the preparation of this EIS to comply with Section 106 of the National Historic Preservation Act of 1966, as amended, Section 7 of the Endangered Species Act, and Section 404 of the Clean Water Act, and any other applicable laws that include public involvement requirements.
The FAA intends to conduct a Scoping process to gather input from all interested parties to help identify any issues of concern associated with the proposed project. In addition to this notice, Federal, state, and local agencies, that have legal jurisdiction and/or special expertise with respect to any potential environmental impacts associated with the proposed project, will be notified by letter of an Agency Scoping Meeting to be held on July 22, 2015 in Norfolk, Virginia.
The general public will be notified of the Scoping process through a legal notice, describing the proposed project. The Notice will be placed in
• July 22, 2015, 5 p.m.–8 p.m.: Bayside High School, 4960 Haygood Road, Virginia Beach, VA
• July 23, 2015, 5 p.m.–8 p.m.: Holiday Inn Norfolk Airport, 1570 N. Military Highway, Norfolk, Virginia
The Public Scoping Meetings will be open house format with project information displayed and representatives from the FAA and the Airport available to answer questions. Written and oral comments will be accepted at each of the meetings. The public comment period on this Scoping phase of the EIS will end on August 3, 2015.
The purpose of the Scoping Process, as stated above, is to receive input from the public, as well as from Federal, state, and local agencies, that have legal jurisdiction and/or special expertise with respect to any potential environmental impacts associated with the proposed project. During this process, questions regarding the scope and process related to the EIS will be answered. More information about the sponsor's proposed project and the scoping meetings can be found at:
Comments should be addressed to the listed contact person, or by email to
Federal Highway Administration (FHWA), DOT.
Notice of limitations on claims for Judicial Reviews by FHWA.
This notice announces actions taken by FHWA and other Federal Agencies that are final in the meaning of 23 U.S.C. 139(l)(1). The actions relate to a proposed highway project corridor connecting Trunk Highway 169 and United States Highway 212 in the vicinity of Trunk Highway 41 in the Counties of Scott and Carver, State of Minnesota. The Federal decisions of a tiered environmental review process under the National Environmental Policy Act, 42 U.S.C. 4321–4351 (NEPA), and implementing regulations on tiering, 40 CFR 1502.20 and 40 CFR 1508.28, determined certain issues relating to the proposed action. Those Tier I decisions will be used by Federal agencies in subsequent proceedings, including decisions whether to grant licenses, permits, and approvals for highway project(s).
By this notice, FHWA is advising the public of the final agency actions subject to 23 U.S.C. 139(l)(1). A claim seeking judicial review of the Federal agency actions on the highway project will be barred unless the claim is filed on or before November 9, 2015. If the Federal law that authorizes judicial review of a claim provides a time period of less than 150 days for filing such a claim, then that shorter time period still applies.
For FHWA: Philip Forst, Environmental Specialist, FHWA, Minnesota Division, 380 Jackson Street, Suite 500, Saint Paul, MN 55101,
Notice is hereby given that FHWA has issued at Tier I Record of Decision (ROD) in connection with a proposed highway project in the State of Minnesota: Construction of a new Trunk Highway (TH) 41 Minnesota River crossing connecting Trunk Highway 169 and United States (US) Highway 212 in the vicinity of the existing Trunk Highway 41. A modified Alternative C–2 corridor was the selected alternative in the Tier I FEIS. The selected alternative is an approximately 3 mile long, 300-foot wide corridor to accommodate a new four-lane east-west regional freeway connection between US 169 and US 212 that will improve regional accessibility and alleviate traffic congestion. Approximately six corridor alternatives were evaluated in the Tier I process. The selected alternative is the only corridor build alternative to be carried forward into a future Tier II EIS.
The Tier I final Federal agency decisions, and the laws under which such actions were taken, are described in the Tier I Final Environmental Impact Statement (FEIS), approved on November 12, 2014, in the Record of Decision (ROD) issued on March 16, 2015, and in other documents in the project records. The FEIS, ROD, and other documents in the project file are available by contacting the Minnesota Division of the FHWA or the Minnesota Department of Transportation at the addresses provided above. The FEIS and ROD can be viewed on the project Web site at
This notice applies to all Federal agency decisions that are final in the meaning of 23 U.S.C. 139(l)(1) as of the issuance date of this notice and all laws under which such actions were taken, including but not limited to:
23 U.S.C. 139(l)(1).
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of renewal of exemption; request for comments.
FMCSA announces its decision to renew an exemption from the 30-minute rest break provision of the Agency's hours-of-service (HOS) regulations for commercial motor vehicle (CMV) drivers transporting livestock. The Agricultural and Food Transporters Conference (AFTC) of the American Trucking Associations (ATA) requested that the exemption, granted on behalf of several associations of agricultural transporters, be renewed to enable these drivers to continue to safeguard the health of certain livestock during long-haul deliveries by not having to take the rest break. The Agency has determined that it is appropriate to renew this exemption for a period of two years to ensure the well-being of the Nation's livestock during interstate transportation by CMV. The exemption, subject to the terms and conditions imposed, will likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent such exemption.
This exemption is effective June 12, 2015, through June 12, 2017. Comments must be received on or before July 13, 2015.
You may submit comments bearing the Federal Docket Management System (FDMS) Docket ID FMCSA–2013–0283 using any of the following methods:
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Each submission must include the Agency name and the docket number for this notice. Note that DOT posts all comments received without change to
Mr. Robert Schultz, Driver and Carrier Operations Division; Office of Carrier, Driver and Vehicle Safety Standards, FMCSA; Telephone: 202–366–2718. Email:
FMCSA has authority under 49 U.S.C. 31136(e) and 31315 to grant exemptions from the Federal Motor Carrier Safety Regulations. FMCSA must publish a notice of each exemption request in the
The Agency reviews the safety analyses and the public comments, and determines whether granting or renewal of the exemption would likely achieve a level of safety equivalent to, or greater than, the level that would be achieved by the current regulation (49 CFR 381.305). The decision of the Agency must be published in the
On December 27, 2011, FMCSA published a final rule amending its HOS regulations for drivers of property-carrying CMVs. The final rule included a provision requiring drivers to take a rest break during the workday under certain circumstances. Drivers may drive a CMV only if a period of 8 hours or less has passed since the end of their last off-duty or sleeper-berth period of at least 30 minutes. FMCSA did not specify when drivers must take the minimum 30-minute break, but the rule requires that they wait no longer than 8 hours after the last off-duty or sleeper-berth period of that length or longer to take the break. This new requirement, as amended by a subsequent decision of the United States Court of Appeals for the DC Circuit,
On June 19, 2013, the National Pork Producers Council (NPPC) on behalf of itself and 12 trade associations, including ATA's Agricultural and Food Transporters Conference, requested a limited two-year exemption from the rest-break requirement for drivers of CMVs engaged in the transportation of livestock. A copy of the request is included in the docket referenced at the beginning of this notice.
The NPPC stated that complying with the 30-minute rest break rule would cause livestock producers and their drivers irreparable harm, place the health and welfare of the livestock at risk, and provide no apparent benefit to public safety, while forcing the livestock industry and its drivers to choose
FMCSA analyzed the request and on June 11, 2014, granted, subject to specific terms and conditions, an exemption from the rest break requirement for drivers transporting livestock. The term of the exemption ends on June 11, 2015. The exemption period was limited to one year in order to gather additional data about the highway safety of operations under the exemption. Carriers utilizing the exemption were required to report any accidents, as defined in 49 CFR 390.5, to FMCSA. As of May 1, 2015, no accidents had been reported.
As of May 13, 2015, FMCSA's Motor Carrier Management Information System (MCMIS) listed 65,872 motor carriers that identified livestock as a type (though not necessarily the only type) of cargo they transport. These carriers operate 220,481 vehicles. The carriers employ 277,782 drivers, but approximately 145,000 drivers qualify as “short-haul” drivers and thus are exempt from the 30-minute break requirement. Therefore, fewer than 135,000 CMV drivers could utilize this exemption.
Data in the docket show that the temperature inside a stopped livestock trailer can rise rapidly during hot summer days, and can drop rapidly on winter days, especially in windy conditions. Substandard transportation of livestock elevates the risk that the food derived therefrom may be unsafe for human consumption. Industry guidelines describe stops of up to 30 minutes as problematic for many animals, even in favorable weather, and encourage drivers of livestock to keep the CMV moving “if at all possible.” Livestock drivers take breaks, but generally of much shorter duration than 30 minutes.
As noted below, carriers utilizing the exemption are required to report any accidents, as defined in 49 CFR 390.5, to FMCSA. Since the granting of this exemption on June 11, 2014, the FMCSA has not received any such reports.
In consideration of the above, FMCSA has determined that it is appropriate to renew this exemption from the 30-minute break requirement for a period of two years, subject to the following terms and conditions:
This exemption is limited to drivers engaged in the interstate transportation of livestock by CMV. The exemption from the 30-minute rest-break requirement is applicable during the transportation of livestock and does not cover the operation of the CMVs after the livestock are unloaded from the vehicle.
This exemption is only available to drivers transporting livestock as defined in the Emergency Livestock Feed Assistance Act of 1988, as amended (the 1988 Act) [7 U.S.C. 1471(2)]. The term “livestock” as used in this exemption means “cattle, elk, reindeer, bison, horses, deer, sheep, goats, swine, poultry (including egg-producing poultry), fish used for food, and other animals designated by the Secretary [of Agriculture] that (A) are part of a foundation herd (including dairy producing cattle) or offspring; or (B) are purchased as part of a normal operation and not to obtain additional benefits under [the 1988 Act].” The exemption is further limited to motor carriers that have a “satisfactory” safety rating or are “unrated”; motor carriers with “conditional” or “unsatisfactory” safety ratings are prohibited from utilizing this exemption.
Motor carriers must notify FMCSA by email addressed to
a. Name of the motor carrier and USDOT number,
b. Date of the accident,
c. City or town, and State, in which the accident occurred, or closest to the accident scene,
d. Driver's name and license number,
e. Vehicle number and state license number,
f. Number of individuals suffering physical injury,
g. Number of fatalities,
h. The police-reported cause of the accident,
i. Whether the driver was cited for violation of any traffic laws, motor carrier safety regulations, and
j. The total driving time and total on-duty time prior to the accident.
This exemption from the 30-minute break requirement [49 CFR 395.3(a)(3)(ii)] is effective during the period June 12, 2015, through June 12, 2017, unless withdrawn or restricted sooner.
FMCSA expects each motor carrier operating under the terms and conditions of this exemption to maintain its safety record. However, should safety deteriorate or credible and substantial public comment in opposition to the exemption be received, FMCSA will, consistent with the statutory requirements of 49 U.S.C. 31315, take all steps necessary to protect the public interest. Authorization of the exemption is discretionary, and FMCSA will immediately revoke the exemption of any motor carrier or driver for failure to comply with the terms and conditions of the exemption.
During the period the exemption is in effect, no State may enforce any law or regulation that conflicts with or is inconsistent with this exemption with respect to a person or entity operating under the exemption [49 U.S.C. 31315(d)].
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Notice of safety advisory.
FRA is issuing Safety Advisory 2015–03 to stress to passenger railroads and railroads that host passenger service and their employees the importance of compliance with Federal regulations and applicable railroad rules governing applicable passenger train speed limits. This safety advisory makes recommendations to these railroads to ensure that compliance with applicable passenger train speed limits is addressed by appropriate railroad operating policies and procedures and signal systems.
Ron Hynes, Director, Office of Safety Assurance and Compliance, Office of Railroad Safety, FRA, 1200 New Jersey
The overall safety of railroad operations has improved in recent years. However, two fatal passenger train accidents in the last 18 months in which serious overspeed events occurred highlight the need to ensure train speed limit compliance, as mandated by existing Federal railroad safety regulations and railroad operating rules.
On Tuesday, May 12, 2015, Amtrak passenger train 188 (Train 188) was traveling timetable east (northbound) from Washington, DC, to New York City. Aboard the train were five Amtrak crew members, three Amtrak employees, and 250 passengers. Train 188 consisted of a locomotive in the lead and seven passenger cars trailing. Shortly after 9:20 p.m., the train derailed while traveling through a curve at Frankford Junction in Philadelphia, Pennsylvania. As a result of the accident, eight persons were killed, and a significant number of persons were seriously injured.
The National Transportation Safety Board (NTSB) has taken the lead role conducting the investigation of this accident under its legal authority. 49 U.S.C. 1101
In response to the derailment, FRA issued Emergency Order No. 31 (EO 31; 80 FR 30534, May 28, 2015). EO 31 requires Amtrak to take the following actions to ensure the safe operation of passenger trains on the Northeast Corridor:
• Immediately implement code changes to Amtrak's Automatic Train Control (ATC) System to enforce the passenger train speed limit ahead of the curve at Frankford Junction in Philadelphia, Pennsylvania where the fatal derailment occurred.
• Survey its Northeast Corridor system and identify each main track curve where there is a reduction of more than 20 mph from the maximum authorized approach speed to that curve for passenger trains, and provide a list of each curve location to FRA within 5 days after EO 31 was issued.
• Submit an action plan for FRA approval within 20 days identifying modifications to its ATC System (or other signal systems) that Amtrak will make to enable warning and enforcement of applicable passenger train speeds at the identified curves. If such modifications would interfere with the timely implementation of a Positive Train Control (PTC) system or are not otherwise feasible, Amtrak's plan must describe alternative procedures that it will adopt at the identified curves to ensure compliance with applicable passenger train speed limits. Amtrak's plan must contain milestones and target dates for completion of action plan items.
• Within 30 days of issuance of the Order, Amtrak must begin to install additional wayside signage alerting engineers and conductors of the maximum authorized passenger train speed throughout its Northeast Corridor system, with particular emphasis on additional signage at the curve locations where significant speed reductions occur. Amtrak must identify the locations where it intends to install the additional wayside speed limit signs in its action plan, and must notify FRA when installation of the signs is completed.
In addition to the recent Amtrak passenger train derailment discussed above, in December 2013 a New York State Metropolitan Transportation Authority Metro-North Commuter Railroad Company (Metro-North) train derailed as it approached the Spuyten Duyvil Station in Bronx, New York. The train traveled over a straightaway with a maximum authorized passenger train speed of 70 mph before reaching a sharp curve in the track with a maximum authorized speed of 30 mph. NTSB's investigation of the Metro-North accident determined the train was traveling approximately 82 mph as it entered the curve's 30-mph speed restriction before derailing. That derailment resulted in four fatalities and at least 61 persons being injured. The Metro-North accident is similar to the recent Amtrak accident in that it involved a serious overspeed event in a sharp curve in the track. As a result of the derailment, FRA issued Emergency Order No. 29 (78 FR 75442, Dec. 11, 2013) requiring Metro-North to take certain actions to control passenger train speeds. FRA also issued Safety Advisory 2013–08, which recommended that all railroads in the United States:
(1) Review the circumstances of the December 1, 2013, Spuyten Duyvil derailment with each of their operating employees.
(2) Provide instruction to their employees during training classes and safety briefings on the importance of compliance with maximum authorized train speed limits and other speed restrictions. This training should include discussion of the railroad's absolute speed limits, speed restrictions based on physical characteristics, temporary speed restrictions, and any other restrictions commonly encountered.
(3) Remind their employees that Federal railroad safety regulation, at 49 CFR 240.305(a)(2) and 242.403(e)(2), prohibits the operation of a locomotive or train at a speed which exceeds the maximum authorized speed by at least 10 mph.
(4) Evaluate quarterly and 6-month reviews of operational testing data as required by 49 CFR 217.9. A railroad should consider increasing the frequency of operational testing where its reviews show any non-compliance with maximum authorized train speeds. A significant number of operational tests should be conducted on trains that are required to reduce speed by more than 20 mph from the maximum authorized train speed. Operational tests should use the reliable methods available, such as reviewing locomotive event recorder data and testing by radar to verify compliance with maximum authorized speeds.
(5) Reinforce the importance of communication between train crewmembers located in the controlling locomotive, particularly during safety critical periods when multiple tasks are occurring (
FRA recognizes that passenger rail transportation is generally extremely safe. However, these two recent accidents, which both involved overspeed events and resulted in numerous passenger fatalities, highlight the need to remain vigilant in ensuring employee compliance with operational speed limits and restrictions for passenger trains. As required by 49 U.S.C. 20157, railroads operating scheduled intercity and commuter passenger service in this country are required to implement PTC Systems by December 31, 2015. By statute a PTC system must be designed to prevent the type of overspeed events that occurred in the derailments discussed above, as well as train-to-train collisions, incursions into roadway work zone limits, and the movement of a train over a switch left in the wrong position. Amtrak has indicated that it intends to meet the statutory deadline to install PTC on the Northeast Corridor. FRA understands that other passenger railroads in this country have concerns about their ability to meet the December 31, 2015 deadline to install PTC. FRA intends to enforce the December 31, 2015 deadline to ensure that PTC is in use as quickly, safely, and efficiently as possible.
Until PTC is in use across the passenger railroad systems in this country, and due to the significant safety concerns presented by the two accidents described above, FRA believes all passenger railroads and railroads that host passenger service need to evaluate their systems and take immediate actions to prevent future catastrophic overspeed events from occurring.
Some railroads have ATC or cab signal systems
FRA will continue to focus on ensuring passenger railroad compliance with maximum authorized train speeds and relevant temporary and permanent speed restrictions in the coming months, including stepped up enforcement actions. These actions will include, but will not be limited to, on-board inspections, radar speed monitoring at locations of significant permanent or temporary speed restrictions, monitoring of railroad officers who conduct operational tests, and comprehensive reviews of a railroad's implementation of their operational tests and inspection program.
FRA strongly encourages railroads and other industry members to re-emphasize the importance of compliance with maximum authorized train speeds and any applicable speed restrictions, and to conduct operational testing at a level that will ensure compliance with all posted speed restrictions.
(1) Review and implement the recommendations made in FRA Safety Advisory 2013–08, which are discussed above.
(2) Review the circumstances of the fatal May 12, 2015, Philadelphia derailment with their operating employees.
(3) Survey their entire systems, or the portions on which passenger service is operated, and identify main track locations where there is a reduction of more than 20 mph from the approach speed to a curve or bridge and the maximum authorized operating speed for passenger trains at that curve or bridge (identified locations).
(4) If the railroad utilizes an ATC, cab signal, or other signal system capable of providing warning and enforcement of applicable passenger train speed limits, make modifications to those systems where appropriate to ensure compliance with applicable speed limits at the identified locations. If the railroad is required to implement PTC at the identified locations, implement these recommended signal system changes in the interim.
(5) If the railroad does not utilize an ATC, cab signal, or other signal system capable of providing warning and enforcement of applicable passenger train speed limits (or if a signal system modification would interfere with the implementation of PTC or is otherwise not viable) all passenger train movements at the identified locations be made with a second qualified crew member in the cab of the controlling locomotive, or with constant communication between the locomotive engineer and an additional qualified and designated crewmember in the body of the train. If the railroad is required to implement PTC at the identified locations, implement these recommended changes in the interim.
(6) Install additional wayside signage alerting engineers and conductors of the maximum authorized passenger train speed throughout the passenger railroad's system or the portions of its system in which passenger service is operated, with particular emphasis on additional signage at the identified locations.
FRA encourages all railroad industry members to take actions consistent with the preceding recommendations. FRA may modify this Safety Advisory 2015–03, issue additional safety advisories, or take other appropriate action necessary to ensure the highest level of safety on the Nation's railroads, including pursing other corrective measures under its rail safety authority.
The Cincinnati, New Orleans and Texas Pacific Railway Company (CNOTP), a wholly owned subsidiary of Norfolk Southern Railway Company, has filed a verified notice of exemption under 49 CFR pt. 1152 subpart F–
CNOTP originally filed its notice of exemption on January 15, 2015, and supplemented the filing on January 29, 2015. In its Notice, CNOTP had stated that “Further Board approval is required for CNOTP to abandon service on the Line.” In the supplement, CNOTP corrects that statement. CNOTP explains that the underlying track and structures on the Line are owned by the City of Cincinnati, Ohio through an instrumentality known as Cincinnati Southern Railway (CSR), not by CNOTP. CNOTP states that CSR is not, and has never been, a common carrier subject to the Board's regulations. CNOTP states that, following discontinuance, CSR, as owner of the track, has agreed to sell the track to KT Group, L.L.C., who intends to salvage the track, but not the ties.
Because the discontinuance is over track that is owned by an entity that is not subject to Board jurisdiction, CNOTP's discontinuance would allow CSR to salvage track without seeking further Board authority, including the preparation of environmental documentation. In light of these circumstances, on March 3, 2015, CNOTP filed a request to hold the proceeding in abeyance so that it could complete environmental and historic reports in connection with the discontinuance. In a decision served on March 9, 2015, the Board held in abeyance the publication of the notice in the
OEA served a draft Environmental Assessment (EA) on May 8, 2015. OEA solicited public comments, but no comments in response to the EA were received by the May 22, 2015 due date. OEA issued a Final EA on May 22, 2015. No environmental or historic preservation issues have been raised by any party or identified by OEA, and no environmental conditions have been recommended by OEA. The Board will issue a separate decision finding that the proposed transaction will not significantly affect either the quality of the human environment or the conservation of energy resources.
CNOTP has certified that: (1) No local traffic has moved over the Line for at least two years; (2) no overhead traffic has moved over the Line for at least two years, and if there were any, it could be rerouted over other lines; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line either is pending with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication) and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) to subsidize continued rail service has been received, this exemption will become effective on July 12, 2015, unless stayed pending reconsideration. Petitions to stay that do not involve environmental issues and formal expressions of intent to file an OFA to subsidize continued rail service under 49 CFR 1152.27(c)(2),
A copy of any petition filed with the Board should be sent to CNOTP's representative: William A. Mullins, Baker & Miller PLLC, 2401 Pennsylvania Ave. NW., Suite 300, Washington, DC 20037.
If the verified notice contains false or misleading information, the exemption is void
Board decisions and notices are available on our Web site at “
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Securities and Exchange Commission.
Proposed rule.
The Securities and Exchange Commission is proposing new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The Commission is proposing new Form N–PORT, which would require certain registered investment companies to report information about their monthly portfolio holdings to the Commission in a structured data format. In addition, the Commission is proposing amendments to Regulation S–X, which would require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The Commission is also proposing new rule 30e–3, which would permit but not require registered investment companies to transmit periodic reports to their shareholders by making the reports accessible on a Web site and satisfying certain other conditions. The Commission is proposing new Form N–CEN, which would require registered investment companies, other than face amount certificate companies, to annually report certain census-type information to the Commission in a structured data format. Finally, the Commission is proposing to rescind current Forms N–Q and N–SAR and to amend certain other rules and forms. Collectively, these amendments would, among other things, improve the information that the Commission receives from investment companies and assist the Commission, in its role as primary regulator of investment companies, to better fulfill its mission of protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation. Investors and other potential users could also utilize this information to help investors make more informed investment decisions.
Comments should be received on or before August 11, 2015.
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Use the Federal eRulemaking Portal (
• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the Commission's Web site. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Daniel K. Chang, Senior Counsel, J. Matthew DeLesDernier, Senior Counsel, Jacob D. Krawitz, Senior Counsel, Andrea Ottomanelli Magovern, Senior Counsel, Michael C. Pawluk, Branch Chief, or Sara Cortes, Senior Special Counsel, at (202) 551–6792, Investment Company Rulemaking Office, Alan Dupski, Assistant Chief Accountant, Chief Accountant's Office, at (202) 551–6918, Division of Investment Management, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–8549.
The Securities and Exchange Commission (the “Commission”) is proposing for comment new Form N–PORT [referenced in 17 CFR 274.150], new Form N–CEN [referenced in 17 CFR 274.101] under the Investment Company Act of 1940 [15 U.S.C. 80a–1
As the primary regulator of the asset management industry, the Commission relies on information included in reports filed by registered investment companies (“funds”)
Commission staff estimates that there were approximately 16,619 funds registered with the Commission, as of December 2014.
Form ADV is used by registered investment advisers to register with the Commission and with the states and by exempt reporting advisers to report information to the Commission. Information on Form ADV is available to the public through the Investment Adviser Public Disclosure System, which allows the public to access the most recent Form ADV filing made by an investment adviser and is available at
While these changes have been taking place in the fund industry, there has also been a significant increase in the use of the Internet as a tool for disseminating information and advances in the technology that can be used to report and analyze information. As discussed below, we have allowed the use of the Internet as a platform for providing required disclosure to investors. We have also started to use structured and interactive data formats to collect, aggregate, and analyze data reported by registrants and other filers. These data formats for information collection have enabled us and other data users, including investors and other industry participants, to better collect and analyze reported information and have improved our ability to carry out our regulatory functions.
We have historically acted to modernize our forms and the manner in which information is filed with the Commission and disclosed to the public in order to keep up with changes in the industry and technology. For example, in 1985, the Commission replaced five different reporting forms with Form N–SAR, which was designed to require reporting of data in a structured manner so that the Commission could construct a comprehensive database of information about the fund industry.
In 2009, we amended Form N–1A, the registration form for open-end funds, to enhance the information provided to investors by requiring these funds to include a summary of key information in the front of their prospectuses.
Also in 2009, the Commission sought to take advantage of new technology by adopting amendments requiring open-end funds to file their prospectus risk/return summaries in eXtensible Business Reporting Language (“XBRL”).
As these industry changes and technological advances have occurred over the years, we recognize a need to improve the type and format of the information that funds provide to us and to investors. We also recognize the need to improve the information that the Commission receives from funds in order to improve the Commission's monitoring of the fund industry in its role as the primary regulator of funds and investment advisers. As discussed below, today we are proposing a set of reporting and disclosure reforms designed to take advantage of the benefits of advanced technology and to modernize the fund reporting regime in order to help the Commission, investors, and other market participants better assess different fund products and to assist us in carrying out our mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Our proposed reforms seek to (1) increase the transparency of fund portfolios and investment practices both to the Commission and to investors, (2) take advantage of technological advances both in terms of the manner in which information is reported to the Commission and how it is provided to investors and other potential users, and (3) where appropriate, reduce duplicative or otherwise unnecessary reporting burdens on the industry.
We also note that in December 2014, the Financial Stability Oversight Council (“FSOC”) issued a notice requesting comment on aspects of the asset management industry, which includes, among other entities, registered investment companies.
Currently, management investment companies (other than small business investment companies (“SBICs”)) are required to report their complete portfolio holdings to the Commission on a quarterly basis.
As discussed in Parts II.A and II.B of this release, we propose to rescind Form N–Q and adopt a new portfolio holdings reporting form, Form N–PORT, which would be filed by all registered management investment companies and unit investment trusts (“UITs”) that operate as ETFs,
We believe that more timely and frequent reporting of portfolio holdings information, as well as the additional information we are proposing to require, would enable the Commission to further its mission to protect investors by assisting the Commission and Commission staff in carrying out its regulatory responsibilities related to the asset management industry. These responsibilities include its examination, enforcement, and monitoring of funds, the Commission's formulation of policy, and the staff's review of fund registration statements and disclosures.
While Form N–PORT is primarily designed to assist the Commission and Commission staff, we believe that information in Form N–PORT would be beneficial to investors and other potential users. In particular, we believe that both sophisticated institutional investors and third-party users that provide services to investors may find the information we propose to require on Form N–PORT useful. For example, Form N–PORT's structured format would allow the Commission, investors, and other potential users to better collect and analyze portfolio holdings information. The portfolio holdings information currently filed on Form N–Q, in contrast, is filed in a plain text or hypertext format, which often requires labor-intensive manual reformatting by Commission staff and other potential users in order to prepare the reported data for analysis. While we do not anticipate that many individual investors would analyze data using Form N–PORT, although some may, we believe that individual investors would benefit indirectly from the information collected on reports on Form N–PORT, through enhanced Commission monitoring and oversight of the fund industry and through analyses prepared by third-party service providers.
In addition, we are proposing amendments to Regulation S–X that would require standardized enhanced derivatives disclosures in fund financial statements, as well as other amendments. Currently, Regulation S–X does not prescribe specific information for most types of derivatives, including swaps, futures, and forwards. While we recognize that many fund groups provide disclosures regarding the terms
We believe our proposed amendments to Regulation S–X to enhance and standardize derivatives disclosures in financial statements would allow comparability among funds and help all investors better assess funds' use of derivatives. We are proposing to require reports on Form N–PORT to contain similar derivatives disclosures to facilitate analysis of derivatives investments across funds. Because Form N–PORT is not primarily designed for individual investors, the proposed amendments to Regulation S–X would require disclosures concerning the fund's investments in derivatives, as well as other disclosures related to liquidity and pricing of investments, in the financial statements that are provided to investors. We have endeavored to mitigate burdens on the industry by conforming the derivatives disclosures that would be required by both Regulation S–X and Form N–PORT.
Finally, we are also proposing a rule that would provide funds with an optional method to satisfy shareholder report transmission requirements by posting such reports online if they meet certain conditions. In order to rely on the rule, funds would be required to make the report and other required materials publicly accessible and free of charge at a Web site address specified in a notice to shareholders, and meet certain conditions relating to shareholder consent, and notice to shareholders of the Web site availability of shareholder reports and of the methods by which shareholders would be able to request a paper copy of the materials. This optional method is intended to modernize the manner in which periodic information is transmitted to shareholders, which we believe would improve the information's overall accessibility while reducing burdens such as the costs associated with printing and mailing shareholder reports.
Currently, the Commission collects census-type information on management investment companies and UITs on reports on Form N–SAR.
Accordingly, we are proposing to rescind Form N–SAR and replace it with Form N–CEN, a new form on which funds will report census-type information to the Commission. Form N–CEN would include many of the same data elements as Form N–SAR, but, in order to improve the quality and utility of information reported, would replace those items that are outdated or of limited usefulness with items that we believe to be of greater relevance today. Where possible, we are also proposing to eliminate items that are reported on other Commission forms, or are available elsewhere. In addition, we are proposing to require that reports on Form N–CEN be filed in a structured XML format, which, we believe, could reduce reporting burdens for current Form N–SAR filers and yield data that can be used more effectively by the Commission and other potential users. Finally, we are proposing that reports on new Form N–CEN be filed annually, rather than semi-annually as is required for reports on Form N–SAR by management companies, which would further reduce current burdens on funds.
As discussed above, we are proposing to create a new monthly portfolio reporting form, Form N–PORT. Our proposal would require registered management investment companies and ETFs organized as UITs, other than money market funds and SBICs, to electronically file with the Commission monthly portfolio investments information on new Form N–PORT in an XML format no later than 30 days after the close of each month.
As the primary regulator of the fund industry, the Commission relies on information that funds file with us, including their registration statements, shareholder reports, and various reporting forms such as Form N–SAR, Form N–CSR, and Form N–Q. The Commission and its staff use this information to understand trends in the fund industry and carry out regulatory responsibilities, including formulating policy and guidance, reviewing fund registration statements, and assessing and examining a fund's regulatory compliance with the federal securities laws and Commission rules thereunder.
Information on fund portfolios is currently filed with the Commission quarterly with up to a 70-day delay.
The information we are proposing to collect on Form N–PORT would be important to the Commission in analyzing and understanding the various risks in a particular fund, as well as risks across specific types of funds and the fund industry as a whole. These risks can include the investment risk that the fund is undertaking as part of its investment strategy, such as interest rate risk, credit risk, volatility risk, other market risks, or risks associated with specific types of investments, such as emerging market debt or commodities. Additionally, the information is helpful to understanding liquidity risks and counterparty risks, and determining whether a fund's exposure to price movements is leveraged, either through borrowings or the use of derivatives. We believe that information we are proposing to require on Form N–PORT will assist the Commission in better understanding each of these risks in the fund industry. We believe that the ability to understand the risks that funds face will help our staff better understand and monitor risks and trends in the fund industry as a whole, facilitating our informed regulation of the fund industry.
We also believe that information obtained from Form N–PORT filings would facilitate our oversight of funds and assist Commission staff in examination, enforcement, and monitoring, as well as in formulating policy and in its review of fund registration statements and disclosures. In this regard, we expect that Commission staff would use the data reported on Form N–PORT for many of the same purposes as Commission staff has used data reported on Form N–MFP by money market funds. The data received on Form N–MFP has been used extensively by Commission staff, including for purposes of assessing regulatory compliance, identifying funds for examination, and risk monitoring. Form N–MFP data has also informed Commission policy; for example, staff used Form N–MFP data in analyses that informed the Commission's considerations when it proposed and adopted money market fund reform rules in 2013 and 2014.
We recognize that, unlike money market funds, which as cash management vehicles generally share common investment objectives and strategies and thus invest in a relatively small number of common security types, other funds invest in a much more diverse manner. Accordingly, Form N–PORT, as proposed, would require reporting of additional information relative to Form N–MFP, in order to facilitate understanding and analysis of the investment strategies that funds pursue, as well as the large variety of securities, commodities, currencies, derivatives, and other investments that funds may invest in.
In addition to assisting the Commission in its regulatory functions, we believe that investors and other potential users could benefit from the periodic public disclosure of the information reported on Form N–PORT. Proposed Form N–PORT is primarily designed for use by the Commission and its staff, and not for disclosing information directly to individual investors. This is because the form's structured format, while needed for quantitative analysis within a fund and across funds, is not an easily human-readable format. Additionally, the information we are proposing to require on Form N–PORT is more voluminous than on a schedule of investments. We believe, however, that some investors, particularly institutional investors, could directly use the data from the information on proposed Form N–PORT for their own quantitative analysis of funds, including to better understand the funds' investment strategies and risks, and to better compare funds with similar strategies. Additionally, we believe that entities providing services to investors, such as investment advisers, broker-dealers, and entities that provide information and analysis for fund investors, could also utilize and analyze the information that would be required by proposed Form N–PORT to help all investors make more informed investment decisions. Accordingly, whether directly or through third parties, we believe that the periodic public disclosure of the information on proposed Form N–PORT could benefit all fund investors. As discussed further below, in order to mitigate the risk that the information on Form N–PORT could be used in ways that might ultimately result in investor harm, we are proposing to limit the public availability of Form N–PORT reports to those reports filed as of quarter end, as well as delay public availability of those reports by 60 days after quarter end.
We intend to increase transparency of fund investments through proposed Form N–PORT in several ways. First, N–PORT would improve reporting of fund derivative usage. As the Commission has previously noted, we have observed significant increases in the use of derivatives by funds, which have highlighted the need for more robust and standardized derivatives disclosures.
At the end of December 2014, alternative mutual funds had almost $200 billion in assets. Although alternative mutual funds only accounted for 1.19% of the mutual fund market as of December 2014, the almost $20.1 billion of inflows into these funds in 2014 represented 4.3% of the inflows for the entire mutual fund industry in that year. These statistics were obtained from staff analysis of Morningstar Direct data, and are based on fund categories as defined by Morningstar.
Furthermore, as discussed further below, proposed Form N–PORT would require funds to report certain risk metrics that would provide measurements of a fund's exposure to changes in interest rates, credit spreads and asset prices, whether through investments in debt securities or in derivatives. Financial statement information provides historical information over a particular time period (
Form N–PORT would also require information about certain fund activities such as securities lending, repurchase agreements, and reverse repurchase agreements, including information regarding the counterparties to which the fund is exposed in those transactions, as well as in over-the-counter derivatives transactions. Such information would increase transparency concerning these activities and would provide better information regarding counterparty information, which would be useful in assessing both individual and multiple fund exposures to a single counterparty.
Proposed Form N–PORT also requires information that would assist the Commission in assessing fund liquidity risk by, for example, requiring funds to provide information about the market liquidity and pricing of portfolio investments, as well as information regarding fund flows, which is helpful to understanding the liquidity pressures a fund might experience due to investor redemption activity.
Finally, as discussed further below, Form N–PORT would be filed electronically in a structured, XML format. This format would enhance the ability of the Commission, as well as investors and other potential users, to analyze portfolio data both on a fund-by-fund basis and also across funds. As a result, although we are proposing to collect certain information on Form N–PORT that may be similarly disclosed or reported elsewhere (
Our proposal would require a report on Form N–PORT to be filed by each registered management investment company and each ETF organized as a UIT.
As indicated above, our proposal would require all ETFs to file reports on Form N–PORT, regardless of their form of organization. Although most ETFs today are structured as open-end management investment companies, there are several ETFs that are organized as UITs.
We request comment on the entities that would be required to file reports on Form N–PORT.
• Should any funds that we are proposing to require to file reports on Form N–PORT not be required to do so? If so, what types of funds?
• Should we require SBICs to file reports on Form N–PORT? How useful would the information reported on Form N–PORT be for investors?
• Our proposal would allow investors in different types of ETFs to compare their portfolio investments by means of identical disclosures on reports on Form N–PORT, regardless of whether an ETF was organized as an open-end management investment company or as a UIT. Should ETFs organized as UITs not be required to file reports on Form N–PORT? If so, why?
Form N–PORT would require a fund to report certain information about the fund and the fund's portfolio investments as of the close of the preceding month, including: (a) General information about the fund; (b) assets and liabilities; (c) certain portfolio-level metrics, including certain risk metrics; (d) information regarding securities lending counterparties; (e) information regarding monthly returns; (f) flow information; (g) certain information regarding each investment in the portfolio; (h) miscellaneous securities (if any); (i) explanatory notes (if any), and (j) exhibits. Each of these is discussed in more detail below.
Part A of Form N–PORT would require general identifying information about the fund, including the name of the registrant, name of the series, and relevant file numbers.
Additionally, we are proposing that funds provide the Legal Entity Identifier (“LEI”) number of the registrant and series.
Commenters to the FSOC Notice expressed support for regulatory acceptance of LEI identifiers.
Form N–PORT would also include general filing and reporting instructions, as well as definitions of specific terms referenced in the form.
We seek comment on these proposed disclosures and instructions.
• Is there any additional or alternative information that should be required to facilitate identification of funds and analysis of the reported information with information from other filings or otherwise available elsewhere?
• Should the Commission require funds to obtain LEIs? Is it appropriate for the Commission to require LEIs, which are only available through the global LEI system? Why or why not? In the case of funds that have not obtained an LEI, will those funds seek to obtain an LEI in the future absent any regulatory requirement to do so? In addition to the fees for obtaining and maintaining an LEI, would there be other costs associated with funds obtaining LEIs?
• Are there any instructions or definitions that should be revised? If so, how? Should any instructions or definitions be added to provide additional clarity, or deleted to avoid confusion with conflicting instructions, definitions, or industry practices?
Part B of proposed Form N–PORT would seek certain portfolio level information about the fund. Part B would include questions requiring funds to report their total assets, total liabilities, and net assets.
Funds would also report any assets invested in a controlled foreign corporation for the purpose of investing in certain types of investments (“controlled foreign corporation” or “CFC”).
Second, we are proposing to require that funds report the amount of certain liabilities, in particular: (1) Borrowings attributable to amounts payable for notes payable, bonds, and similar debt, as reported pursuant to rule 6–04(13)(a) of Regulation S–X [17 CFR 210.6–04(13)(a)]; (2) payables for investments purchased either (i) on a delayed delivery, when-delivered, or other firm commitment basis, or (ii) on a standby commitment basis; and (3) liquidation preference of outstanding preferred stock issued by the fund.
We request comment on the reporting of assets and liabilities proposed on Form N–PORT.
• As discussed above, our proposal would require funds to disclose each underlying investment in a CFC. Should we consider modifying the information we propose to require, or require additional information? How commonly do funds invest in CFCs that in turn invest their assets in underlying investments? Should we provide instructions to clarify how funds should report investments in this situation? If so, should the Commission permit funds to disclose only the ultimate underlying investments, or should the Commission require disclosure of each layer of investment?
• Are there other methods of reporting the assets (including assets in CFCs) and liabilities described above that we should consider?
• Are there other assets and liabilities that funds should be required to separately report? If so, why? For example, should the Commission require funds to separately break out categories of assets and liabilities similar to what is currently required by Form N–SAR?
One of the purposes of Form N–PORT is to provide the Commission with information regarding fund portfolios to help us better monitor trends in the fund industry, including investment strategies funds are pursuing, the investment risks that funds undertake, and how different funds might be affected by changes in market conditions. As discussed above, the Commission uses information from fund filings, including a fund's registration statement and reports on Form N–CSR (which includes the fund's shareholder report) and Form N–Q, to inform its understanding and regulation of the fund industry. Additionally our staff reviews fund disclosures—including registration statements, shareholder reports, and other documents—both on an ongoing basis as well as retroactively every three years.
The disclosures in a fund's registration statement about its investment objective, investment strategies, and risks of investing in the fund, as well as the fund's financial statements, are fundamental to understanding a fund's implementation of its investment strategies and the risks in the fund. However, the financial statements and narrative disclosures in fund registration statements and shareholder reports do not always provide a complete picture of a fund's exposure to changes in asset prices, particularly as fund strategies and fund investments become more complex. The financial statements, including a fund's schedule of portfolio investments, provide data regarding investments' values as of the end of the reporting period—a “snapshot” of data at a particular point in time—or, in the case of the statement of operations, for example, historical data over a specified time period. By contrast, based on staff experience and outreach to funds, we understand that funds commonly internally use multiple risk metrics that provide calculations that measure the change in the value of fund investments assuming a specified change in the value of underlying assets or, in the case of debt instruments and derivatives that provide exposure to interest rates and debt instruments, changes in interest rates or in credit spreads above the risk-free rate.
Accordingly, we believe it is appropriate to propose requiring funds to report quantitative measurements of certain risk metrics that would provide information beyond the narrative, often qualitative disclosures about investment strategies and risks in the fund's registration statement, as well as a fund's historical financial statement disclosures. Monthly reporting on these risk measures, in particular, would help provide the Commission with more current information on how funds are implementing their investment strategies through particular exposures. Receiving this information on a monthly basis could help the Commission, for example, more efficiently analyze the potential effects of a market event on funds.
Specifically, we are proposing to require certain funds to provide portfolio level measures on Form N–PORT that will help Commission staff better understand and monitor funds' exposures to changes in interest rates and credit spreads across the yield curve. As discussed in Part II.A.2.g below, we are also proposing to require risk measures at the investment level for options and convertible bonds. We believe that the staff can use these measures, for example, to determine whether additional guidance or policy measures are appropriate to improve disclosures in order to help investors better understand how changes in interest rate or credit spreads might affect their investment in a fund.
Additionally, as we discussed above, we believe that institutional investors, as well as entities that provide services to both institutional and individual investors, would be able to use these risk metrics to conduct their own analyses in order to help them better understand fund composition, investment strategy, and interest rate
In particular, for funds that invest in debt instruments, or in derivatives that provide exposure to debt or debt instruments, we believe it is important for the Commission staff, investors, and other potential users to have measures that would help them analyze how portfolio values might change in response to changes in interest rates or credit spreads.
We are proposing to limit this requirement to funds that invest in debt instruments or derivatives that provide exposure to debt instruments or interest rates that represent at least 20% of the fund's notional value as of the reporting date.
The delta-adjusted notional value of options is needed to have an accurate measurement of the exposure that the option creates to the underlying reference asset.
For duration, we are proposing to require that a fund calculate the change in value in the fund's portfolio from a 1 basis point change in interest rates (commonly known as DV01) for each applicable key rate along the risk-free interest rate curve,
We believe that requiring funds to provide further detail about their exposures to interest rate changes along the risk-free rate curve would provide the Commission with a better understanding of the risk profiles of funds with different strategies for achieving debt exposures. For example, funds targeting an effective duration of five years could achieve that objective in different ways—one fund could invest predominantly in intermediate-term debt; another fund could create a long position in longer-term bonds, matched with a short position in shorter-term bonds. While both funds would have an intermediate-term duration, the risk profiles of these two funds, that is, their exposures to changes in long-term and short-term interest rates, are different. Having the proposed DV01 calculations along the risk-free interest rate curve would clarify this difference. The Commission staff could use this information to better understand how funds are achieving their exposures to interest rates, and use this information to perform analysis across funds with similar strategies to identify outliers for potential further inquiry, as appropriate.
Additionally, we are proposing to require that the same funds provide a measure of spread duration (commonly known as SDV01) at the portfolio level for each of the same maturities listed above, aggregated by non-investment grade and investment grade exposures.
In determining the methodology for the proposed measures of duration and spread duration, staff engaged in outreach to asset managers and risk service providers that provide risk management and other services to asset managers and institutional investors. The methodology proposed is both based on staff experience in using duration and spread duration, as well as this outreach to better understand common fund practices for calculating such measures. The Commission recognizes that particular funds might currently vary their methodology for calculating duration and spread duration by, for example, only providing a single measure of duration or spread duration or by only reporting key rate durations for particular maturities. Based on staff experience and outreach, the Commission believes that the proposed methodologies for reporting duration and spread duration will allow for better comparability across funds.
Also, based on outreach, Commission staff believes that service providers that provide risk management services to funds generally use a “bottom up” approach to calculating duration and spread duration, meaning that such measures are first calculated at the position level and then aggregated at the portfolio level. Accordingly, we believe that providing the specific methodology for aggregation of duration and spread duration would not significantly increase the burden of calculating such metrics by funds, even if funds analyze such measures at the portfolio level using a methodology different from what we are proposing. As discussed below, however, we request comment on the proposed methodologies, including whether such methodologies should be modified.
For both duration and spread duration, we are proposing to require that funds provide the change in value in the fund's portfolio from a 1 basis point change in interest rates or credit spreads, rather than a larger change, such as 5 basis points or 25 basis points. Based on staff's outreach, we believe that a 1 basis point change is the methodology that many funds currently use to calculate these risk measures at the position level for internal risk monitoring and would provide sufficient information to assist the Commission in analyzing fund exposures to changes in interest rate or credit spreads. We believe that requiring funds to calculate such measures based on a larger basis point change could require more customized calculations, and therefore increase costs to funds, relative to the approach proposed. We request comment on this aspect of the proposed methodology.
While the Commission is proposing that funds provide a calculation of each of these measures at a portfolio level, the Commission has considered whether to propose, instead, that funds report these risk metrics for each debt instrument or derivative that has an interest rate or credit exposure. This would provide more precise data for analysis of various movements in interest rates and credit spreads. Additionally, as discussed above, the Commission believes that most funds currently calculate these risk metrics at a position level; however, we recognize that even if such calculations are available at a position level, reporting these metrics could cause funds to make additional systems changes to collect such position-level data for reporting, as well as potential burdens related to increased review time and quality control in submitting the reports. Based on staff's outreach and staff's experience, the Commission believes that requiring funds to provide this information for each maturity at the portfolio level would provide a sufficient level of granularity for purposes of Commission staff analysis. Finally, we believe that there would be certain efficiencies for the Commission, investors, and other potential users to having funds report the portfolio-level calculations relative to reporting position-level calculations, as this could allow for more timely and efficient analysis of the data by not requiring the Commission or other potential users to calculate the portfolio-level measures from the position-level measures. We request comment below on the relative burdens and benefits of providing portfolio level and position level data.
The Commission also considered whether to require funds to report a portfolio level measure (or, for the same reasons discussed immediately above in connection with how risk measures are calculated, position level measures) for convexity, which facilitates more precise measurement of the change in a bond price with larger changes in interest rates.
We request comment on the proposed requirements to provide risk measures at the portfolio level.
• We are proposing a 20% threshold because, based on staff experience, we believe that this would require funds that use debt and exposure to debt or interest rate changes as part of their investment strategy to provide those metrics, while providing a minimum threshold so that funds that invest in debt for cash management or other purposes unrelated to implementing their investment strategy would not be required to collect, calculate, or report such data. Given this objective, is 20% the appropriate threshold for determining which funds must provide these risk metrics? Should this threshold be lower, such as 5% or 10% or higher, such as 30% or 35%? Are there alternative methodologies that the Commission should consider for determining which funds should be required to provide this information? Should we, instead, base the threshold directly on the net asset value (“NAV”) of the fund's debt securities and interest rate investments, rather than the fund's notional exposure to debt securities or interest rates as a percentage of the fund's NAV?
• We are proposing to require reporting information on DV01 and SDV01 at the portfolio level because we believe that this can provide the
• To what extent would the values reported for these risk metrics be affected by the inputs and assumptions underlying the methodologies by which funds would calculate these metrics, including assumptions regarding the valuation of the investments or underlying securities of investments, particularly for investments that have pre-payment options, such as mortgage-backed securities? Specifically, how would the comparability of information reported by different funds be affected if funds used different inputs and assumptions in their methodologies? Do funds have concerns regarding reporting measures that include such assumptions, such as proprietary or liability concerns? Are there ways the Commission could improve the standardization of the calculation of these risk metrics? If so, how?
• To the extent that funds are calculating such measures using a methodology other than what the Commission is proposing, what would the associated costs and other burdens be for funds to calculate and report these measures according to a different methodology than that typically used by the fund?
• Are there any alternatives or modifications to the methodologies that the Commission is proposing that the Commission should consider?
• Should we provide a
To increase the rate of return on their portfolios, some funds engage in securities lending activities whereby a fund lends certain of its portfolio securities to other financial institutions such as broker-dealers. In return for the security lent, funds receive collateral and sometimes a fee. To protect the fund from the risk of borrower default, the borrower generally posts collateral with the fund in an amount at least equal to the value of the borrowed securities, and this amount of collateral is adjusted daily as the value of the borrowed securities is marked to market.
The fund's income from these activities may come from fees paid by the borrowers to the fund and/or from the reinvestment of collateral. Many funds engage an external service provider—commonly called a “securities lending agent”—to administer the securities lending program. The securities lending agent is typically compensated by being paid a share of the fund's securities lending revenue after the counterparty has been paid any rebate due to it.
Securities lending implicates certain provisions of the Investment Company Act, and funds that engage in securities lending do so in reliance on Commission staff no-action letters, and in some circumstances, exemptive orders.
Currently, the information that funds are required to report about securities lending activity, whether in a structured format or otherwise, is limited. For example, funds disclose on Form N–SAR whether they are permitted under their investment policies to, and whether they did engage during the reporting period in, securities lending activities.
To address these data gaps and provide additional information to the Commission, investors, and other potential users regarding a fund's securities lending activities, we are proposing that funds report certain counterparty information and position-level information monthly on Form N–PORT.
Our proposals today are intended, in part, to increase the transparency of information available related to the lending and borrowing of securities with respect to funds as a subset of the universe of market participants engaged in securities lending activities.
While we believe there is value to having information concerning securities lending counterparties to monitor risk, as well as to monitor compliance with conditions set forth in staff no-action letters and exemptive orders,
We request comment on the portfolio level securities lending information requirements we are proposing.
• As discussed above, Form N–PORT would require funds to disclose the aggregate value of all securities on loan to each securities lending counterparty and the name and LEI (if any) of the counterparty. Should we instead require funds to report this information on a loan-by-loan or security-by-security basis? To what extent, if any, would such information be used by investors and other potential users? What, if any, additional issues would funds face in tracking and reporting such information on a loan-by-loan or security-by-security basis? Do funds currently track or have the ability to readily determine their counterparty exposure on a loan-by-loan or security-by-security basis? If securities lending counterparty information should be reported on a loan-by-loan or security-by-security basis, is there any additional or alternative information we should require funds to report, such as the rebate or compensation to the securities lending agent?
• Instead of requiring funds to report the aggregate value of all securities on loan to each securities lending counterparty, should we limit such disclosures to counterparties to which the fund has the greatest exposure, such as the top five or top ten counterparties?
• Alternately, or in addition, should the Commission request information regarding other types of counterparty exposures? For example, should the Commission require funds to report counterparty exposures based on the amount of unsettled trades with each counterparty? If so, should such information be reported in terms of aggregate or net exposure, and why?
We are proposing to require funds to provide monthly total returns for each of the preceding three months.
We are proposing to require this information on Form N–PORT because we believe it would be useful to have such information in a structured format to facilitate comparisons across funds. For example, analysis of return information over time among similar funds could reveal outliers that might merit further inquiry by Commission staff. Additionally, performance that appears to be inconsistent with a fund's investment strategy or other benchmarks
Because only quarter-end reports on Form N–PORT would be made public, we are proposing that funds provide return information for each of the preceding three months.
We are also proposing that funds report, for each of the preceding three months, monthly net realized gain (or loss) and net change in unrealized appreciation (or depreciation) attributable to derivatives for each of the following categories: Commodity contracts, credit contracts, equity contracts, foreign exchange contracts, interest rate contracts, and other derivatives contracts.
We request comment on the return information we are proposing in Form N–PORT.
• Should the Commission consider, as an alternative, requiring funds to provide monthly return information annually on Form N–CEN, rather than on Form N–PORT? Would this significantly reduce the burden of reporting such information?
• We are proposing to require that funds report three months of returns so that investors and other potential users, who would only observe reports on Form N–PORT on a quarterly basis, would still receive return data for each month of the year. Do commenters agree that such disclosure of monthly returns would be helpful to investors? Are there preferable alternatives for providing such information to investors? Are there potential negative consequences of reporting monthly returns? For example, could the availability of this information cause investors to emphasize short-term returns?
• We request comment on alternative requirements for fund reporting of return information. For example, the Commission requests comment on whether to require reporting by funds of gross returns. Would gross information, with or without accompanying fee information for each class, be confusing for investors? If so, are there ways to mitigate the risk of investor confusion? Instead of requiring reporting of returns for all classes, should the Commission, for example, require funds to report return information for a single class, such as the class with the highest expense ratio or the largest share class in terms of assets under management? What would be the relative benefits and burdens of only requiring disclosure of a single class?
• Are there alternative methods that the Commission should consider for requiring funds to report the effect of derivatives on the return of the fund? For example, should the Commission require that funds report the monthly net realized gain or loss and net change in unrealized appreciation or depreciation attributable to derivatives by type of derivative (
Form N–PORT would require funds to separately report, for each of the preceding three months, the total net asset value of: (1) Shares sold (including exchanges but excluding reinvestment of dividends and distributions); (2) shares sold in connection with reinvestments of dividends and distributions; and (3) shares redeemed or repurchased (including exchanges).
We believe that having flow information reported to us monthly will help us better monitor trends in the fund industry. For example, it could help us analyze types of funds that are becoming more popular among investors and areas of high growth in the industry. It could help us better examine investor behavior in response to market events. Finally, in combination with other information reported on Form N–PORT regarding liquidity of fund positions, it could also help us identify funds that might be at risk of experiencing liquidity stress due to increased redemptions.
• What would be the costs and burdens of providing flow information on a monthly basis on Form N–PORT? Should the Commission consider, as an alternative, requiring funds to provide monthly flow information annually on Form N–CEN, rather than on Form N–PORT?
• To what extent would the usefulness of the flow information be
• Form N–SAR currently also requires funds to report flow information related to “other” shares sold (
• Should we require that flow information be reported as to each class of the fund? Would such additional information be helpful to investors and other potential users? What would be the burdens to funds with multiple classes of reporting such information?
Part C of proposed Form N–PORT would require funds to report certain information on an investment-by-investment basis about each investment held by the fund and its consolidated subsidiaries as of the close of the preceding month. Funds would respond to certain questions that would apply to all investments (
Funds would have the option of identifying any investments that are “miscellaneous securities.”
Proposed Form N–PORT would require funds to report certain basic information about each investment. In particular, funds would report the name of the issuer and title of issue or description of the investment, as they are currently required to do on their reported schedules of investments.
To facilitate analysis of fund portfolios, it is important for Commission staff to be able to identify individual portfolio securities, as well as the reference instruments of derivative investments through the use of an identifying code or number, which is not currently required to be reported on the schedule of investments. Fund shareholders and potential investors that are analyzing fund portfolios or investments across funds could similarly benefit from the clear identification of a fund's portfolio securities across funds. The staff has found that some securities reported by funds lack a securities identifier, and this absence has reduced the usefulness of other information reported.
To address this issue, we propose to require that funds report additional information about the issuer and the security. Funds would report certain securities identifiers, if available.
We also propose to require funds to report the amount of each investment as of the end of the reporting period, as is currently required under Regulation S–X.
Our proposal would also require funds to report the payoff profile of the investment, indicating whether the investment is held long, short, or N/A, which would serve the same purpose as the current requirement in Regulation S–X to disclose investments sold short.
Funds would also report the asset type for the investment: Short-term investment vehicle (
Our proposal would also require funds to report, for each investment, whether the investment is a restricted security and whether the investment is an illiquid asset.
Form N–PORT would define “illiquid asset” as “an asset that cannot be sold or disposed of by the Fund in the ordinary course of business within seven calendar days, at approximately the value ascribed to it by the Fund.”
Each fund would also report whether the investment is categorized by the fund as a Level 1, Level 2, or Level 3 fair value measurement in the fair value hierarchy under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).
Form N–PORT would also require funds to report the country that corresponds to the country of investment or issuer based on the concentrations of the risk and economic exposure of the investment. Additionally, funds would be required to report the country in which the issuer is organized if that is different from the country of risk and economic exposure.
These disclosures would provide the Commission staff and investors with more information about country-specific exposures associated with the fund's investments. Specifically, the Commission believes that providing both the country based on concentrations of risk and economic exposure and also the country in which the issuer is organized would assist the Commission, investors, and other potential users in understanding the country-specific risks associated with such investments. For example, knowing the country of risk and economic exposure is important for understanding the effect of such investments in a portfolio when that country might be going through times of economic or political stress, regardless of whether the investment is issued in a different country. Knowing the country in which the issuer is organized would be important information for analyzing the effect of any events that could affect the country in which the issuer is organized, such as sanctions or monetary controls, as this could affect the ability of the fund to liquidate the investment.
We request comment on our proposed disclosure requirements.
• Our proposal would require funds to report certain identifiers for their investments. Should the Commission include additional specific identifiers in Form N–PORT, such as the Financial Instrumental Global Identifier (“FIGI”) or other similar identifier, if available?
• We request comment on our proposal to require funds to provide other unique identifiers for investments that do not have ISIN or ticker identifiers. Should the Commission require, in certain circumstances, specific identifiers to be reported as other unique identifiers? For example, in the case of security-based swaps, should the Commission require funds to report unique product identifiers?
• How, if at all, should we modify our proposed disclosures for the amount of each investment at the end of the reporting period (as well as the currency in which it is denominated)? Likewise, should we modify our proposed disclosures for the payoff profile of each investment and the restricted/illiquid nature of securities? If so, why?
• Would our proposed asset and issuer categories allow funds to readily categorize the investments typically held in fund portfolios? Should we include additional or alternative categories, and if so why? For example, are there any specific asset subcategories with sufficiently unique features as to warrant their own asset category? To the extent that funds currently are not categorizing their investments as proposed in Form N–PORT, what costs would be associated with providing such information?
• Should any of these disclosures be aggregated and reported on a portfolio
• We request comment on the incremental burden of reporting this information for each investment held by the fund, relative to the current burden of reporting the total value of each class of investments categorized in each level of the fair value hierarchy, as currently required by U.S. GAAP. Are there other ways in which a fund could identify and disclose investments that do not have readily available market quotations or observable inputs as an alternative to disclosing each investment's categorization as a Level 1, Level 2, or Level 3 measurement?
• Are there additional items that should be included on Form N–PORT in order to improve the transparency regarding the liquidity and valuation of investments? For example, should the Commission require additional disclosure regarding the fund's valuation of its investments, such as the primary pricing source used (
• Should the Commission require funds to report both the country in which the issuer is organized and also the country with the greatest concentrations of risk and economic exposure of the investments? What is the burden of reporting both elements, if different? Should the Commission provide specific guidance or instructions for determining the country with the greatest concentration of risks and economic exposure? Should funds have the option of reporting more than one country of economic risk, or a geographic region of economic risk?
• Should funds not be required to report country codes for U.S. investments? Would such an exclusion result in reduced burdens for funds that held only domestic securities? On the other hand, would such an exclusion result in investor confusion or complicate data validation efforts, by, for example, rendering it unclear whether an investment with N/A reported for its country code was a U.S. investment or was instead a foreign investment for which a country code had not been properly reported?
In addition to the information required above, Form N–PORT would require additional information about each debt security held by the fund in order to gain transparency into the payment flows and convertibility into equity of such investments, as such information can be used to better understand the payoff profile and credit risk of these investments. First, funds would report the maturity date and coupon (reporting annualized rate and indicating whether fixed, floating, variable, or none).
Finally, we are proposing to require additional information for convertible securities, to indicate whether the conversion is mandatory or contingent.
We request comment on our proposed disclosure requirements for debt securities.
• Are there additional or alternative characteristics of debt securities that we should require to be disclosed to assist the Commission, investors, or other potential users in understanding the nature and risks of a fund's debt security investments? For example, would disclosure of which debt securities are guaranteed, the nature of such guarantee (
• We request comment on our proposed disclosure requirements for convertible securities. With regard to the delta, to what extent would the inputs and assumptions underlying the methodology by which funds calculate price changes affect the values reported? Are there liability or other concerns associated with the reporting of such measures with such inputs and assumptions? How would the comparability of information reported between funds be affected if funds used different inputs and assumptions in calculating delta, such as different assumptions regarding the values of the funds' portfolios? Are there ways the Commission could improve the standardization of the calculation of delta? If so, how? What would the associated costs and other burdens be for funds to calculate and report these measures according to a different methodology than that typically used by the fund?
In addition to the information required above for all investments, Form N–PORT would require each fund to report additional information for each repurchase and reverse repurchase agreement held by the fund. The fund would report the category that reflects the transaction from the perspective of the fund (repurchase, reverse repurchase), whether the transaction is cleared by a central counterparty—and if so the name of the central counterparty—or if not the name and LEI (if any) of the over-the-counter counterparty, repurchase rate, whether the repurchase agreement is tri-party (to distinguish from bilateral transactions), and the maturity date.
These disclosures would enhance the information currently reported regarding funds' use of repurchase agreements and reverse repurchase agreements. Information regarding repurchase agreements would be comparable to similar disclosures currently required to be made by money market funds on Form N–MFP. The categories used for reporting collateral would track the categories currently used to report tri-party repurchase agreement information to the Federal Reserve Bank of New York. We believe that conforming the categories that would be used in Form N–PORT to categories used in other reporting contexts would ease reporting burdens and enhance comparability.
We request comment on our proposed disclosure requirements above.
• As discussed above, the reporting requirements contained in Form N–PORT would be comparable to similar disclosures currently required to be made by money market funds on Form N–MFP concerning repurchase agreements. Should we collect different or additional information? For example, should the proposed reporting requirements be revised to encompass characteristics of bilateral repurchase and reverse repurchase agreements, which are not typically held by money market funds but we understand are more commonly held by funds that would be reporting on Form N–PORT? If so, how? Should the categories used for reporting collateral, which as proposed would track the categories currently used to report tri-party repurchase agreement information to the Federal Reserve Bank of New York, be revised? If so, how and why?
• We believe that funds already track the characteristics of their repurchase and reverse repurchase agreements that we would require to be reported on Form N–PORT. To the extent this is true, what would be the incremental cost and burden of reporting such information to the Commission?
• Are there additional or alternative disclosures that we should require to be reported to assist investors in understanding counterparty and other risks associated with the fund's repurchase and reverse repurchase agreements?
As discussed above, the current reporting regime for derivatives has led to inconsistent approaches to reporting derivatives information and, in some cases, insufficient information concerning the terms and underlying reference assets of derivatives to allow the Commission or investors to understand the investment. Additionally, as discussed further below, for options, the Commission believes that it would be important to have a measurement of “delta,” a measure not reported in the financial statements or schedule of investments, to better understand the exposure to the underlying reference asset that the options produce in the portfolio. Currently, the Commission and investors are sometimes unable to accurately assess funds' derivatives investments and the exposures they create, which can be important to understanding funds' investment strategies, use of leverage, and risk of loss. Our proposal is intended to increase transparency into funds' derivatives investments by requiring funds to disclose certain characteristics and terms of derivative contracts that are important to understand the payoff profile of a fund's investment in such contracts, as well as the exposures they create or hedge in the fund. This would include, for example, exposures to currency fluctuations, interest rate shifts, prices of the underlying reference asset, and counterparty credit risk. As discussed further below, we are also amending Regulation S–X to make similar changes to the reporting regime for derivatives disclosures in fund financial statements.
Consequently, in addition to the information required above for all investments, Form N–PORT would require additional information about each derivative contract in the fund's portfolio. Funds would report the category of derivative that most closely represents the investment (
Form N–PORT would also require funds to report terms and conditions of each derivative investment that are important to understanding the payoff profile of the derivative.
We recognize that some derivatives have underlying assets that are indices of securities or other assets or a “custom basket” of assets, the components of which are not publicly available. We are proposing requirements to ensure that the Commission, investors, and other potential users are aware of the components of such indices or custom baskets. If the reference instrument is an index for which the components are publicly available on a Web site and are updated on that Web site no less frequently than quarterly, funds would identify the index and provide the index identifier, if any.
We are proposing this requirement because we believe that it is important for the Commission, investors, and other potential users to have transparency into all exposures to assets that the fund has, regardless of whether the fund directly holds investments in those assets or chooses to create those exposures through a derivatives contract.
If the reference instrument is a derivative, funds would indicate the category of derivative (
We are also proposing to require funds to report the delta of the option, which is the ratio of the change in the value of the option to the change in the value of the reference instrument.
For futures and forwards (other than foreign exchange forwards, which share similarities with foreign exchange swaps and should be reported accordingly as discussed below), Form N–PORT would require funds to report a description of the reference instrument, the payoff profile (
For foreign exchange forwards and swaps, funds would report the amount and description of currency sold, amount and description of currency purchased, settlement date, and unrealized appreciation or depreciation.
For swaps (other than foreign exchange swaps), funds would report the description and terms of payments necessary for a user of financial information to understand the nature and terms of payments to be paid and received, including, as applicable: a description of the reference instrument, obligation, or index; financing rate to be paid or received; floating or fixed rates to be paid and received; and payment frequency.
Finally, for derivatives that do not fall into the categories enumerated in Form N–PORT, funds would provide a description of information sufficient for a user of financial information to understand the nature and terms of the investment. This description would include, as applicable, currency, payment terms, payment rates, call or put features, exercise price, and a description of the reference instrument, among other things.
We request comment on our proposed disclosure requirements for derivatives.
• Is there additional or alternative information about derivative contracts that we should be requiring? Should we modify the information we are proposing to require for any derivatives contracts? Should other terms and conditions, categories of derivatives, payoff profiles, or identifiers be included in Form N–PORT so that all material elements of derivatives contracts can be reported?
• For options, should funds be required to identify the option exercise type (
• We recently adopted Regulation SBSR, which will require one of the parties to security-based swap transactions to report certain information to registered security-based swaps data repositories or the Commission.
• Proposed Form N–PORT would require funds to list all underlying reference assets unless the underlying reference asset is an index whose components are publicly available on a Web site and are updated on that Web site no less frequently than quarterly, in which case funds would identify the index and publisher of the index, or unless the notional amount of the derivative represents 1% or less of the NAV of the fund, in which case funds would provide a narrative description of the index.
• How, if at all, should we modify the proposed requirement to report delta? To what extent would the inputs and assumptions underlying the methodology by which funds calculate this measure affect the value reported? Are there potential liability or other concerns associated with the reporting of such measures according to such inputs and assumptions? For example, how would the comparability of information reported between funds be affected if funds used different inputs and assumptions in their methodologies?
• Are there additional or alternative metrics that we should consider requiring to be reported? Would the disclosure of risk metrics such as vega—which measures the amount that an option contract's price changes in relation to a 1% change in the volatility of the underlying asset—or gamma—which measures the sensitivity of delta in response to price changes in the underlying instrument—enhance the utility of the derivatives information reported in Form N–PORT? What would be the costs and burdens to funds and benefits to investors and other potential users of requiring funds to report such additional or alternative metrics? How would the comparability of information reported by different funds be affected if funds used different inputs and assumptions in their methodologies, such as different assumptions regarding the values of the funds' portfolios?
• We believe that funds already track the characteristics of their derivatives that we would require to be reported on Form N–PORT. To the extent this is correct, what would be the incremental
As discussed above, our proposal would require funds to report on Form N–PORT, for each of their securities lending counterparties as of the reporting date, the full name and LEI of the counterparty (if any), as well as the aggregate value of all securities on loan to the counterparty.
These disclosures would provide information about how funds reinvest the cash collateral received from securities lending activity and should allow for more accurate determination of the value of collateral securing such loans. This could improve the ability of Commission staff, as well as investors, brokers, dealers, and other market participants to assess collateral reinvestment risks and associated potential liquidity and loss risks, as well as better understand leverage creation through the reinvestment of collateral.
We request comment on our proposed disclosure requirements for securities loans and cash collateral reinvestment.
• Should the Commission require funds to report information about securities on loan or reinvestment of cash collateral at the portfolio level, rather than at the individual security level? If so, what categories should be used to report such reinvestment? For example, would it be appropriate to use the same collateral categories for securities lending that we are proposing to be used for repurchase and reverse repurchase agreements?
• As discussed, Form N–PORT would require funds to indicate, for each investment, whether any portion of the investment represented non-cash collateral received to secure loaned securities. To what extent would this information be helpful to brokers, dealers, and investors? To what extent do funds receive collateral other than cash?
• Is there additional or alternative information regarding securities lending transactions that the Commission should require to be disclosed in reports on Form N–PORT?
• We believe that funds already track the characteristics of their securities lending and cash collateral reinvestment transactions that we would require to be reported on Form N–PORT. Is this belief correct? What would be the burden of reporting such information to the Commission?
In Part D of Form N–PORT, as currently permitted by Regulation S–X, funds would have the option of identifying and reporting certain investments as “miscellaneous securities.”
• Should funds continue to be allowed to use the category of miscellaneous securities, either on Form N–PORT or in publicly disclosed schedules of investments pursuant to instruction 1 to rule 12–12 and instruction 5 to rule 12–12C of Regulation S–X? To what extent do funds currently use “miscellaneous securities” as a line item in their schedule of investments, as opposed to disclosing all investments in securities of unaffiliated issuers? For what purposes? Should we continue to allow funds to exclude the full disclosures of such securities from funds' schedules of investments? Alternatively, should we consider lowering the threshold, such as to two percent or one percent of the total value of securities of unaffiliated issuers?
In Part E of Form N–PORT, funds would have the option of providing explanatory notes relating to the filing, if any.
These notes, which would be optional, could be used to explain assumptions that funds made in responding to specific items in Form N–PORT. Funds could also provide context for anomalous responses or discuss issues that could not be adequately addressed elsewhere given the constraints of the form. Similar
We request comment on our proposed disclosure requirements.
• Would the format outlined above for the explanatory notes allow funds to adequately discuss their responses on Form N–PORT? If not, how should the format be modified?
• Should explanatory notes in publicly available filings of Form N–PORT be nonpublic? If so, why?
In Part F of Form N–PORT, for reports filed for the end of the first and third quarters of the fund's fiscal year, a fund would also attach the fund's complete portfolio holdings as of the close of the period covered by the report. These portfolio holdings would be presented in accordance with the schedules set forth in §§ 210.12–12 to 12–14 of Regulation S–X.
As discussed further below in Part B, we are proposing to rescind Form N–Q because reports on Form N–PORT for the first and third fiscal quarters would make similar reports on Form N–Q unnecessarily duplicative. While we recognize that the quarterly, publicly disclosed reports on Form N–PORT will provide structured data to investors and other potential users, we recognize that the amount and structured format of the data contained in those reports are not primarily designed for individual investors. We believe that such investors might prefer that portfolio holdings schedules for the first and third quarters continue to be presented using the form and content specified by Regulation S–X, which investors are accustomed to viewing in reports on Form N–Q and in shareholder reports. Therefore, we are proposing to require that, for reports on Form N–PORT for the first and third quarters of a fund's fiscal year, the fund would attach its complete portfolio holdings for that fiscal quarter, presented in accordance with the schedules set forth in §§ 210.12–12 to 12–14 of Regulation S–X.
Requiring funds to attach these portfolio holdings schedules to reports on Form N–PORT would provide the Commission, investors, and other potential users with access to funds' current and historical portfolio holdings for those funds' first and third fiscal quarters. Our proposal would also consolidate these disclosures in a central location, together with other fund portfolio holdings disclosures in shareholder reports and reports on Form N–CSR for funds' second and fourth fiscal quarters.
Under our proposal, and consistent with current practice, funds would have until 60 days after the end of their second and fourth fiscal quarters to transmit reports to shareholders containing portfolio holdings schedules prepared in accordance with Regulation S–X for that reporting period.
As discussed below, we are proposing to allow funds to transmit reports to shareholders by posting online those reports, together with the funds' complete portfolio holdings for the first and third fiscal quarters presented in accordance with the schedules set forth in §§ 210.12–12 to 12–14 of Regulation S–X disclosures.
We request comment on our proposed exhibits.
• Should funds be required to attach portfolio holdings schedules to reports on Form N–PORT? Is there an alternative that would be better for funds and investors in terms of informing investors' investment decisions with regards to current and historical portfolio holdings?
• As discussed above, the attached portfolio holdings schedules are intended for investors, but would not be required to be made publicly available to investors until 60 days after the close of the reporting period; however, as proposed, funds would be required to prepare and file this attachment within 30 days of the end of the reporting period. Should funds be allowed to file reports on Form N–PORT for the first and third fiscal quarters without Regulation S–X compliant schedules, but then be required to amend those reports on Form N–PORT to attach Regulation S–X compliant schedules no later than 60 days after the end of the reporting period?
• Should the portfolio schedules attached to Form N–PORT, which are similar to reports funds are providing currently on Form N–Q, be certified, as is currently required by Form N–Q?
In addition to the requests for comment above, we request general comment on feasible alternatives to the information we would be requiring funds to report on Form N–PORT that would minimize the reporting burdens on funds while maintaining the anticipated benefits of the reporting and disclosure.
• Would Form N–PORT, as proposed, appropriately consider the usefulness of the information to the Commission, investors, and other potential users of the required information and the costs that would be associated with reporting this information? If not, which data points or items should be enhanced or scaled back? Are there any proposed items in Form N–PORT that should be revised to avoid duplication of reporting requirements in different Commission rules or forms? If so, please explain. On the other hand, are there any elements in Form N–PORT that the Commission should carry over to other Commission forms or rules?
• Are there specific items that the proposed form would require that are unnecessary or otherwise should not be required in the manner that we propose? Alternately, is there different or additional information that we have not identified that could be useful to us or investors in monitoring funds? For example, to the extent there are fund-specific, sector-specific, or industry-wide risks that would not be addressed by the information we are proposing to collect today, should we require additional or alternative information that would be relevant to an evaluation of the risk characteristics of the fund and its portfolio investments? Likewise, is there any investment- or entity-specific information that should be included in Form N–PORT to facilitate analysis of the information that would be reported? Should the manner in which information would be reported in Form N–PORT be revised to improve the clarity of disclosures or reduce reporting burdens?
• We believe that the information we are proposing to require would be readily available to funds as a matter of general business practice. Do commenters agree with this assumption? For example, do fund accounting or financial reporting systems, or those of a fund's custodian, generally contain the investment information that we are requesting in our proposal? What is the feasibility and burden of requiring funds to report information that is not contained in such systems? To the extent that any items that we have requested are not contained in fund accounting or financial reporting systems, are there other types of readily available data that would provide us with similar information?
As discussed above, the Commission proposes that funds would report information on Form N–PORT in XML, so that Commission staff, investors, and other potential users could create databases of fund portfolio information to be used for data analysis. Forms N–CSR and N–Q are not currently filed in a structured format, which results in reports that are comprehensible to a human reader, but are not suitable for automated processing, and generally require filers to reformat the required information from the way it is stored for normal business uses.
• What would be the costs to funds of providing data conforming to a Form N–PORT XML Schema? How would costs be affected, if at all, by the size of the funds and fund complexes reporting this data? How would this affect smaller fund companies?
• Should the Commission allow or require the form to be provided in an XML Schema derived from existing XML based languages, such as Financial products Markup Language (“FpML”) or XBRL? FpML is an industry standard created by ISDA for exchanging and reporting the terms and conditions of derivatives contracts. XBRL is another industry standard used by the Commission for many reporting forms.
• Is there another structured format that would allow investors and analysts to easily download and analyze the data?
The Commission is considering whether reports on Form N–PORT should be submitted through EDGAR or another electronic filing system, either maintained by the Commission or by a third-party contractor. If reports on Form N–PORT were required to be submitted through EDGAR, the electronic filing requirements of Regulation S–T would apply.
We request comment on this aspect of our proposal.
• Are there specific other capabilities that the Commission should consider in developing or selecting an electronic filing system? For example, should the system have the capability to cross-check information reported to other electronic filing systems, such as the Investment Adviser Registration Depository (where registration forms for investment advisers are filed)? If so, which platforms and why?
• Is EDGAR the optimal vehicle for filing reports on Form N–PORT with the Commission? If not, what vehicle would be optimal for filing reports and why? Should the Commission allow the filing of documents in electronic media other than on EDGAR? If so, please make specific recommendations.
• Are there any particular concerns with filing such reports on EDGAR as opposed to a third party system or vice versa? If so, what are those concerns and what are potential remedies for such concerns? For example, as discussed further below, as proposed, reports on Form N–PORT for the first and second month of each fiscal quarter would not be made public. Accordingly, any filing would need to have confidentiality protections to keep the information on such Forms non-public. How should EDGAR or an alternative filing platform best address the confidentiality of this information?
• How important to investors and other interested parties is the fact that EDGAR currently serves as the filing system for fund filings with the Commission, and thus serves as a single repository where investors may examine historical filings by a given fund on related forms and generally compare reports made by other funds? To what extent, if at all, could investors become confused by the use of a new filing system for Form N–PORT and the use of EDGAR for other fund filings? How should any such investor confusion be mitigated by funds and the Commission?
Our proposal would require funds to report information on Form N–PORT no later than 30 days after the close of each month.
• Would 30 days be sufficient for funds to gather and report this information to the Commission? If not, what amount of time would be required and why? Conversely, could funds easily and reliably gather and report this information in less than 30 days, which would provide the Commission staff with more timely data?
As an alternative to monthly reports filed on Form N–PORT, should the Commission require quarterly reports that include portfolio information for each month of that quarter? How would the viability of this alternative be affected, if at all, by the technological challenges and inadvertent disclosure risks associated with combining in a single form nonpublic portfolio information relating to the first two months of each quarter with public portfolio information relating to the third month of that quarter? We note that this alternative would eliminate many of the benefits of monthly reporting, such as the ability of monthly data to address the staleness of quarterly data and to assist in monitoring funds by decreasing the delay between reports. However, this alternative would still provide twelve data points per year, which should improve the Commission staff's ability to perform analyses of portfolios, and would discourage various forms of portfolio manipulation, as discussed above. What, if any, other factors should the Commission consider in evaluating this alternative?
We are proposing that funds report information on Form N–PORT on a monthly basis, no later than 30 days after the close of each month.
The quarterly portfolio reports that the Commission currently receives on Forms N–Q and N–CSR can quickly become stale due to the turnover of portfolio securities and fluctuations in the values of portfolio investments. Monthly portfolio reporting would decrease the delay between reports, which should prove useful to the Commission for fund monitoring, particularly in times of market stress. This would also triple the number of data points reported to the Commission in a given year, as well as ensure that the Commission has current information, which should in turn enhance the ability of Commission staff to perform analyses of funds in the course of monitoring for industry trends, or identifying issues for examination or inquiry.
As discussed above, the Commission generally believes that public availability of information, including the types of information that would be collected on Form N–PORT that may not currently be reported or disclosed by funds, can benefit investors by assisting them in making more informed investment decisions. Although Form N–PORT is not primarily designed for disclosing information to individual investors, we believe that many investors, particularly institutional investors, as well as academic researchers, financial analysts, and economic research firms, could use the information reported on Form N–PORT to evaluate fund portfolios and assess the potential for returns and risks of a particular fund. Accordingly, whether directly or through third parties, we believe that the periodic public disclosure of the information on proposed Form N–PORT could benefit all fund investors.
The Commission, however, recognizes that more frequent portfolio disclosure could potentially harm fund shareholders by expanding the opportunities for professional traders to exploit this information by engaging in predatory trading practices, such as trading ahead of funds, often called “front-running.”
We discussed these concerns when we first proposed and adopted Form N–MFP, and made the determination to make each monthly report on Form N–MFP public, with a 60 day delay.
Empirical studies indicate that the portfolio holdings information that investment companies disclose to the Commission and to shareholders contains information that can be used by other investors to front-run and
We recognize that some free-riding and front running activity can occur even with quarterly disclosure, with the potential for investor harm. Conversely, however, investors previously petitioned for quarterly disclosures, noting numerous benefits that quarterly disclosure of portfolio schedules could provide, including allowing investors to better monitor the extent to which their funds' portfolios overlap, and hence enabling investors to make more informed asset allocation decisions, and providing investors with greater information about how a fund is complying with its stated investment objective.
Our proposal is intended to appropriately consider the benefits to the Commission, investors, and other potential users of public portfolio disclosures, including the reporting of such disclosures in a structured format and additional portfolio information that would be required on proposed Form N–PORT and the potential costs associated with making that information available to the public, which could be ultimately borne by investors. Accordingly, in an attempt to minimize these potential costs and harms, we propose to require public disclosure of fund reports on Form N–PORT once each quarter, rather than monthly, thereby maintaining the status quo regarding the frequency of public portfolio disclosure. As discussed above, funds are currently required to disclose their portfolio investments quarterly, via public filings with the Commission and semi-annual reports distributed to shareholders. Consequently, the Commission is not currently proposing to make public the information reported for the first and second months of each fund's fiscal quarter on Form N–PORT. Only information reported for the third month of each fund's fiscal quarter on Form N–PORT would be made publicly available, and such information would not be made public until 60 days after the end of the third month of the fund's fiscal quarter. We believe that maintaining the status quo with regard to the frequency and the time lag of portfolio reporting would allow the Commission, the fund industry, and the marketplace to assess the impact of the structured and more detailed data reported on Form N–PORT on the mix of information available to the public, and the extent to which these changes might affect the potential for predatory trading, before determining whether more frequent or more timely public disclosure would be, beneficial to investors in funds.
We are proposing to maintain the status quo of public disclosure of quarterly information based upon each fund's fiscal quarters, rather than calendar quarters, to ensure that public disclosure of information filed on Form N–PORT would be the same as the portfolio disclosures reported on a semi-annual fiscal year basis on Form N–CSR. We believe that such overlap would minimize the risks of predatory trading, because otherwise funds with fiscal year-ends that fall other than on a calendar quarter- or year-end would have their portfolios publicly available more frequently than funds with fiscal year-ends that fall on a calendar quarter- or year-end, thus increasing the risks to those funds discussed above related to potential front-running or reverse engineering.
We request comment on the proposed frequency and delay of public disclosure of information reported on Form N–PORT.
• Should we require information on Form N–PORT reported for the first and second month of each fund's fiscal quarter be made public? Are the concerns about front-running or other possible harms discussed above warranted given the 60-day delay? Would a different combination of public disclosure frequency and delay better protect funds and their investors from the risks of predatory trading, while still providing timely and regular information to investors? To what extent would investors benefit from receiving monthly data as opposed to quarterly data?
• Are there alternatives we should consider to provide investors and other potential users with the information reported on Form N–PORT for the first and second months of each quarter? For example, would the potential harms discussed above be mitigated if reports on Form N–PORT for the first and second months were made public 60 days (or a shorter or longer time period) after the end of each quarter, or 60 days (or a shorter or longer time period) after the end of each fund's fiscal year, thereby increasing the time lag of such information? If monthly information were to be provided quarterly or annually, how would that affect the benefits of such information to investors and other potential users?
• Would Form N–PORT contain the type of information that, if disclosed on a monthly basis, could reveal information that a fund would consider proprietary or confidential or that could place the fund at a competitive disadvantage? If so, please explain and provide examples, as applicable.
• Would restricting public disclosure of the information reported on Form N–PORT to information reported for the third month of each fund's fiscal quarter alleviate concerns about front-running or other possible harms that might be caused by making the monthly information reported on Form N–PORT public? Should we instead provide that all or a portion of the requested information on Form N–PORT be submitted in nonpublic reports to the Commission? If so, please identify the specific items that should remain nonpublic and explain why.
• Do commenters believe that our proposed 60-day delay in making the information public would be helpful in protecting against possible front running or free riding? Would a shorter delay (
• Should information be reported on Form N–PORT as of the third month of each fund's fiscal year, as proposed, or should we instead require a uniform public reporting schedule for all funds to facilitate comparison of information reported on Form N–PORT (
Along with our proposal to adopt new Form N–PORT, we are proposing to rescind Form N–Q. Management companies other than SBICs are currently required to report their complete portfolio holdings as of the end of their first and third fiscal quarters on Form N–Q. Because the data reported on proposed Form N–PORT would include the portfolio holdings information contained in reports on Form N–Q, we believe that Form N–PORT, if adopted, would render reports on Form N–Q unnecessarily duplicative. Therefore, we believe it is appropriate to rescind Form N–Q rather than require funds to report similar information to the Commission on two separate forms.
However, as noted earlier, we believe that individual investors and other potential users might prefer that portfolio holdings schedules for the first and third quarters continue to be presented using the form and content specified by Regulation S–X, which investors are accustomed to viewing in reports on Form N–Q and in shareholder reports. Therefore, we are proposing to require that, for reports on Form N–PORT for the first and third quarters of a fund's fiscal year, the fund would attach its complete portfolio holdings for that fiscal quarter, presented in accordance with the schedules set forth in §§ 210.12–12 to 12–14 of Regulation S–X [17 CFR 210.12–12—12–14]. Also, as discussed below, proposed new rule 30e–3 would allow funds to satisfy requirements to transmit reports to shareholders by posting on a Web site those shareholder reports and these same portfolio schedules for the funds' first and third quarters.
In connection with the Commission's implementation of the Sarbanes-Oxley Act of 2002, Form N–Q and Form N–CSR require the principal executive and financial officers of the fund to make quarterly certifications relating to (1) the accuracy of information reported to the Commission, and (2) disclosure controls and procedures and internal control over financial reporting.
Under today's proposal, the certifications as to the accuracy of the portfolio schedules reported for the second and fourth fiscal quarters on Form N–CSR would remain. However, we are proposing to amend the form of certification in Form N–CSR to require each certifying officer to state that he or she has disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year, rather than the registrant's most recent fiscal quarter as currently required by the form.
We request comments on the proposed rescission of Form N–Q and related rule and form amendments.
• Should we rescind Form N–Q, as we have proposed? Should we instead retain Form N–Q, and not require Regulation S–X compliant schedules to be attached to reports for the first and third fiscal quarters on Form N–PORT? Why or why not?
• Would the proposed amendments to the certification requirements in Form N–CSR be an appropriate substitute for the certification requirements in Form N–Q? Would the change from quarterly to semiannual certifications have an effect on the quality of funds' internal controls or on other costs associated with certifications? If so, are those changes appropriate?
As part of our larger effort to modernize the manner in which funds report holdings information to investors, today we are proposing amendments to Regulation S–X, which prescribes the form and content of financial statements required in registration statements and shareholder reports.
As outlined below, we are proposing amendments to Articles 6 and 12 of Regulation S–X that would: (1) Require new, standardized disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts,
As discussed above, the proposed rules will renumber the current schedules in Article 12 of RegulationS–X and break out the disclosure of derivatives currently reported on Schedule 12–13 into separate schedules. These changes are summarized in Figure 1, below.
We believe the proposed amendments will assist comparability among funds, and increase transparency for investors regarding a fund's use of derivatives and the liquidity of certain investments. We have endeavored to mitigate burdens on the industry by proposing to require similar disclosures both on Form N-PORT and in a fund's financial statements.
In 2011, as part of a wider effort to review the use of derivatives by management investment companies, we issued a concept release and request for comment on a range of issues.
While the rules under Regulation S–X establish general requirements for portfolio holdings disclosures in fund financial statements, they do not prescribe standardized information to be included for derivative instruments
To address issues of inconsistent disclosures and lack of transparency as to derivative instruments, we are proposing to amend Regulation S–X by proposing new schedules for open futures contracts, open forward foreign currency contracts, and open swap contracts. We are also proposing to modify the current disclosure requirements for purchased and written option contracts. Finally, we are proposing to include certain instructions regarding the presentation of derivatives contracts that are generally consistent with instructions that are currently included, or that we are proposing to add, in either rule 12–12 (Investments in securities of unaffiliated issuers) or rule 12–13 (Investments other than securities).
Our proposed rule would modify the current disclosure of written option contracts.
We are also proposing for options where the underlying investment would otherwise be presented in accordance with another provision of rule 12–12 or proposed rules 12–13 through 12–13D that the presentation of that investment must include a description, as required by those provisions.
As required in proposed Form N–PORT,
We are also proposing several instructions to rule 12–13 and the other rules we are proposing concerning derivatives holdings (
Current rule 12–13 likewise contains an instruction to include tax basis disclosures for investments other than securities.
In order to provide greater transparency to investors into which investments are deemed illiquid, we are also proposing to require funds to identify illiquid investments.
Proposed rule 12–13 would also include other new instructions.
We are proposing new rule 12–13A, which would require standardized reporting of open futures contracts.
As discussed above, our proposal also contains certain new instructions for rule 12–13A that are generally the same across all of the schedules for derivatives contracts.
We are also proposing new rule 12–13B, which would require standardized disclosures for open forward foreign currency contracts.
We are also proposing new rule 12–13C, which would require standardized reporting of fund positions in open swap contracts.
While instruction 3 of proposed rule 12–13C provides specific examples for the more common types of swap contracts (
As required in our proposed disclosures for open option contracts
For swaps which pay or receive financing payments, funds would disclose variable financing rates in a manner similar to disclosure of variable interest rates on securities in accordance with instruction 4 to proposed rule 12–12.
We are also proposing to amend current rule 12–13 and, for organization and consistency, renumber it as proposed rule 12–13D. Proposed rule 12–13D is intended to continue, as is currently required by rule 12–13, to be the schedule by which funds report investments not otherwise required to be reported pursuant to Article 12.
We request comment on our proposed amendments to rules 12–13 through 12–13D of Regulation S–X:
• Many of our proposed portfolio holdings disclosure requirements in Article 12 conform with similar requirements on proposed Form N–PORT. Are our proposed amendments to Article 12 appropriate for fund financial statements? Is there information that is currently proposed in Form N–PORT, but not in Article 12, that would benefit investors? For example, to the extent that proposed Form N–PORT instructs filers to report the country code that corresponds to the country of investment or issuer based on the concentrations of the risk and economic exposure of the investments, or, if different, the country where the issuer is organized, should those same instructions be integrated into Regulation S–X to standardize how funds report that information in their financial statements and in Form N–PORT?
• Are there other categories of investments not specifically covered in Article 12 that should be specifically addressed in a new rule or directly addressed in rule 12–13D?
• To what extent are proposed rules 12–13 through 12–13D consistent with industry practices? How are our proposed amendments different? Are there other industry practices that we should include in our proposal with respect to the disclosure of derivative investments?
• The schedules to rules 12–13 through 12–13D use the term “description” to require funds to disclose the information sufficient for a user of financial information to identify the investment. Should the instructions to any of those rules be enhanced or modified to clarify what is meant by the term “description?” If so, how should these be enhanced or modified?
• The schedules to rules 12–13 (Open option contracts written), 12–13B (Open forward foreign currency contracts), 12–13C (Open swap contracts), and 12–13D (Other investments) would require disclosure of the counterparty to the transaction for non-exchange traded instruments. Should we, as proposed, require disclosure of the counterparty to certain transactions? Should the exchange or clearing member be disclosed for exchange-traded derivatives? Are there any additional counterparty or exchange risks that should be disclosed? If so, why? Are there any confidentiality or other concerns with requiring the disclosure of counterparties?
• We request comment on our proposed amendments to rule 12–13 (Open option contracts written). Should we require different or additional information about these contracts? Should any of the proposed information requirements be excluded? Is it appropriate to require disclosure of “notional amount” for option contracts? Is this metric useful to investors? Should we require the disclosures of open option contracts written to be grouped or subtotaled? For example, should we require over-the-counter option contracts to be grouped by counterparty?
• As proposed, rule 12–13 would require disclosure of each option contract with an underlying investment that is an index or basket of investments whose components are not publicly available on a Web site and the notional amount of the holding exceeds one percent of the NAV of the fund. Are there better alternatives to disclose the underlying investments for an options contract if it consists of a custom basket of securities? If so, what alternatives and why? To the extent such indices are proprietary or subject to licensing agreements, what would be the effect of this requirement? For example, would funds incur costs for amending licensing agreements? Would index providers be unwilling to amend existing licensing agreements? If so, how would this impact funds that make such investments and the marketplace generally? Are there other concerns about disclosing the components of proprietary indices? Should we alter this requirement, and if so how? Is our exceeding one percent of the NAV disclosure threshold appropriate? Should there be a different disclosure threshold applied to an option contract's underlying investments? If so, what threshold and why? For example, should there be a disclosure threshold applied to individual holdings (
• We request comment on proposed rule 12–13A (Open futures contracts). Should we require different or additional information about these contracts? Should any of the proposed information requirements be excluded? Our proposed rule would require disclosure of notional amount and value on open futures contracts. Should we require disclosure of notional amount for futures contracts? Should we require disclosure of value for futures contracts? Should we require the disclosures of open futures contracts to be grouped or subtotaled? If so, how? For example, should we require open futures contracts to be organized by country of issuance?
• We request comment on proposed rule 12–13B (Open forward foreign currency contracts). Should we require different or additional information about these contracts? Should any of the proposed information requirements be excluded? Rule 12–13B, as proposed, is limited to forward foreign currency contracts. Are there other types of forwards that should be addressed in this section that would not otherwise be presented as other derivative investments, such as swaps? Should we require the disclosures of open forward foreign currency contracts to be grouped or subtotaled? If so, how? For example, should we require open forward foreign currency contracts to be organized by currency or type of transaction (
• We request comment on proposed rule 12–13C (Open swap contracts). Should we require different or additional information about these contracts? Should any of the proposed information requirements be excluded? Instruction 1 to proposed rule 12–13C requires the schedule to be organized by descriptive title (
• Instruction 3 of proposed rule 12–13C contains examples of information that could be included for credit default swaps, interest rate swaps, and total return swaps. Is the example contained in proposed rule 12–13C adequate? Is there any other information that should be disclosed as part of the description for credit default swaps, interest rate swaps, and total return swaps? Are there other types of swaps that should be included as examples within proposed rule 12–13C? If so, what information should be included in the example?
• As proposed, rule 12–13C would require disclosure of each investment with a referenced asset that is an index whose components are not periodically publicly available on a Web site and the notional amount of the holding exceeds one percent of the NAV of the fund. Are there better alternatives to disclose the underlying assets of a swap if it consists of a custom basket of securities? If so, what alternative and why? To the extent such indices are proprietary or subject to licensing agreements, what would be the effect of this requirement? For example, would funds incur costs for amending licensing agreements? Would index providers be unwilling to amend existing licensing agreements? If so, how would this impact funds that make such investments and the marketplace generally? Are there other concerns about disclosing the components of proprietary indices? Should we alter this requirement, and if so how? Is our exceeding one percent of the NAV disclosure threshold appropriate? Should there be a different disclosure threshold applied to a swap's referenced assets? If so, what threshold and why? For example, should there be a disclosure threshold applied to individual holdings (
• We request comment on our proposed amendments in rule 12–13D (Investments other than those presented in rules 12–12, 12–12A, 12–12B, 12–13, 12–13A, 12–13B, and 12–13C). Should we require different or additional information about these contracts? Should any of the proposed information requirements be excluded?
• We request comment on our proposed requirements in rules 12–13 through 12–13D that the fund identify investments which cannot be sold because of restrictions or conditions applicable to the investment. Is this requirement appropriate? Why or why not? Would this requirement assist investors and other interested parties with understanding the marketability of an investment? Why or why not?
• We request comment on our proposed requirements in rules 12–13 through 12–13D that the fund identify investments whose fair value was determined using significant unobservable inputs. Is this requirement appropriate? Why or why not? Would this requirement assist investors and other interested parties with understanding risks associated with valuation?
• Should we propose a disclosure relating to “investments not readily marketable” as is currently required by rule 12–13? Why or why not?
• We request comment on our proposed requirements in rules 12–13 through 12–13D that the fund identify investments that are considered to be illiquid. Is this requirement appropriate? Why or why not? What are the costs and benefits associated with this requirement? Will independent accountants be able to audit this disclosure?
• We request comment on our proposed disclosures based on cost for Federal income tax purposes under proposed rule 12–12A and rules 12–13 through 12–13D. Do these disclosures provide meaningful information for investors in addition to tax basis disclosures required under U.S. GAAP? What are the costs and benefits associated with providing this disclosure? Should our proposed disclosures be reported in a separate stand-alone disclosure or, as proposed, as a note to each separate schedule? Should we eliminate the current disclosure requirement to present tax-basis cost and unrealized appreciation and depreciation in both semi-annual and annual shareholder reports? Why or why not? As an alternative, should we make the tax-basis disclosure an annual requirement?
While we are not proposing changes to the schedules for rules 12–12, 12–12A, and 12–12C, we are proposing certain additional rule instructions that would include new disclosures, as well as certain clarifying changes, including renumbering several of the schedules.
We are proposing several modifications to the instructions to rule 12–12, the rule concerning disclosure of investments in securities of unaffiliated issuers. We are proposing to modify instruction 2 to rule 12–12 (and the corresponding instructions to proposed rules 12–12A, 12–12B, 12–13D, and12–14) which would require funds to categorize the schedule by type of investment, the related industry, and the related country, or geographic region.
In order to provide more transparency to a fund's investments in debt securities, we are proposing an instruction to rule 12–12 requiring the fund to indicate the interest rate or preferential dividend rate and maturity rate for certain enumerated debt instruments.
Our proposal would modify the current instruction to rule 12–12
As in our proposed derivatives disclosures,
As in proposed rules 12–13 through 12–13D,
Likewise, we are proposing several modifications to rule 12–12A regarding the presentation of securities sold short, in order to conform the instructions to proposed rule 12–12.
Funds are permitted to include in their reports to shareholders a summary portfolio schedule, in lieu of a complete portfolio schedule, so long as it conforms with current rule 12–12C (Summary schedule of investments in securities of unaffiliated issuers).
We request comment on our amendments to proposed rules 12–12 through 12–12B of Regulation S–X:
• Are our proposed amendments to rule 12–12 through 12–12B appropriate? Are there other amendments to rules 12–12 through 12–12B that should be made to improve disclosures regarding the investments that would be reported under the rules? If so, what amendments and why?
• We request comment on proposed amendments to rule 12–12 (Investments in securities of unaffiliated issuers). For variable rate securities, we propose to require disclosure of a description of the reference rate and spread (
• We request comment on instruction 2 to proposed rule 12–12 (and the corresponding instructions to rules 12–12A, 12–12B, and 12–14) which would require funds to categorize the schedule by type of investment, the related industry, and the related country, or geographic region. Should we include this instruction in our proposed rules? What are the costs or benefits associated with such a requirement?
• We request comment our proposed modifications in rules 12–12 and 12–12B that would require a fund to indicate where any portion of the issue is on loan. Should we include this requirement in our proposed rules? Why or why not?
• We request comment on instruction 4 to proposed rule 12–12. Should we require funds to disclose the interest rate or preferential dividend rate and maturity rate for certain debt instruments? Are there any types of securities that should (or should not) be included in instruction 4's list of applicable debt instruments?
• We request comment on our proposal to require a fund to disclose each issue of illiquid securities. Should we include this requirement in our proposed rules? Why or why not? Would the fund's independent accountants be able to audit this disclosure?
• We request comment on our proposed requirements in rules 12–12, 12–12A, and 12–12B that the fund identify investments whose fair value
• Are our amendments to proposed rules 12–12 through 12–12B consistent with industry practices? If not, how are our amendments different and what would be the costs and benefits associated with such differences? Are there other industry practices that we should include in our proposal?
We are proposing amendments to rule 12–14 (Investments in and advances to affiliates).
Likewise, in instruction 6(e) and (f), we are proposing to require disclosure of total realized gain or loss and total net increase or decrease in unrealized appreciation or depreciation for affiliated investments in order to correlate these totals to the statement of operations.
Additionally, we are proposing a new instruction 7 in order to make the categorization of investments in and advances to affiliates consistent with the method of categorization used in proposed rules 12–12, 12–12A, and 12–12B.
We request comment on our proposed amendments to rule 12–14 of Regulation S–X:
• Are our proposed amendments to rule 12–14 appropriate? Are there other amendments to rule 12–14 that should be made to improve disclosures regarding the investments that would be reported under the rule? If so, what amendments and why?
• In proposed rule 12–14, we are no longer requiring information about the fund's equity in the profit or loss of each controlled portfolio company. Instead, we are proposing to require the realized gain or loss and change in unrealized appreciation or depreciation for all affiliated investments. Is this change appropriate? Is it still important to understand the equity in the profit or loss of each controlled company in addition to the controlled portfolio company's effect on the fund's statement of operations? Would the presentation of realized gains or losses and changes in unrealized appreciation or depreciation assist investors with better understanding the impact of each affiliated investment on the fund's statement of operations? Why or why not? Are there other changes to the disclosure of affiliated transactions that would better assist investors with understanding the impact of affiliated investments on the fund's statement of operations?
• In addition to those discussed above, what are the costs and benefits associated with the proposed changes? Would the proposed changes under rule 12–14 reduce any burdens on filers? If so, how?
• Are our amendments to proposed rule 12–14 consistent with industry practices? If not, how are our amendments different? Are there other industry practices that we should include in our proposal with respect to the disclosure of affiliated investments?
Finally, we are proposing revisions to Article 6 of Regulation S–X, which prescribes the form and content of financial statements filed for funds. Many of the revisions we are proposing today are intended to conform Article 6 with our proposed changes to Article 12 and update other financial statement requirements.
A BDC is a closed-end fund that is operated for the purpose of making investments in small and developing businesses and financially troubled businesses and that elects to be regulated as a BDC.
In order to allow a more uniform presentation of investment schedules in a fund's financial statements, we are proposing to rescind subparagraph (a) of rule 6–10 under Regulation S–X, regarding which schedules are to be filed.
Moreover, current rule 6–10(a) provides that if the information required by any schedule (including the notes thereto) is shown in the related financial statement or in a note thereto without making such statement unclear or confusing, that procedure may be followed and the schedule omitted.
We are also proposing changes to rules 6–03 and 6–04 to specifically reference the investments required to be reported on separate schedules in amended Article 12.
We are also proposing to amend rule 6–04 to refer individually to our derivatives disclosures in proposed rules 12–13A through 12–13C.
Proposed rule 6–05.3 would also specifically require presentation of items relating to investments other than securities in the notes to financial statements.
We are also proposing to add new disclosure requirements that are designed to increase transparency to investors about certain investments and activities. First, we are proposing to add new subsection (m) to rule 6–03 that would require funds to make certain disclosures in connection with a fund's securities lending activities and cash collateral management.
We are proposing to amend rule 6–07.7(a) in order to conform statement of operations disclosures of the net realized gains or losses from investments to include our additional derivatives disclosures in proposed rules 12–13A through 12–13C.
We are also proposing to eliminate Regulation S–X's requirement for specific disclosure of written options activity under current rule 6–07.7(c).
We are also proposing to eliminate the exception in Schedule II of current rule 6–10 which does not require reporting under current rule 12–13 if the investments, at both the beginning and end of the period, amount to one percent or less of the value of total investments.
We request comment on our proposed changes to Article 6 of Regulation S–X.
• Are our proposed amendments to Article 6 of Regulation S–X appropriate? If not, which amendments are not appropriate and why? Are there other amendments to Article 6 of Regulation S–X that we should propose? If so, what amendments and why?
• Are there alternative methods of presentation of derivatives that we should consider, rather than the proposed requirement that all schedules be presented in the same location? If so, what method and why is it preferable?
• As we discussed above, among others, our basis for proposing to eliminate rule 6–10(a) was our belief that a fund and its consolidated subsidiaries should present their consolidated investments for each applicable schedule, without indicating which are owned directly by the fund and which are owned by the consolidated subsidiaries. Is this proposed change appropriate? Why or why not? Should we require different or additional information about consolidated investments?
• We request comment on our proposal to eliminate rule 6–04.4, which requires disclosure of “Total investments” on the balance sheet under “Assets,” and the corresponding reference to rule 6–04.4 in rule 6–03(d). Are these proposed changes appropriate? Why or why not? Would eliminating current rule 6–04.4 provide more complete information to investors?
• We request comment on our proposal to amend rule 6–05.3 to specifically require presentation of items relating to investments other than securities in the notes to the financial statements, as well as require fund financial statements to reflect all unaffiliated investments presented on separate schedules under Article 12. Are our proposed changes appropriate? Why or why not?
• Would the disclosure required under proposed rule 6.03(m) concerning income and expenses in connection with securities lending activities provide meaningful information to investors or other potential users? For example, would the disclosures regarding compensation and other fee and expense information relating to the securities lending agent and cash collateral manager be useful to fund boards in evaluating their securities lending arrangements? Would these disclosures be sufficient for this purpose, or would additional information be necessary, for example, to put the fee and expense information in context (
• Is the proposed disclosure under rule 6–07.1 for non-cash dividends and payment-in-kind interest on the statement of operations meaningful to investors or other potential users of the fund's financial statements? Should all non-cash interest be disclosed, including amortization and accretion, or should just payment-in-kind interest be disclosed?
• Do our proposed amendments to rules 6–07.7(a) and 6–07.7(c) omit any classifications of gains or loss or changes in unrealized appreciation or
• We request comment on our proposal to eliminate Regulation S–X's requirements for specific disclosure of written options activity under rule 6–07.7(c). Does the current requirement for specific disclosure of written options activity under rule 6–07.7(c) provide a user of financial statements with sufficient incremental benefit to merit retaining this disclosure in addition to the disclosures required by ASC Topic 815? Why or why not?
• Proposed rule 6–10(b) would no longer allow funds to omit the schedule of investments other than securities if the investments, other than securities, at both the beginning and end of the period amount to one percent or less of the value of total investments. Is this change appropriate? Are there any costs associated with this change? If so, what are they?
• Are our amendments to Article 6 of Regulation S–X generally consistent with industry practices, except where specifically noted in the discussion above? If not, how are our amendments different? Are there other industry practices that we should include in our proposal with respect to the form and content of financial statements?
The Commission is proposing new rule 30e–3 under the Investment Company Act, which would, if adopted, permit, but not require, a fund to satisfy requirements under the Act and rules thereunder to transmit reports to shareholders if the fund makes the reports and certain other materials accessible on its Web site. Reliance on the rule would be subject to certain conditions, including conditions relating to (1) the availability of the shareholder report and other required information, (2) prior shareholder consent, (3) notice to shareholders of the availability of shareholder reports, and (4) shareholder ability to request paper copies of the shareholder report or other required information.
This new option is intended to modernize the manner in which periodic information is transmitted to shareholders. We believe it would improve the information's overall accessibility while reducing burdens such as printing and mailing costs borne by funds, and ultimately, by fund shareholders. As described below, today's proposal draws on the Commission's experience with use of the Internet as a medium to provide documents and other information to investors. The proposal is supported by recent Commission investor testing efforts and other empirical research concerning investors' preferences about report transmission methods and use of the Internet for financial and other purposes generally. At the same time, the Commission recognizes that empirical research, discussed below, demonstrates that some investors continue to prefer to receive paper reports. The proposal therefore incorporates a set of protections intended to avoid investor confusion and protect the ability of investors to choose their preferred means of communication.
Reliance on the rule would be optional. Funds that do not maintain Web sites or that otherwise wish to transmit shareholder reports in paper or pursuant to the Commission's existing electronic delivery guidance would continue to be able to satisfy transmission requirements by those transmission methods. Furthermore, under the rule as proposed, a fund relying on the rule to satisfy shareholder report transmission obligations with respect to certain shareholders would not be precluded from transmitting shareholder reports to other shareholders pursuant to the Commission's electronic delivery guidance. We expect that funds would continue to rely on the Commission's guidance to electronically transmit reports to shareholders who have elected to receive reports electronically, and rely on the rule with respect to shareholders who have not so elected (
Funds are generally required to transmit reports to shareholders on a semiannual basis.
More recently, the Division of Investment Management published guidance stating the staff's position that electronic delivery of a notice pursuant to rule 19a–1 under the Investment Company Act, consistent with the Commission's electronic delivery guidance, would satisfy the purposes and policies underlying the rule.
Recent investor testing and Internet usage trends have highlighted that preferences about electronic delivery of information have evolved, and that many investors would prefer enhanced availability of fund information on the Internet. For example, investor testing sponsored by the Commission and conducted in 2011
Also, in 2007, the Commission engaged a consultant to conduct focus group interviews and a telephone survey concerning investors' views and opinions about various disclosure documents filed by companies, including mutual funds. We have placed the consultant's report concerning the focus group testing and related transcripts in the comment file for the proposed rule (available at
In the time since this investor testing was conducted, access to and use of the Internet has continued to increase significantly, including among demographic groups that have previously been less apt to use the Internet. For example, a study conducted by the Pew Research Center's Internet & American Life Project in 2013 found that only 15% of American adults ages 18 and older do not use the Internet or email—falling from 26% in 2011, when our investor testing was conducted, and from 39% a decade before in 2001.
These trends have also extended to use of the Internet for financial purposes. For example, a recent survey by the Investment Company Institute found that in 2014, 94% of U.S. households owning mutual funds had Internet access (up from 68% in 2000), with widespread use among various age groups, education levels and income levels.
Given the evolving preferences and trends in Internet usage, in particular with regard to the delivery of financial information, we believe that it is appropriate to propose a rule that would permit the Web site transmission of fund shareholder reports, while maintaining the ability of shareholders who prefer to receive reports in paper to receive reports in that form. Funds and their shareholders would benefit from the reductions in related printing and mailing costs. Also, the rule, as proposed, would consolidate current and historical portfolio holdings information in one location (
Although we believe the proposed rule would benefit many investors, we recognize that there are concerns associated with how some investors may be affected. For example, as discussed above, investor testing suggests that a significant minority of investors prefer to receive paper reports and that some demographic groups of investors may be less likely to use the Internet. Some of these investors might not fully understand the actions they would need to take under the proposed rule to continue to receive their reports in paper. We believe that it is critical that these investors continue to receive disclosure in a means that is convenient and accessible for them. In addition, there is a risk that even some investors that prefer to use the Internet might be less likely to review reports electronically than they would in paper. We also believe it is critical that the proposed rule communicate the importance of the information that would be made available on the Web site.
Accordingly, as discussed below, the proposed rule would include certain safeguards for investors who wish to continue to receive shareholder reports in paper, by requiring prior consent of investors, and continuing to make shareholder reports and other required information available in paper upon request. The proposed rule would also include requirements intended to emphasize the importance of the information available on the Web site. These protections are intended to maintain the ability of investors who prefer to receive reports in paper to continue to do so without confusion, as well as to provide to investors clear and prominent printed notifications each time a new shareholder report is made available online. We request comment below on the potential concerns articulated above, as well as the steps we are proposing to address them while capturing the potential benefits for investors and funds of electronic communication.
As proposed, new rule 30e–3 would provide that a fund's annual or semiannual report to shareholders would be considered transmitted to a shareholder of record if certain conditions set forth in the rule are satisfied as to (a) availability of the report and other materials, (b) shareholder consent, (c) notice to shareholders, and (d) delivery of materials upon request of the shareholder.
Under the rule as proposed, the fund's report to shareholders under rule 30e–1 or 30e–2 would be required to be publicly accessible, free of charge, at a
In addition to the most current shareholder report, the rule as proposed would require that the fund post on its Web site (1) any previous shareholder report transmitted to shareholders of record within the last 244 days,
These materials would also be required to be publicly accessible in the same manner and for the same time period as the current shareholder report.
To conform the form and content of the portfolio holdings schedules for the first and third quarters to those schedules presented in the fund's shareholder reports for the second and fourth quarters, the proposed rule would require the schedules for the first and third quarters to be presented in accordance with the schedules set forth in §§ 210.12–12—12–14 of Regulation S–X [17 CFR 210.12–12—12–14], which need not be audited.
These Web site portfolio disclosure requirements would be generally consistent with funds' current disclosure obligations under Regulation S–X for reports filed on Forms N–Q and N–CSR.
Proposed rule 30e–3 would require compliance with certain conditions designed to ensure the accessibility of shareholder reports and other required materials.
Third, the rule as proposed would include a safe harbor provision that would allow a fund to continue relying on the rule even if it did not meet the posting requirements of the rule for a temporary period of time.
While we believe that many investors would prefer electronic transmission of shareholder reports based on investor testing and Internet usage trends, we also acknowledge that there likely will be investors that may continue to prefer receiving shareholder reports in paper.
To obtain implied consent as to a shareholder, the fund would be required to transmit to the shareholder a separate written statement (“Initial Statement”), at least 60 days before it begins to rely on the rule, notifying the shareholder of the fund's intent to make future shareholder reports available on the fund's Web site until the shareholder revokes consent.
• State that future shareholder reports will be accessible, free of charge, at a Web site;
• explain that the fund will no longer mail printed copies of shareholder reports to the shareholder unless the shareholder notifies the fund that he or she wishes to receive printed reports in the future;
• include a toll-free telephone number and be accompanied by a reply form that is pre-addressed with postage-paid and that includes the information that the fund would need to identify the shareholder, and explain that the shareholder can use either of those two methods at any time to notify the fund that he or she wishes to receive printed reports in the future;
• state that the fund will mail printed copies of future shareholder reports within 30 days after the fund receives notice of the shareholder's preference;
• contain a prominent legend in bold-face type that states: “How to Continue Receiving Printed Copies of Shareholder Reports.”
The Initial Statement is designed to permit funds to infer that a shareholder has consented to electronic transmission of future shareholder reports by alerting the shareholder to the fact that the shareholder will no longer receive printed copies in the future unless the shareholder notifies the fund that he or she wishes to receive print copies of such reports in the future. Because of the importance of this information, in addition to the required prominent legend on the envelope in which the Initial Statement is delivered or on the Initial Statement itself, the proposed rule would require certain conditions intended to ensure that the Initial Statement is not obscured by other materials. Specifically, the proposed rule would require that the Initial Statement could not be incorporated into or combined with another document,
If the fund does not receive the reply form or other notification indicating that a particular shareholder wishes to continue to receive paper reports by mail within 60 days after the fund sends the Initial Statement, then the fund may begin to transmit shareholder reports to that shareholder electronically, provided that it meets the other conditions of the rule.
Proposed rule 30e–3 would require funds relying on the rule with respect to a shareholder who has consented to electronic transmission pursuant to the conditions of paragraph (c)(1) of the rule to send a notice (“Notice”) within 60 days of the close of the fiscal period to which the report relates.
As proposed, the Notice, like the Initial Statement, would be required to
• Contain a prominent legend in bold-face type stating that an important report to shareholders is available online and in print by request;
• state that each shareholder report contains important information about the fund, including its portfolio holdings, and is available on the Internet or, upon request, by mail, and encouraging shareholders to access and review the report;
• include a Web site address that leads directly to each report the fund is transmitting to the recipient shareholder in reliance on rule 30e–3;
• include the Web site address where the shareholder report and other required portfolio information is posted;
• provide instructions on how a shareholder may request, at no charge, a paper copy of the shareholder report or other materials required to be made accessible online, and an indication that the shareholder will not receive a paper copy of the report unless requested;
• include a toll-free telephone number and must be accompanied by a reply form that is pre-addressed with postage-paid and that includes the information that the fund would need to identify the shareholder, and explain that the shareholder can use either of those two methods at any time to notify the fund that he or she wishes to receive printed reports in the future.
The proposed Notice is designed to alert shareholders to the availability of a shareholder report online and to provide shareholders with information on how to obtain a paper copy of the report if they should want one. We believe it is important to limit the information in the Notice and the other materials sent along with the Notice in order to ensure that shareholders are made aware of the availability of a shareholder report and so that the availability of the report does not become obscured. Therefore, the rule as proposed would limit the information contained in the Notice to the information required by the rule.
Similar to the Commission's rules on householding prospectuses, shareholder reports, and proxy statements and information statements,
Proposed rule 30e–3 would also require, as a condition to reliance on the rule to transmit shareholder reports electronically, that the fund (or a financial intermediary through which shares of the fund may be purchased or sold) must send, at no cost to the requestor and by U.S. first class mail or other reasonably prompt means, a paper copy of any of the materials discussed above—
Rule 30e–1(d) under the Investment Company Act permits an open-end management investment company to transmit a copy of its prospectus or statement of additional information in place of its shareholder report, if it includes all of the information that would otherwise be required to be contained in the shareholder report.
Under the current rules, in lieu of providing a complete schedule of portfolio investments as part of the financial statements included in its shareholder report, a fund may provide a summary schedule of portfolio investments (“Summary Schedule”).
We believe that use of the summary schedule may be unnecessary,
We are also proposing some related amendments to certain of our rules and forms. First, we are proposing to amend rule 498 under the Securities Act, which concerns the use of a summary prospectus,
Second, we are proposing to amend rule 498 under the Securities Act and rule 14a–16 under the Exchange Act to include an Initial Statement or Notice that would be required by proposed rule 30e–3 among the materials that are permitted to accompany and have equal or greater prominence than the summary prospectus prepared in reliance on rule 498 and a notice of Internet availability of proxy materials.
We request comments on our proposal that would permit electronic transmission of shareholder reports.
• To what extent are funds currently relying on the Commission's guidance on the use of electronic media to deliver or transmit disclosure documents and other information to shareholders? To what extent have shareholders elected to receive disclosure documents and other information in general, and shareholder reports in particular, through electronic means? In the case of shareholders who have elected electronic delivery of disclosure documents in general, and delivery of shareholder reports in particular, to what extent are those shareholders accessing those materials online? Please provide supportive data to the extent available.
• If proposed rule 30e–3 is adopted, to what extent would funds (i) choose to rely on the rule, and (ii) continue to rely on guidance concerning electronic transmission that we have already issued?
• Would availability of the rule change in any way current industry practices on transmitting shareholder reports electronically? For example, we expect that funds would continue to rely on the Commission's guidance to electronically transmit reports to shareholders who have elected to receive reports electronically, and rely on the rule with respect to shareholders who have not so elected. For administrative or other purposes, would funds discontinue their reliance on the Commission's guidance and instead rely on the rule to transmit reports electronically with respect to their entire shareholder base? If so, why? What impact, if any, would the proposed rule have on the transmission of reports to shareholders of UITs required to transmit reports pursuant to rule 30e–2 under the Investment Company Act? What impact, if any, would the proposed rule have on the transmission of reports to shareholders holding fund shares through financial intermediaries or other omnibus type arrangements? Should we permit funds that rely on rule 30e–3 to continue to rely on prior electronic transmission guidance for certain of their shareholders? Why or why not?
• If rule 30e–3 is adopted as proposed, in the case of funds relying on the rule to transmit reports electronically to one or more shareholders, would funds nonetheless seek shareholder consent to transmit reports to those shareholders pursuant to the Commission's electronic guidance in lieu of the rule? Why or why not?
• Should we, as we have proposed, allow funds to transmit reports to shareholders electronically by making them accessible on a Web site? Would investors prefer that these materials be transmitted in this manner? What would be the effect of proposed rule 30e–3 on the ability of investors to access shareholder reports? Would the shareholder report information be more useful or less useful if transmitted in the manner proposed? Would investors be more aware or less aware of the availability of the information if transmitted in reliance on the proposed rule?
• Would any positive or negative effect of the proposed rule on investors be disproportionately greater for certain investors than for others? If so, which investors would be disproportionately affected, to what extent, and how would such effects manifest? What, if any, additional measures could help mitigate any such disproportionate effects? Please provide supportive data to the extent available.
• Rule 30e–3 as proposed contains a number of conditions to be satisfied for reliance on the rule. Are the proposed conditions appropriate? Are there conditions that should be added or are any of the proposed conditions inappropriate? If so, state the conditions and the reasons why.
• The rule as proposed would require that the materials required to be accessible online be publicly accessible, free of charge, at the Web site specified in the Notice, and does not expressly require that the Web site be the fund's Web site. Should the rule require that the materials be accessible at the fund's Web site? Why or why not?
• What materials should be required to be accessible in order for a fund to rely on the rule? For example, we have proposed that a fund relying on the rule would be required to make accessible the shareholder report, the shareholder report for the prior period, and in the case of a fund that is a management
• The rule as proposed would require that the materials made accessible on the Web site be presented in a format or formats that are convenient for both reading online and printing on paper. Is the proposed format requirement appropriate? Are there liability or other concerns that would arise in connection with meeting a fund's obligation to transmit shareholder reports under Section 30(e) and the rules thereunder? Should we instead require that the materials be presented in a format or formats that are human-readable and capable of being printed on paper in human-readable format? Why or why not?
• How soon should each of the materials be required to be accessible, and how long should each be required to remain accessible?
• The proposed rule would contain a safe harbor for instances in which the materials required to be made accessible are not available for a temporary period of time. Is the safe harbor as proposed appropriate, or should it be modified? For example, should the rule be more proscriptive as to the period of time in which action must be taken to resolve any issues?
• Should we require the Web site on which the proposed rule's required materials are made accessible to incorporate safeguards to protect the anonymity of its visitors? For example, should we require similar conditions to those provided in rule 14a–16 under the Exchange Act relating to Internet availability of proxy materials? Why or why not? If so, what specific requirements should we consider?
• Should the proposed rule require that a shareholder consent to electronic transmission of shareholder reports before a fund begins to rely on the rule? Should we permit funds to obtain implied consent, as proposed, or should we require funds to receive express consent? Are there certain circumstances in which funds should not be permitted to obtain implied consent? For example, if an investor upon opening a new account does not opt-in to electronic delivery of documents, should the fund be permitted nonetheless to seek to rely on the proposed rule as to that shareholder? Why or why not?
• Under the proposed rule, each series of a registrant offering multiple series would need to obtain separate consent as to a shareholder, regardless of whether consent was obtained from that shareholder by other series offered by that registrant. If a fund has obtained implied consent from a shareholder as to a particular series, and subsequently the shareholder invests in one or more other series offered by the fund, should the fund be required to obtain consent as to those other series, or should the fund be permitted to infer consent as to all series offered by the fund? Why or why not? Should the fund be permitted to infer consent as to only other series offered by the registered investment company, or should the fund be permitted to infer consent as to other funds within the fund complex? What, if any, are the special considerations relating to investors who invest through intermediaries?
• Under the proposed rule, to obtain implied consent as to a shareholder, the fund would be required to transmit to the shareholder an Initial Statement, at least 60 days before it begins to rely on the rule. Are the proposed disclosures for the Initial Statement appropriate? Should a fund be required to provide to a shareholder other disclosures before inferring consent to electronic transmission?
• Should the rule require funds to provide multiple written statements (
• What methods should shareholders be permitted to use to deny or revoke consent to electronic transmission?
• Should we permit the Initial Statement to be incorporated into, or combined with, one or more other documents? If so, which documents should we permit the Initial Statement to be incorporated into or combined with?
• The rule as proposed would require that the Initial Statement must be sent separately from other types of communications and may not accompany any other document or materials except the fund's current summary prospectus, statutory prospectus, statement of additional information, or Notice of Internet Availability of Proxy Materials. Is this requirement appropriate? Should we permit the Initial Statement to accompany one or more other documents? If so, which documents?
• Should we, as we have proposed for the Notice, permit the Initial Statement to be sent in a “householded” manner?
• Should we require that the Initial Statement not contain any additional information other than that specified in the rule? Why or why not? Absent any requirement specified by rule, what other information would funds generally include in the Initial Statement? For example, would funds provide information on how shareholders could elect to receive the shareholder report and other documents and information electronically by satisfying the conditions contained in the Commission's guidance on use of electronic media relating to notice, access, and evidence of delivery?
• Should the rule permit funds to obtain implied consent from shareholders who have previously revoked consent? If so, should the rule prescribe a minimum period of time after consent was revoked before re-attempting to obtain implied consent from a shareholder? What period should that be and why?
• Should each fund be required to send a shareholder a Notice each time it transmits a shareholder report electronically under the proposed rule? Why or why not?
• We anticipate that the Notice would be sent in paper and mailed to shareholders. Should we permit the Notice to be sent by email if the shareholder has provided an email address? Why or why not? For example, are there any concerns that under such an approach, while a shareholder may have provided an email address (
• Are the proposed disclosures for the Notice appropriate? Should we require that the disclosure in the Notice concerning a shareholder's ability to indicate a preference for paper transmission in the future be preceded
• Should we permit the Notice to be incorporated into, or combined with, one or more other documents? If so, which documents should we permit the Notice to be incorporated into or combined with?
• The rule as proposed would require that the Notice must be sent separately from other types of communications and may not accompany any other document or materials except the fund's current summary prospectus, statutory prospectus, statement of additional information, or Notice of Internet Availability of Proxy Materials. Is this requirement appropriate? Should we permit the Notice to accompany one or more other documents? If so, which documents? For example, in the case of a Notice sent to a shareholder for the first time, should we permit or require the Notice to be accompanied with materials explaining the new transmission regime? Why or why not?
• Should we, as proposed, permit funds to either send separate Notices for each fund or send combined Notices for more than one fund held by a particular shareholder, or should the rule require one or the other of those approaches?
• Should we require that the Notice not contain any additional information other than that specified in the rule? Why or why not? Absent any restriction by rule, what other information would funds generally include in the Notice? For example, would funds provide information on how shareholders could elect to receive the shareholder report and other documents and information electronically by satisfying the conditions contained in the Commission's guidance on use of electronic media relating to notice, access, and evidence of delivery?
• In the case of management companies that are not SBICs, should we require such funds to send a notice each time the fund makes accessible its complete portfolio holdings for the first or third fiscal quarters? Why or why not?
• Should we, as proposed, permit the Notice to be sent in a “householded” manner?
• We are proposing that funds would file a form of the Notice with the Commission not later than 10 days after it is sent to shareholders. Is 10 days sufficient to meet this proposed filing requirement, or should some other filing period be required? If so, what time period and why?
• We anticipate that the form of Notice would be filed with the Commission on EDGAR pursuant to a separate EDGAR submission type. Should we instead require that the form of Notice be filed as an exhibit to a report filed with the Commission? For example, should we require that the form of Notice be filed as part of the fund's report on Form N–CSR or Form N–CEN? Why or why not?
• Should we require, as proposed, that funds send a paper copy of a shareholder report upon request? If so, how soon should a fund be required to send the report after receiving a request?
• Should we restrict funds relying on the proposed rule from using the summary schedule of investments? Why or why not? Are there considerations relating to the use of the summary schedule of investments other than those relating to printing and mailing costs that would make the summary schedule an important option for funds to provide portfolio holdings disclosures? Should we restrict funds from using the summary schedule only in reports transmitted pursuant to the rule, and permit funds to use the summary schedule in printed reports that are mailed to shareholders? Would funds prefer this additional flexibility? Why or why not?
• Are the proposed amendments to rule 498 and the registration forms regarding Web site availability of documents appropriate? Should we also, for example, specifically require funds relying on the rule to disclose on the cover page or elsewhere in the summary prospectus or statutory prospectus its reliance on the rule and what specific documents are made available on the Web site?
• To what extent would the proposed rule reduce burdens such as printing and mailing costs borne by funds? Would these burden reductions ultimately accrue to fund shareholders in the form of lower total fund operating expenses? For example, would these reductions ultimately accrue to shareholders in funds with arrangements that permit or limit payments to service providers or intermediaries such as broker-dealers in connection with the printing and mailing of shareholder reports? Please provide supportive data to the extent available.
• In addition to allowing funds to electronically transmit reports to shareholders, should we also consider options for permitting similar delivery of summary or statutory prospectuses? Why or why not?
We are proposing to amend the framework by which registered investment companies report census-type information to the Commission by rescinding Form N–SAR and replacing it with a new form—Form N–CEN.
In recent years, Commission staff has found that the utility of the information reported on Form N–SAR has become increasingly limited. We believe there are two primary reasons for this limited utility. First, in the past two decades, we have not substantively updated the information reported on the form to reflect new market developments, products, investment practices, or risks. Second, the technology by which funds file reports on Form N–SAR has not been updated and limits the Commission staff's ability to extract and analyze the data reported. Accordingly, we believe that by updating the content and format requirements for census reporting, as discussed below, the Commission will be better able to carry out its regulatory functions, while at the same time reducing burdens on filers.
Proposed Form N–CEN would gather similar census information about the fund industry that funds currently report on Form N–SAR, which could be aggregated and analyzed by Commission staff to better understand industry trends, inform policy, and assist with the Commission's examination program. However, in order to improve the quality and utility of information reported, proposed Form N–CEN would streamline and update information reported to the Commission to reflect current Commission staff information
In order to improve the utility of the information reported to the Commission, we are also proposing that reports on Form N–CEN be structured in an XML format.
We are proposing to require that all registered investment companies, except face amount certificate companies,
Like Form N–SAR, the sections of Form N–CEN that a fund is required to complete would depend on the type of registrant in order to better tailor the disclosure requirements.
• All management companies, other than SBICs, would complete Part C;
• closed-end funds and SBICs would complete Part D;
• ETFs (including those that are UITs) would complete Part E;
• UITs would complete Part F.
We request comment on who must file Form N–CEN.
• Should we require any other types of investment companies to file reports on Form N–CEN? For example, should face-amount certificate companies be required to file reports on Form N–CEN?
• Should funds offering multiple series be required to file a report for each series separately, rather than one report covering multiple series, as proposed?
Management investment companies currently file reports on Form N–SAR semi-annually,
We are proposing a filing period of 60 days after the end of the fiscal year for funds to file reports on Form N–CEN.
Rule 30b1–3 under the Investment Company Act currently requires a fund to file a transition report on Form N–SAR when a fund's fiscal year
In addition, a fund would be able to file an amendment to a previously filed report on proposed Form N–CEN at any time, including an amendment to correct a mistake or error in a previously filed report.
We request comment on the proposed frequency of reporting and proposed reporting deadline:
• Should reports on Form N–CEN be filed more frequently than annually, as proposed? Should we require management companies to file reports on Form N–CEN semi-annually and UITs to file reports annually, as is currently required by Form N–SAR? Are certain information items on Form N–CEN of a nature that they may change frequently or such that more frequent information about them should be reported to the Commission? If so, should any information items in proposed Form N–CEN be reported on proposed Form N–PORT or another form instead? If so, what items and on which forms?
• Consistent with the treatment of Form N–SAR filings for management companies, we are proposing that reports be filed 60 days after the end of the fund's fiscal year. Should we require a different filing period? If so, what period should we require and why? How long would it take funds to collect, verify, and file reports covering the information required by proposed Form N–CEN? Would the burdens associated with reports on proposed Form N–CEN be greater or less than those associated with reports on Form N–SAR?
• We have proposed that reports on Form N–CEN be filed as of the end of the fund's fiscal year. We understand that funds have other filing requirements that are tied to their fiscal-year end. Should we require some other period end date, such as end of calendar year? Should UITs be required to file reports as of the end of their fiscal year, as proposed, or should they file reports as of the end of their calendar year as they currently do with reports on Form N–SAR?
• We are proposing to eliminate rule 30b1–3 under the Investment Company Act. Should we instead retain the rule? Are the general instructions to Form N–CEN, as proposed, sufficiently clear as to the filing requirements when a fund changes its fiscal year end? If not, how should the general instructions be revised, or in the alternative, should a transition period rule be provided in connection with Form N–CEN? If so, how should a transition period be defined and what deadlines or timeframes should such a rule address?
• Should a fund be required to file an amendment to its Form N–CEN report or file a current report within a certain period of time if previously reported information changes? If so, what types of changes should trigger an amendment requirement? What filing period should be required for such an amendment requirement?
Part A of Form N–CEN, which would be completed by all funds, would collect information about the reporting period covered by the report. It would require funds to report the fiscal-year end date and indicate if the report covers a period of less than 12 months.
We request comment on the information items proposed to be reported in Part A.
Part B of Form N–CEN, which would also be completed by all funds, would require certain background and other identifying information about the fund. In the case of funds offering multiple series, if the response to an item in Part B of the form differs between series, the fund would be instructed to provide a response for each series, as applicable, and label the response with the name and series identification number of the series to which a response relates.
Included in this background information would be the fund's name,
As discussed above, funds would be required to include the location of their books and records in reports on proposed Form N–CEN. We note that books and records information is currently required by fund registration forms;
Similar to Form N–SAR,
Similar to Form N–SAR, proposed Form N–CEN would also require the fund to provide its classification (
Under proposed Form N–CEN, a management company would report information about its directors, including each director's name, whether they are an “interested person” (as defined by section 2(a)(19) of the Investment Company Act), and the Investment Company Act file number of any other registered investment company for which they serve as a director.
Part B would also include an item regarding matters that have been submitted to a vote of security holders during the relevant period.
Form N–SAR currently requires management companies to report a number of data points relating to fidelity bond and errors and omissions insurance policy coverage.
In order to better understand instances when funds receive financial support from an affiliated entity, our proposal would also require new information regarding the provision of such financial support.
In addition, Form N–CEN would include a new item requiring reporting as to whether the fund relied on orders from the Commission granting the fund an exemption from one or more provisions of the Investment Company Act, Securities Act or Securities Exchange Act during the reporting period.
As with Form N–SAR,
We are proposing to include for all funds several other accounting and valuation related items that are currently required for management companies by Form N–SAR, and that provide important information to the Commission regarding possible accounting and valuation issues related to a fund. These items include a question relating to material changes in the method of valuation of the fund's assets.
Form N–CEN would also require, like Form N–SAR, that management companies, other than SBICs, file a copy of their independent public accountant's report on internal control as an attachment to their reports on the form.
Unlike Form N–SAR, proposed Form N–CEN would also include an item relating to whether, during the reporting period, an open-end fund made any payments to shareholders or reprocessed shareholder accounts as a result of an NAV error.
We request comment on the proposed information items to be reported in Part B:
• Should any additional information regarding the fund be requested? Should any of the information that would be requested by proposed Form N–CEN be excluded? Should any of the information requested for all Registrants be limited to only certain Registrants?
• Should any other identifying number other than file number and LEI be requested?
• Should another definition or term be used to capture affiliations across related funds rather than “family of investment companies”? Should a broader term, such as “fund complex” as defined by instruction 1(b) to Item 17 of Form N–1A, be used instead? If so, why would a broader definition be better?
• Should Form N–CEN request any additional information concerning the board of directors or individual directors? For example, should Form N–CEN request information about the length of service of directors?
• Should Form N–CEN request information regarding a fund's CCO, as proposed? Should we, as proposed, make the CCO's phone number a non-public data field on all Form N–CEN filings? Are there any privacy concerns with the other information that would be requested? Would these concerns still exist if the information is reported in a non-public data field? Are there any other concerns with the information that would be requested? Is there other information we should request in lieu of information that presents such concerns?
• The current proposal eliminates Form N–SAR's attachment regarding matters submitted to a vote of security holders. Should we retain this requirement in Form N–CEN? Why or why not? Are there any costs to eliminating Form N–SAR's attachment in Item 77C in favor of yes/no type questions? Should the item regarding votes submitted to security holders apply to UITs?
• We request comment on Item 12 of proposed Form N–CEN. Should this item apply to UITs? Should “legal proceedings” be defined? Should it include administrative, mediated, or arbitrated matters? Are there any other litigation matters that should be deemed inherently material besides those enumerated in the instructions to the item? Is there any additional information that should be requested regarding material legal proceeding matters?
• Should Form N–CEN request information about the fidelity bond beyond what has been proposed (
• Is the term “errors and omissions insurance” clear or should the form include a definition? In addition to requesting information on whether any errors and omissions insurance claim was made as proposed, should dates of insurance claims and amounts of claims be requested? Should Form N–CEN permit funds to exclude the advancement of expenses under a policy from disclosure as a claim?
• The definition of “financial support” in proposed Form N–CEN would include a non-exclusive list of examples of actions that would (and would not) be deemed “financial support.” Money market funds currently report this information in reports on Form N–CR. Should the definition in proposed Form N–CEN be further expanded or limited from our definition in Form N–CR, and if so, how and why? For example, should we include a requirement to report information relating to inter-fund lending? Should we require non-money market funds to report receipt of financial support on a more timely basis? For example, should we require non-money market funds to file reports on Form N–CR or a similar form if they receive financial support?
• Should any additional information concerning exemptive or other orders be requested?
• We also considered whether to require funds to disclose reliance on no-action letters. If we were to require this information, should we limit it to certain no-action letters and, if so, which ones?
• Should we request additional information regarding fund accounting and valuation? If so, what information? Should the items relating to changes in valuation methods and changes in accounting principles and practices apply to UITs, as proposed?
• We request comment on Items 23 and 24 of proposed Form N–CEN. Should we request information regarding NAV errors and/or dividend and distribution payments that required a written statement pursuant to section 19(a) and rule 19a–1? Why or why not? Is there additional information we should request?
Part C of Form N–CEN would be completed by management investment companies other than SBICs. For management companies offering multiple series, this information would be completed separately as to each series.
Similar to Form N–SAR, proposed Form N–CEN would include general identifying information on management companies and any series thereof, including the full name of the fund, the fund's series identification number and LEI, and whether it is the fund's first
Pursuant to proposed Form N–CEN, a management company also would be required to identify if it is any of the following types of funds:
First, proposed Form N–CEN would require a management company to further indicate if it is an ETF or an ETMF.
Specifically, the proposed tracking difference data item would equal the annualized difference between the index fund's total return during the reporting period and the index's return during the reporting period, and the proposed tracking error data item would equal the annualized standard deviation of the daily difference between the index fund's total return and the index's return during the reporting period.
Finally, master funds would be required to provide identifying information with respect to each feeder fund, including information on unregistered feeder funds (
Proposed Form N–CEN would also require the management company to report if it seeks to operate as a non-diversified company, as defined in section 5(b)(2) of the Investment Company Act.
We request comment on the Part C questions relating to the fund's background and classification:
• Should additional identifying information be requested with regard to series or classes of management investment companies? Should any of the information proposed to be included in proposed Form N–CEN be excluded?
• We request comment on our list of types of fund. Are there any types of funds that we should add to or remove from the list? If so, which ones and why? Should we include additional categories based on investment strategy, as proposed? If so, which categories? Are the definitions in proposed Form N–CEN of the type of funds listed appropriate? Should any different definitions be used for types of funds? If so, what definitions and why? Are any terms that are not defined sufficiently clear or should we provide definitions? If so, what terms and what definitions?
• We request comment on the information to be required for index funds. Should we require the difference between the fund's total return during the reporting period and the index's return during the reporting period? Is this a meaningful methodology? Is there a better methodology for calculating tracking difference or tracking error?
• Should the form solicit information about the intent of a management company to operate as a non-diversified fund or should it request information about past operations during the reporting period?
We are also proposing to require a management company to identify if it invests in a controlled foreign corporation for the purpose of investing in certain types of instruments, such as commodities, including the name and LEI of such corporation, if any.
We request comment on the Part C questions relating to the fund's investments in certain foreign corporations:
• Should we request additional information on whether the management company invested in a foreign corporation or subsidiary, including CFCs? For example, should we request information on the types of investing activities the CFCs engage in or certain balance sheet items from the CFC?
As discussed above, we are proposing that funds provide certain securities lending information in reports on Form N–PORT to help inform the Commission, investors and other market participants about the scale of securities lending activity by funds and their collateral reinvestments.
Accordingly, we propose to require that each management company report annually on new Form N–CEN, in addition to whether it is authorized to engage in securities lending transactions and whether it loaned securities during the reporting period,
Under proposed Form N–CEN, management companies would also be required to disclose whether a securities lending agent or any other entity indemnifies the fund against borrower default on loans administered by the agent and certain identifying information about the entity providing indemnification if not the securities lending agent.
Because management companies sometimes engage external service providers as securities lending agents or cash collateral managers, we believe that some of the risks associated with securities lending activities by management companies could be impacted by these service providers and the nature of their relationships with the management companies and one another. Accordingly, we propose to require that management companies report some basic identifying information about each securities lending agent and cash collateral manager.
We request comment on the Part C questions relating to the management company's securities lending activities:
• Should management companies be required to report any or all of the proposed information concerning securities lending activity? If not, which items should not be required, and why? Should we collect any additional information?
• Should we require, as proposed, that management companies disclose annually whether any borrower of securities defaulted on its obligations to the management company? Why or why not? Should we instead, or additionally, require management companies to report monthly on Form N–PORT whether any borrower of securities defaulted on its obligations to the management company?
• Should we require, as proposed, that management companies report certain information about each securities lending agent and each cash collateral manager? Why or why not? Should we require that these funds disclose whether each of these external service providers is a first- or second-tier affiliate of the fund?
• In addition to requiring management companies to report whether they made each of the proposed types of payments associated with securities lending, should the Commission also require disclosure of
• Would the proposed reporting requirements regarding securities lending yield beneficial information? If not, what information should the Commission collect instead to conduct appropriate risk monitoring of securities lending activity by management companies? How should this information be collected?
• Would the proposed reporting requirements concerning securities lending activity be burdensome?
• Should proposed Form N–CEN include a specific definition for “securities lending agent”? Why or why not? If so, how should the term be defined? Should the form include a specific definition for “cash collateral manager”? Why or why not? If so, how should the term be defined?
• Are there other reporting requirements that the Commission should adopt for securities lending activity? If so, would these additional reporting requirements assist with Commission risk monitoring, inform the public, or both?
Like Form N–SAR, proposed Form N–CEN would include a requirement that management companies report whether they relied on certain rules under the Investment Company Act during the reporting period.
In addition, we are proposing to amend rule 10f–3 to eliminate the requirement that funds provide the Commission with reports on Form N–SAR regarding any transactions effected pursuant to the rule.
We request comment on the Part C questions relating to the management company's reliance on certain exemptive rules and orders:
• Should any additional information concerning exemptive or other rules be requested?
• We request comment on our proposal to eliminate the requirement under rule 10f–3 that funds provide the Commission with periodic reports on Form N–SAR. Should we eliminate this requirement or continue it under Form N–CEN? Why or why not? Are there any costs or benefits associated with eliminating this requirement?
As in Form N–SAR,
We request comment on the Part C questions relating to the management company's expense limitations and fee waivers:
• Are the proposed Form N–CEN items relating to expense limitations appropriate? Is there any additional information that we should request on the management company's expense limitations? If so, what items and why?
Similar to Form N–SAR,
Based on staff experience, management companies and their boards often rely on pricing agents to help price securities held by the fund. Therefore, we are proposing a new requirement that management companies provide identifying information on persons that provided pricing services during the reporting period,
Part C would also require identifying information on the ten entities that, during the reporting period, received the largest dollar amount of brokerage commissions from the management company
We request comment on the Part C questions relating to the fund's service providers:
• Are the proposed Form N–CEN items relating to service providers appropriate? Should any of the service providers or information regarding the service providers included in proposed Form N–CEN be excluded from the form? Are there other service providers for which we should require information? For example, should we request information on index providers and, in particular, affiliated index providers?
• Are the service providers identified in proposed Form N–CEN sufficiently clear or should we provide definitions for each provider? If so, what definitions should we use and why?
• Should additional information be requested regarding advisers or sub-advisers? Should the form provide a definition of the term sub-adviser?
• Should any additional specific service provider information be requested? Is there any proposed service provider information that should not be requested? Should proposed Form N–CEN request information on whether the service provider was hired or terminated, or on the affiliation of the service provider, as proposed?
• In addition to requesting service provider city and state or foreign country information as proposed, should street address, phone or email information be requested? Would inclusion of this additional information in proposed Form N–CEN raise any privacy or other concerns?
• Should the form request information regarding sub-transfer agents or other shareholder servicers?
• Should any additional information on service provider fees be requested? For example, should custodian, audit, or administrator fees be requested? Is certain service provider fee information unnecessary as redundant with financial statements?
• Is the use of the term “pricing service” appropriate as proposed? Should the form provide a definition of “pricing service”?
• Should we, as proposed, include custody pursuant to rules 17f–6 and 17f–7 under the Investment Company Act (types of custody not currently listed in Form N–SAR) on the list of types of custody in proposed Form N–CEN?
• Is there additional information regarding broker-dealers that should be requested? Should we use a different methodology other than largest amount of brokerage commissions or collect information for a larger or smaller number of brokers?
• Is there additional information regarding payments by the management companies to brokers or dealers for “brokerage and research services” that should be requested?
We request comment on Part C, generally:
• Are there any additional questions regarding management companies that we should include in proposed Form N–CEN?
Proposed Form N–CEN would, as Form N–SAR does, recognize that closed-end funds and SBICs have particular characteristics that warrant questions targeted specifically to them.
Similar to Form N–SAR, we are proposing to require in Part D of proposed Form N–CEN information on the securities that have been issued by the closed-end fund or SBIC, including the type of security issued (common stock, preferred stock, warrants, convertible securities, bonds, or any security considered “other”), title of each class, exchange where listed, and ticker symbol.
Like Form N–SAR,
We are also proposing to carry over Form N–SAR's requirements
Part G of proposed Form N–CEN would also require closed-end funds or SBICs to file attachments regarding material amendments to organizational documents,
Similar to Form N–SAR, we are proposing to require other census-type information relating to management fees and net operating expenses. Closed-end funds would be required to report the fund's advisory fee as of the end of the reporting period as a percentage of net assets.
Finally, like Form N–SAR, proposed Form N–CEN would require information regarding an SBIC's investment advisers, transfer agents, and custodians.
We request comment on the following information requirements relating to closed-end funds and SBICs:
• Are the proposed Form N–CEN items relating to closed-end funds and SBICs appropriate? Are there other information items relating to closed-end funds and SBICs that we should require? If so, what information and why? Are there any items relating to closed-end funds and SBICs in proposed Form N–CEN that should be excluded from the form?
• Is there additional information regarding trading in closed-end fund or SBIC securities that should be requested?
• Is there additional information regarding repurchases that should be requested?
• Should the form provide specific instructions on the calculation of management fees?
• Should net annual operating expenses be defined? Should they include amortization and depreciation expenses?
• Should the management fee for closed-end funds be requested as proposed or should other information such as the absolute amount of fees be requested?
Should we request this information for SBICs? Should the form request information on what the fee is based upon, such as a percentage of income or performance? Should breakpoints used in calculating the management fee be reported at each breakpoint level or should an average management fee be provided? Should the management fee information requested be forward-looking or should it be backward looking, as proposed, providing a management fee based on fees charged during the reporting period and, if so, which NAV (
• If a closed-end fund or SBIC pays a performance fee, should the form provide instructions regarding how they should calculate the fees to be disclosed?
• In connection with defaults, is reference to a $1,000 face amount appropriate? Would this requirement appropriately provide meaningful information not only on the amount of principal default but default on interest payments? Should the form also require information on the amount of debt outstanding to provide additional context and information related to the default?
• Regarding dividends in arrears, should the form request per share amounts as proposed or should it request the aggregate amount in arrears?
We are proposing to include a section in Form N–CEN related specifically to ETFs—Part E—which ETFs would complete in addition to Parts A, B, and G, and either Part C (for open-end funds) or Part F (for UITs). For purposes of Form N–CEN, an ETF is a special type of investment company that is registered under the Investment Company Act as either an open-end fund or a UIT. Unlike other open-end funds and UITs, an ETF does not sell or redeem its shares except in large blocks (or “creation units”) and with broker-dealers that have contractual arrangements with the ETF (called “authorized participants”).
Currently, ETFs are subject to the same comprehensive information reporting requirements on Form N–SAR as are other open-end funds or UITs, and they are not required to report additional, more specialized information because Form N–SAR predates the introduction of ETFs to the market and has not been amended to address ETFs' distinct characteristics. In 2009, the Commission amended its registration statement disclosure requirements for ETFs
Some of the new reporting requirements for ETFs that we are proposing today as part of Form N–CEN relate to an ETF's (or its service provider's) interaction with authorized participants. These entities have an important role to play in the orderly distribution and trading of ETF shares and are significant to the ETF marketplace.
Because of the importance of authorized participants, we are proposing new reporting requirements
Other proposed new reporting requirements relate to certain characteristics of ETF creation units—the large blocks of shares that authorized participants may purchase from or redeem to the ETF. In the primary market, ETF shares, bundled in creation units, are sold or redeemed either primarily “in kind”—
In order to better understand the capital markets implications of different creation unit requirements, primary market transaction methods, and transaction fees, we are proposing to require that ETFs annually report summary information about these characteristics of creation units and primary market transactions. ETFs are not currently required to report the information discussed below in a structured format, and public availability of many of the proposed data items is limited and indeterminable. To better understand the commonality of different transaction methods and the degree to which it varies across ETFs and over time, we propose to require that ETFs report the total value (i) of creation units that were purchased by authorized participants primarily in exchange for portfolio securities on an in-kind basis;
We also propose to require ETFs to report the number of ETF shares required to form a creation unit as of the last business day of the reporting period,
Finally, with respect to ETFs that are UITs, we ask for information regarding tracking difference and tracking error.
Taken together, we believe that, in addition to informing the Commission's risk analysis and, potentially, future policymaking concerning ETFs, the information these proposed requirements would yield could also help inform the interested public about the operation of, and possible risks associated with, these funds.
We request comment on the proposed reporting requirements for ETFs and ETMFs:
• Should ETFs be required to report the proposed additional information in Part E of proposed Form N–CEN that other funds would not be required to report?
• Should ETFs that are UITs and ETFs that are open-end funds be subject to the same special reporting requirements, or should the requirements be different from one
• Should the proposed items concerning authorized participants be required? Why or why not? Should we require additional information about authorized participants? For example, should we require funds to report the volume of shares purchased and redeemed in each month of the reporting period by each authorized participant, in order to better understand how primary market transactions are distributed across authorized participants and over the course of the reporting period? Should we require funds to report information on purchases and redemptions by each authorized participant on days when the most primary or secondary market activity is observed, which could be used to better understand how primary market activity responds to periods of unusual activity? Why or why not? If so, what specific information should be required?
• Should the proposed items concerning creation unit characteristics and primary market transactions be required? Why or why not?
• Should the ETFs and ETMFs that are subject to the proposed special reporting requirements be defined as proposed? If not, how should the group be defined? Are there certain entities that are not included in the proposed definitions that should be? Are there certain entities that are included in the proposed definitions that should not be?
• Would the proposed reporting requirements yield beneficial information? If not, what information should the Commission collect instead to conduct appropriate risk monitoring of ETFs? How should this information be collected?
• Would any of the proposed reporting requirements conflict with agreements between private parties, such as ETFs and authorized participants, to keep information confidential? If so, should the information nonetheless be required to be disclosed?
• How might the proposed reporting requirements concerning ETF primary market transaction fees be used by others outside the Commission, if at all? Are the proposed fee categories (
• How costly would the proposed reporting requirements for ETFs be? In addition to reporting and recordkeeping costs, are there competitive or other costs that should be considered in connection with these proposed requirements?
• Are there other reporting requirements that the Commission should adopt for ETFs? If so, would these additional reporting requirements assist with Commission risk monitoring, inform the public, or both?
Part F of Form N–CEN would require information specific to UITs. Like Form N–SAR, proposed Form N–CEN would recognize that UITs have particular characteristics that warrant questions targeted specifically to them.
Proposed Form N–CEN would also ask whether a UIT is a separate account of an insurance company.
Accordingly, similar to Form N–SAR,
As proposed, Form N–CEN would also require certain new information to be reported by separate accounts offering variable annuity and variable life insurance contracts. Specifically, if the UIT is a separate account of an insurance company, proposed Form N–CEN would require disclosure of its series identification number
With respect to insurance company separate accounts, our proposal would also require new identifying and census information for each security issued
Finally, Form N–CEN would carry over the Form N–SAR
We request comment on the following information requirements relating to UITs:
• Is there any additional information regarding series of UITs that should be requested? For example, are there other special UIT account types that should also be included in the form? Is there any information regarding UITs that is included in proposed Form N–CEN that should be excluded from the form?
• Is there any additional information regarding those involved in the formation and governance of the UIT and service providers to the UIT that should be requested? Should the form provide instructions or a definition regarding depositor or sponsor?
• Is there any additional information regarding the number of series that should be requested?
• We request comment on the requirement to provide asset information for the UIT. Is there any other information regarding the series' assets that should be provided? Form N–SAR item 127 contains a detailed list of asset types held by the UIT. The requirement in Form N–CEN is limited to total assets. Should we require more granular asset information in Form N–CEN, as we did in Form N–SAR item 127? If so which items should we include?
• We request comment on our items relating specifically to insurance company separate accounts. Should we include items relating solely to insurance company separate accounts? Are there any UIT items that insurance company separate accounts should be subject to that they would not be subject to under our proposal? Is there any other information that we should require for insurance company separate accounts?
Like Form N–SAR,
Thus, all funds that would be required to file Form N–CEN would, where applicable, be required to file attachments regarding legal proceedings,
As noted earlier, all of the attachments, except one, are currently required by Form N–SAR.
We request comment on the following information requirements relating to attachments to the Form:
• Should any additional attachments be required to be attached to Form N–CEN? Are any proposed attachments unnecessary and, if so, why? Should any of the attachments requested for all Registrants be limited to only certain Registrants?
• Should we require that the information be reported as attachments to the form or in narrative text-boxes embedded in the form?
• Should attachment requirements concerning copies of all constituent instruments defining the rights of the holders of any new class of securities and of any amendments to constituent instruments be limited to closed-end funds and SBICs as proposed? Should such requirements apply to all funds?
• Should the attachments regarding material amendments to organizational documents and new or amended advisory contracts apply only to closed-end funds and SBICs as proposed? Should these requirements apply to all funds? Should the advisory contract requirement apply only to advisory contracts to which the fund is a party or should it include all advisory contracts, including subadvisory contracts?
• Should any of the attachment filing requirements without materiality qualifiers be limited by materiality qualifiers?
• With Form N–CEN, we are proposing to eliminate a number of attachments currently required by items 77 and 102 of Form N–SAR. Are there any attachments to Form N–SAR, that are proposed to be eliminated, that should be included in Form N–CEN? Which attachments and why? Are there any costs associated with eliminating these attachments?
As we discussed above, with proposed Form N–CEN, we seek to improve the information that we collect in order to reflect changes in the fund industry since Form N–SAR's adoption in 1985. With that in mind, we are proposing to eliminate certain items from Form N–SAR that we believe are no longer needed by Commission staff or are outdated in their current form. For example, we are proposing not to include Form N–SAR's requirement relating to considerations which affected the participation of brokers or dealers or other entities in commissions or other compensation paid on portfolio transactions.
Form N–CEN would similarly eliminate a number of Form N–SAR items where the information is (or would be, under our proposed reforms) reported elsewhere—for example, items relating to fees and expenses, including front-end and deferred/contingent sales loads, redemption and account maintenance fees, rule 12b-1 fees, and advisory fees.
We are also proposing to eliminate certain information requirements specifically relating to SBICs and UITs that we no longer believe are necessary to collect on a census form because, much like the items discussed above, the benefit of having such information
The full list of items from Form N–SAR that would be included in Form N–CEN, as proposed, or would be eliminated is listed in Figure 2 below.
We request comment on the information requirements relating to items required in Form N–SAR, but not required in proposed Form N–CEN, including the following:
• Should proposed Form N–CEN require more detailed information relating to the fund's 12b–1 plan, as required by items 40 through 44 of Form N–SAR, considering detailed information regarding the fund's 12b–1 plan is otherwise disclosed in response to other reporting requirements?
• Should proposed Form N–CEN include financial information or balance sheet items, such as those required by item 72 of Form N–SAR?
• Despite the fact that certain items relating to fee information are required by other forms, should we include fee information in proposed Form N–CEN? If so, what specific information and why?
• Should proposed Form N–CEN include information relating to number of shares outstanding, total number of shareholder accounts, or average net assets during the reporting period as required by Items 74.U.1, 74.X, and 75 of Form N–SAR?
• Are there any other items currently in Form N–SAR that are proposed to be eliminated, which should be included in Form N–CEN? Which items and why? Are there any costs associated with eliminating these items?
We are also proposing technical and conforming amendments to various rules and forms. As discussed above, our proposal would rescind Form N–Q and create new Form N–PORT. In order to implement this proposed change, we propose to revise Forms N–1A, N–2, and N–3 to refer to the availability of portfolio holdings schedules attached to reports on Form N–PORT and posted on fund Web sites rather than on reports on Form N–Q.
Our proposal would also rescind Form N–SAR and replace it with new Form N–CEN. In order to implement this proposed change, we propose to revise the following rules and sections to remove references to Form N–SAR and replace them with references to Form N–CEN: 17 CFR 232.301, 17 CFR 240.10A–1, 17 CFR 240.12b–25, 17 CFR 249.322, 17 CFR 249.330, 17 CFR 270.8b–16, 270.30d–1, and 17 CFR 274.101.
Currently, reports on Form N–SAR are filed semi-annually by management investment companies as required by 17 CFR 270.30b1–1, and annually by UITs as required by 17 CFR 270.30a–1. Because our proposal would require reports on Form N–CEN to be filed annually by all registered investment companies, we propose to rescind 17 CFR 270.30b1–1 and revise 17 CFR 270.30a–1 to require all registered investment companies to file reports on Form N–CEN. We also propose to revise the following rules to remove references to 17 CFR 270.30b1–1 and add references to proposed rule 17 CFR 270.30a–1: 17 CFR 240.13a–10, 17 CFR 240.13a–11, 17 CFR 240.13a–13, 17 CFR 240.13a–16, 17 CFR 240.15d–10, 17 CFR 240.15d–11, 17 CFR 240.15d–13, and 17 CFR 240.15d–16.
In addition, as a result of the proposed new annual reporting requirement that would apply to all registered investment companies, we propose to rescind 17 CFR 270.30b1–2—which currently permits wholly-owned management investment company subsidiaries of management investment companies to not file Form N–SAR under certain circumstances—and propose new rule 17 CFR 270.30a–4—which would permit wholly-owned management investment company subsidiaries of management investment companies to not file Form N–CEN under those same circumstances. We also propose to amend 17 CFR 200.800 to display control numbers assigned to information collection requirements for Forms N–PORT and N–CEN by the Office of Management and Budget pursuant to the Paperwork Reduction Act. As discussed further below, 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.
Our proposed amendments to Regulation S–X would, among other things, require management investment companies to report new schedules for certain derivatives holdings.
We also propose to amend Form N–CSR to delete instructions addressing how certifications as to changes in the registrant's internal control over financial reporting should be handled during the transition period when certifications were being implemented on Form N–Q, because those instructions are no longer applicable.
We also propose to remove paragraph (a) of 17 CFR 232.105, which currently requires electronic filers to submit Forms N–SAR and 13F in ASCII, and redesignate paragraphs (b) and (c) as (a) and (b), respectively. Our proposal would rescind Form N–SAR, and Form 13F has been submitted by electronic filers in XML, rather than ASCII, since 2013.
We request comment on these technical and conforming amendments.
Currently, we anticipate the following compliance dates for our proposed amendments, as set forth below.
Given the nature and frequency of filings on proposed Form N–PORT, if Form N–PORT is adopted, the Commission expects to provide for a tiered set of compliance dates based on asset size. Specifically, for larger entities—namely, funds that together with other investment companies in the same “group of related investment companies”
For smaller entities (
If Form N–CEN and the related proposals are adopted, we are proposing a compliance date of 18 months after the effective date to comply with the new reporting requirements. We expect that eighteen months would provide an adequate period of time for funds, intermediaries, and other service providers to conduct the requisite operational changes to their systems and to establish internal processes to prepare, validate, and file reports on proposed Form N–CEN with the Commission. We are proposing the same compliance date for the related amendments to other rules and forms we are proposing today.
Unlike Form N–PORT, we do not expect to provide for a tiered compliance date based on asset size. We believe that it is less likely that smaller fund complexes would need additional time to comply with the requirements to file Form N–CEN because the requirements are similar to the current requirements to file Form N–SAR, and we expect that filers will prefer the updated, more efficient filing format of Form N–CEN. We are therefore proposing to require all funds, regardless of size, to file reports on Form N–CEN with the same compliance period.
Proposed rule 30e–3, if adopted, would permit (but not require) a fund to satisfy requirements under the Act and rules thereunder to transmit reports to shareholders if the fund makes the reports and certain other materials accessible on its Web site. As reliance on the rule would be optional, we believe a compliance period would not be necessary. Therefore, we expect that funds would be able to rely on the rule immediately after the effective date.
As discussed above, our proposed amendments to Regulation S–X are largely consistent with existing fund disclosure practices. As such, we do not expect that fund, intermediaries, or service providers would require significant amounts of time to modify systems or establish internal processes to prepare financial statements in accordance with our proposed amendments to Regulation S–X. Accordingly, we are proposing a compliance date for our proposed amendments to Regulation S–X of eight months after the effective date. We expect the same compliance date would apply to conforming amendments related to our proposed amendments to Regulation S–X, including the related amendment we are proposing today.
We request comment on the compliance dates discussed above.
• How, if at all, should the proposed compliance dates be modified? What factors should we consider when setting the compliance dates for the proposed rules and forms?
• We request comment on our proposed tiered compliance dates for filings on Form N–PORT. Is a threshold of $1 billion based on the net assets of funds together with other investment companies in the same “group of related investment companies” as of the end of the most recent fiscal year appropriate? Should the threshold be higher or lower?
• With respect to Form N–PORT, is our compliance date of eighteen months for larger filers appropriate? If not, what length of time would be appropriate for compliance with Form N–PORT? Would a shorter or longer compliance date be appropriate? For example, would a compliance date of 15 months be sufficient? Conversely, would funds need more time to comply, such as 20 months? Is our 12 month extension of the compliance period for smaller entities appropriate? If not, what length of time would be appropriate for compliance with Form N–PORT? Would a shorter or longer extension, such as 9 months or 15 months, be appropriate? How do we appropriately consider the benefits and costs to receiving the information more quickly and the potential costs and benefits associated with a shorter or longer compliance period?
• Should the Commission consider the implementation of reporting on Form N–PORT initially through a voluntary pilot program? If so, what length of time would be needed for funds and their service providers to appropriately test their reporting procedures?
• Is our eighteen-month compliance period for Form N–CEN appropriate? If not, what length of time would be appropriate? Would a shorter or longer compliance date be appropriate? For example, would a compliance date of 15 months be sufficient? Conversely, would funds need more time to comply, such as 20 months? Should the compliance period for Form N–CEN mirror that for Form N–PORT, or should we consider different compliance periods? Should we adopt a tiered compliance period for Form N–CEN? Why or why not?
• We are proposing to not have a compliance period for the option for Web site transmission of shareholder reports under proposed rule 30e-3. Is this appropriate?
• Is our eight-month compliance period for our proposed amendments to Regulation S–X adequate? If not, what length of time would be adequate and why?
We request and encourage any interested person to submit comments
The Commission is sensitive to the economic effects, including the benefits and costs and the effects on efficiency, competition, and capital formation that will result from the proposed changes to the current reporting regime. Changes to the current reporting regime include proposed Form N–PORT, the rescission of Form N–Q, amendments to the certification requirements for Form N–CSR, amendments to Regulation S–X, the proposed rule governing electronic transmission of shareholder reports, proposed Form N–CEN, and the rescission of Form N–SAR. The economic effects of the proposed changes are discussed below.
The Commission is proposing to modernize the content and format requirements of reports and disclosures by funds, and the manner in which information is filed with the Commission and disclosed to the public. The intent of the proposal is to enhance the Commission's ability to effectively oversee and monitor the activities of investment companies in order to better carry out its regulatory functions and to aid investors and other market participants to better assess the benefits, costs, and risks of investing in different fund products. In summary, and as discussed in greater detail in Part II above, the Commission is proposing the following changes to its rules and forms:
• We propose to require registered management investment companies and ETFs organized as UITs, other than money market funds or SBICs, to report monthly portfolio information in a structured data format on a proposed new form, Form N–PORT.
• Because we believe that monthly portfolio reports on Form N–PORT would render quarterly portfolio reports on current Form N–Q unnecessarily duplicative, we are proposing to rescind Form N–Q. We also propose to lengthen the look-back for Sarbanes-Oxley certifications on Form N–CSR to six months to cover the gap in certification coverage that would otherwise occur once Form N–Q is rescinded.
• We propose to revise Regulation S–X to require new, standardized enhanced disclosures regarding fund holdings in certain derivatives instruments; update the disclosures for other investments; and amend the rules regarding the general form and content of fund financial statements.
• We propose new rule 30e–3 under the Investment Company Act, which would allow funds to satisfy shareholder report transmission requirements by posting such reports on their own Web sites if they meet certain conditions, including posting quarterly portfolio holdings on their Web sites and notifying investors of its availability.
• We propose to rescind Form N–SAR, the form on which funds currently report census-type information on a semi-annual basis, and replace it with Form N–CEN, which would require the annual reporting of similar and additional information in an updated, structured format.
The current disclosure of information by funds serves as the baseline against which the costs and benefits as well as the impact on efficiency, competition, and capital formation of this proposal are discussed. The baseline includes the current set of requirements for funds to file reports on Forms N–CSR, N–Q, and N–SAR with the Commission and the content of such reports, including Regulation S–X, and in particular, its schedule of investments. The baseline also includes guidance from Commission staff and other industry groups that has established industry practices for the disclosure of a fund's schedule of investments and financial statements, and includes Commission guidance that permits funds to transmit these materials electronically today provided that certain other conditions are met. Lastly, the baseline includes the current practice of some funds to voluntarily disclose additional information. For example, some funds disclose monthly or quarterly portfolio investment information on their Web sites or to third-party information providers, and disclose additional information (
We discuss separately below the economic effects of each part of the proposal: the introduction of Form N–PORT, rescission of Form N–Q, amendments to the certification requirements for Form N–CSR, amendments to Regulation S–X, the electronic transmission of shareholder reports, and the introduction of Form N–CEN and the rescission of Form N–SAR. We identify for each part of the proposal the baseline from which the economic effects will be discussed and the parties most likely to be affected.
As noted above, the assets of registered investment companies exceeded $18 trillion at year-end 2014, having grown from about $4.7 trillion at the end of 1997.
The Commission relies on information included in reports filed by funds to monitor trends, identify risks, inform policy and rulemaking, and assist Commission staff in examination and enforcement efforts of the asset management industry. An essential factor to the Commission's ability to carry out its regulatory functions is regular, timely information about portfolio holdings and general, census information about funds. In general, this proposal would modernize the fund reporting regime and, among other effects, would result in an increased transparency of fund portfolios and investment practices. The increased transparency would improve the ability of the Commission to fulfill its regulatory functions. These functions include the development of policy and guidance, the staff's review of fund registration statements and disclosures, and the Commission's examination and enforcement programs. The increased transparency would also improve the ability of investors to select funds for investment, and therefore improve their ability to allocate capital across funds and other investments to more closely reflect their investment risk preferences. Increased transparency would also enhance competition among funds to attract investors.
At the outset, the Commission notes that, where possible, it has sought to quantify the costs, benefits, and effects on efficiency, competition, and capital formation expected to result from each part of the proposal and its reasonable alternatives. As discussed in further detail below, in many cases the Commission is unable to quantify the economic effects because it lacks the information necessary to provide a reasonable estimate.
The economic effects of the proposal depend upon a number of factors that we cannot estimate or quantify, such as the extent to which investor protection would increase along with the ability of the Commission to oversee the fund industry; the amount of new information that would become available as a result of requiring such information in regulatory filings (as opposed to information that is provided voluntarily); the increase in the availability of the information to all investors, institutional and individual, as a result of the improved structured format of the information; and the extent to which investors are able to use the information to make more informed investment decisions either through direct use or through third-party service providers. Therefore, much of the discussion below is qualitative in nature although we try to describe where possible the direction of these effects.
Form N–PORT, as proposed, would require registered management investment companies and ETFs organized as UITs, other than money market funds or SBICs, to report portfolio investment information to the Commission on a monthly basis. As discussed, only information reported for the last month of each fiscal quarter would be made available to the public in order to minimize potential costs associated with making the information public, including front-running or reverse engineering of a fund's investment strategies. Reports would be filed in a structured format using XML to allow for easier aggregation and manipulation of the data. As discussed above, we are also proposing to rescind Form N–Q but require that funds attach their complete portfolio holdings to Form N–PORT for the first and third fiscal quarters in accordance to Regulation S–X. We are also proposing to amend the form of certification in Form N–CSR to require each certifying officer to state that he or she has disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year to fill the gap in certification coverage that would otherwise occur once Form N–Q is rescinded.
The current set of requirements under which registered management investment companies (other than money market funds and SBICs) and ETFs organized as UITs publicly report their complete portfolio investments to the Commission on a quarterly basis and certain other information on a semi-annual basis,
Currently, the Commission requires registered management investment companies (other than money market funds and SBICs) to report their complete portfolio investments to the Commission on a quarterly basis.
Forms N–CSR and N–Q are required to be filed in HTML or ASCII/SGML format.
The economic effects from the introduction of new Form N–PORT would largely result from the disclosure of portfolio investment information in a structured format, as well as the additional information that investment companies would report. The economic effects would depend on the extent to which the portfolios and investment practices of investment companies become more transparent as a result of the increase in the amount and availability of portfolio investment information, and the ability of Commission staff and all investors to utilize the structured data. The current reporting requirements for investment companies, however, reduce the ability of Commission staff to evaluate the potential economic effects. For example, the non-structured format of reported portfolio investment information, the absence of information to identify securities, and reporting inconsistencies between investment companies all reduce the ability of Commission staff to aggregate information across the fund industry and to evaluate the economic effects of the proposal.
The proposal would increase the amount of portfolio investment information available for some investment companies more so than others. For example, investment companies that utilize derivatives as part of their investment strategy, or that otherwise engage in alternative strategies, would have more information become available describing their businesses than other investment companies. Information from Form N–SAR provides some indication as to the current use of derivatives by investment companies. Form N–SAR requires investment companies to identify permitted investment policies, and if permitted, investment policies engaged in during the reporting period. As of the second half of 2014, on average 75.4% of investment companies reported as permitted investment policies involving the writing or investing in options or futures, and on average 5.2% of investment companies reported engaging in each one of these policies during the report period.
As discussed, Form N–PORT would improve the information that registered management investment companies and ETFs organized as UITs (other than money market funds and SBICs) disclose to the Commission. The increase in the reporting frequency, the update to the structure of the information that reporting funds would disclose, and the additional information not currently disclosed, discussed in further detail below, would improve the ability of the Commission to understand, analyze, and monitor the fund industry. We believe that the information we receive on these reports would facilitate the oversight of funds and would assist the Commission, as the primary regulator of such funds, to better effectuate its mission to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation, through better informed policy decisions, more specific guidance and comments in the disclosure review process, and more targeted examination and enforcement efforts.
To the extent that monthly portfolio investment information is not currently available, the requirement that all investment companies make available
The ability of Commission staff to effectively use the information reported in Form N–PORT is dependent on the ability of staff to compile and aggregate information into a single database that can then be utilized to conduct industry-wide analyses. Otherwise, the information would only improve the ability of staff to analyze a single or a small number of funds at any one time. The structuring of the information in an XML format would improve the ability of the Commission to compile and aggregate information across all funds, and to analyze individual funds, a subset of funds, or the fund industry as a whole, and would increase the overall efficiency of staff to analyze the information. For example, the ability to compare portfolio investment information across reporting funds or for a single fund across report dates would improve the ability of the Commission to identify funds for examination and to identify trends in the fund industry.
The structuring of portfolio investment information may also improve the quality of the information disclosed by imposing constraints on how the information would be provided. A feature of XML is a built-in validation framework that can provide precise constraints as to how the information could be provided. These data checks, which are not available in the current formats for Form N–CSR and Form N–Q, are important to ensure that the reports contain information that is accurate and consistent across filings, and therefore usable by Commission staff. An improved, structured format may also promote additional efficiency among investment companies to the extent that the new reporting requirements encourage an update and integration of systems, and standardized formats for the disclosure and transmission of filings.
Form N–PORT would require information that is not currently required to be reported to the Commission, including portfolio and position level risk-sensitivity measures and additional information describing derivatives, securities lending activities, repurchase and reverse repurchase agreements, the pricing and liquidity of securities, and information regarding fund returns and flows. The information would increase the ability of Commission staff to understand the use of these products and activities as part of a fund's investment strategy, as well as the risks of a particular fund, a group of funds, and the fund industry.
The proposed requirement to report portfolio- and position-level risk sensitivity measures would provide Commission staff with a set of estimates that summarizes the risk exposures of a fund. The risk sensitivity measures improve the ability of Commission staff to efficiently analyze information for all funds and identify those funds not only with specific risk exposures but also risk exposures that appear to be outliers among peer funds. An ability to efficiently identify funds based on exposure to certain risks would improve the Commission's ability to analyze fund industry trends, monitor funds, and, as appropriate, engage in further inquiry or timely outreach in case of a market or other event. Commission staff could also use these measures to determine whether additional guidance or policy measures are appropriate to improve disclosures.
The calculation of portfolio- or position-level measures of risk for some derivatives, including derivatives with unique or complicated payoff structures, sometimes requires time-intensive computational methods or additional information that Form N–PORT would not require. As discussed above, based on staff experience and outreach, we understand that most funds calculate risk measures for such securities. Accordingly, we believe that requiring funds to provide these measures is more efficient than requiring funds to provide all of the information that might be necessary for the Commission, investors, or other potential users to calculate these measures. The requirement for investment companies to provide risk measures for derivatives, at the position-level and at the portfolio-level, would therefore improve the ability of staff to efficiently identify the risk exposures of funds regardless of the types of derivatives held or that could be introduced to the marketplace. In addition, the requirement for investment companies to provide portfolio-level measures of risk would also improve the ability of staff to efficiently identify interest rate and credit spread exposures at the fund level and conduct analyses without first aggregating position-level measures.
Form N–PORT would require funds to provide the contractual terms for debt securities and many of the more common derivatives including options, futures, forwards, and swaps; the reference instrument for all convertible debt securities and derivatives, and information describing the size of the position. The information would provide Commission staff an ability to identify funds with interest rate risk exposure or exposure to other risks such as those pertaining to a company, industry, or region.
As discussed, for securities lending activities and reverse repurchase agreements, Form N–PORT would require counterparty identification information, contractual terms, and information describing the collateral and reinvestment of the collateral. The additional information could improve the ability of Commission staff to assess fund compliance with the conditions that they must meet to engage in securities lending, as well as better analyze the extent to which funds are exposed to the creditworthiness of counterparties, the loss of principal of the reinvested collateral, and leverage creation through the reinvestment of collateral.
Form N–PORT would also require additional identification information regarding the reporting fund, the issuers of fund investments, and the investments themselves, including the reference instruments for convertible debt securities and derivatives investments. The additional
Investors, third-party information providers, and other potential users would also experience benefits from the introduction of Form N–PORT. While the frequency of public disclosure of portfolio information would not change, we believe that the structured format of this information would allow investors and other potential users to more efficiently analyze portfolio information. Investors and other potential users would also have quarterly disclosure of additional information that is currently not included in the schedule of investments reported on Form N–Q and Form N–CSR. The additional information as well as the structure of the information would increase the transparency of funds' investment strategies and improve the ability of investors and other potential users to more efficiently identify the risk exposures of the fund.
Form N–PORT would benefit investors, to the extent that they use the information, to better differentiate investment companies based on their investment strategies and other activities. For example, investors would be able to more efficiently identify funds that use derivatives and the extent to which they use derivatives as part of their investment strategies.
Portfolio investment information that investment companies report to the Commission is informative in describing the ongoing investment strategy of the fund,
Rescission of Form N–Q, along with its certifications of the accuracy of the portfolio schedules reported for each fund's first and third fiscal quarters, may result in some cost savings by funds in terms of administrative or filing costs. However, we expect any such savings, if any, to be minimal, because under our proposal each fund would still be required to file portfolio schedules prepared in accordance with §§ 210.12–12 to 12–14 of Regulation S–X for the fund's first and third fiscal quarters, by attaching those schedules as attachments to its reports on Form N–PORT for those reporting periods.
Form N–PORT, as proposed, would require registered management investment companies and ETFs organized as UITs, other than money market funds or SBICs, to incur one-time and ongoing costs to comply with the new filing requirements. Funds would incur additional ongoing costs to report portfolio investment information on a monthly basis on Form N–PORT instead of a quarterly basis as currently reported on Forms N–Q and N–CSR. Funds that voluntarily provide information to third-party information providers and on its Web site, including monthly portfolio investments, and additional information in fund financial statements, including additional information regarding derivatives similar to the requirements that we are proposing today, would bear fewer costs as a result of the proposal than those that do not.
Funds would also incur costs to file reports on Form N–PORT in a structured format. Based on staff experience with other XML filings, however, these costs are expected to be minimal given the technology that would be used to structure the data.
Form N–PORT would also require the disclosure of certain information that is not currently required by the Commission. In some instances, such as in the case of increased disclosures regarding derivatives investments and information concerning the pricing and liquidity of investments, the Commission is proposing to require parallel disclosures in the fund's schedule of investments; accordingly, we expect funds would generally incur one set of costs to adhere to the reporting of new information on Form N–PORT and in its schedule of investments. For other information, such as the reporting of particular asset classifications, identification of investments and reference instruments, and risk measures, the information would be disclosed on Form N–PORT only.
To the extent that our proposal would require information to be reported that is not currently contained in fund accounting or financial reporting systems, funds would bear one-time costs to update systems to adhere to the new filing requirements. The one-time costs would depend on the extent to which investment companies currently report the information required to be disclosed. The one-time costs would also depend on whether an investment company would need to implement new systems, such as to calculate and report risk-sensitivity measures, and to integrate information maintained in separate internal systems or by third parties to comply with the new requirements. Based on staff outreach to funds, we believe that, at a minimum, funds would incur systems or licensing costs to obtain a software solution or to retain a service provider in order to report data on risk metrics, as risk metrics are not required to be reported on the fund financial statements. Our experience with and outreach to funds indicates that the types of systems funds use for warehousing and aggregating data, including data on risk metrics, varies widely.
To the extent possible, we have attempted to quantify these costs. As discussed below, we estimate that funds would incur certain annual paperwork costs associated with preparing, reviewing, and filing reports on Form N–PORT.
Although under the proposal there would be no change to the frequency or time-lag for which investment company security position information is publicly disclosed, the increase in the amount of publicly available information and the greater ability to analyze the information as a result of its structure may facilitate activities such as “front-running,” “predatory trading,” and “copycatting/reverse engineering of trading strategies” by other investors. For example, Form N–PORT would result in the disclosure of additional information, such as pertaining to derivatives and securities lending activities, which could more clearly reveal the investment strategy of reporting funds and its risk exposures. The structured format of portfolio investments disclosure could also improve the ability of other investors to obtain and aggregate the data, and identify specific funds to front-run or predatory trade. These activities could reduce the profitability from developing new investment strategies, and therefore could reduce innovation and impact competition in the fund industry.
Investors that trade ahead of funds could reduce the profitability of funds by increasing the price of fund purchases and by decreasing the price of fund sales. These activities can reduce the returns to shareholders who invest
A trading strategy that follows the publicly reported holdings of actively managed funds can also earn similar if not higher after expense returns.
A comparison can be made between the economic effects from the introduction of Form N–PORT and the economic effects from the introduction of Form N–Q in May 2004 which increased the reporting frequency of portfolio investment information to the Commission from semiannual to quarterly. The introduction of Form N–Q resulted in an increase in the amount of information that could have been acted upon by other investors. For example, evidence indicates that the ability of copycat funds to outperform actively managed funds increased after the introduction of Form N–Q,
We have endeavored to mitigate the potential for front-running, predatory trading, and copycatting/reverse engineering by other market participants by proposing to maintain the status quo for the frequency and timing of disclosure of publicly available portfolio information. In addition, much, though not all, of the information that Form N–PORT would require, is already disclosed by reporting funds on Form N–CSR and Form N–Q.
Form N–PORT would require the disclosure of information that is currently nonpublic that could result in additional costs to funds and market participants. For example, Form N–PORT would require a fund to report the identities and weights of each of the individual components comprising the reference instruments underlying the fund's derivative investments, unless the reference instrument is an index whose components are publicly available on a Web site and are updated on that Web site no less frequently than quarterly, or the notional amount of the derivative represents 1% or less of the net asset value of the fund.
As discussed above, although our proposal would rescind Form N–Q, it would also require funds to file portfolio schedules prepared in accordance with §§ 210.12–12 to 12–14 of Regulation S–X for the fund's first and third fiscal quarters, by attaching those schedules as attachments to its reports on Form N–PORT for those reporting periods. Although the schedules attached to Form N–PORT would be largely identical to the information currently reported on Form N–Q, under our proposal funds would have 30 days to prepare and file the attachments to Form N–PORT, as opposed to the 60 days that funds currently have to prepare, certify, and file reports on Form N–Q. The faster turnaround time may result in increased costs to funds, but we expect these costs may be mitigated by removing the requirement that funds certify this information.
Rescission of Form N–Q would also eliminate certifications of the accuracy of the portfolio schedules reported for the first and third fiscal quarters, and would also result in funds providing certifications regarding their disclosure controls and procedures and internal control over financial reporting semi-annually rather than quarterly. To the extent that such certifications improve the accuracy of the data reported, removing such certifications could have negative effects on the quality of the data reported. Likewise, if the reduced frequency of the certifications affects the process by which controls and procedures are assessed, requiring such certifications semi-annually rather than quarterly could reduce the effectiveness of the fund's disclosure controls and procedures and internal control over financial reporting are assessed. However, we expect such effects, if any, to be minimal because certifying officers would continue to certify portfolio holdings for the fund's second and fourth fiscal quarters and would further provide semi-annual certifications concerning disclosure controls and procedures and internal control over financial reporting that would cover the entire year.
The proposed amendments to Regulation S–X would require new, standardized disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts, and additional disclosures regarding fund holdings of written and purchased option contracts; update the disclosures for other investments with conforming amendments, as well as reorganize the order in which some investments are presented; and amend the rules regarding the general form and content of fund financial statements, including requiring prominent placement of investments in derivative investments in a fund's financial statements, rather than allowing such schedules to be placed in the notes to the financial statements.
The current set of requirements under Regulation S–X, as well as the current practice of many funds
Regulation S–X prescribes the form and content of financial statements required in shareholder reports and registration updates. Today, Regulation S–X does not prescribe specific information to be disclosed under Regulation S–X for many investments in derivatives, which could result in inconsistent reporting between funds and reduced transparency of the information reported, and in some cases could result in insufficient information concerning the terms and underlying reference assets of derivatives to allow investors to understand the investment.
Many of the economic effects from the proposed amendments to Regulation S–X would largely result from an increase in investor ability to make investment decisions dependent on more transparent disclosure in shareholder reports and in the financial statements of registration statements. As discussed above, the economic effects would depend on the extent to which the portfolios and investment practices of investment companies become more transparent, and the ability of investors, and in particular individual investors, to utilize shareholder reports to make investment decisions. The economic effects would also depend on the extent to which investment companies already voluntarily provide disclosures that would be required by the proposed amendments. As a result of these factors, some of which are difficult to quantify or unquantifiable, the discussion below is largely qualitative although certain one-time and ongoing costs associated with the proposed amendments are quantified below.
The amendments to Regulation S–X could benefit investors by updating the information funds disclose in the financial statements of registration statements and shareholder reports. Our proposed amendments could benefit investors through increased transparency into a fund's investments, particularly for individual investors that we would not expect to use the information in Form N–PORT because of its structured format. In particular, the additional information that Regulation S–X would require for open option contracts both written and purchased, open futures contracts, open forward foreign currency contracts, open swap contracts, and other investments would increase the transparency of the fund's portfolio investments and risk exposures.
Other amendments would also improve the transparency into the fund's investments. For example, we are proposing to require funds to identify each investment whose fair value was determined using significant unobservable inputs.
In certain circumstances, we are also requiring funds to separately list each of the investments comprising the referenced assets underlying swap
We also believe that our proposed changes to the form and content of financial statements in Article 6 of Regulation S–X will similarly benefit investors, particularly individual investors, through greater transparency in a fund's financial statements. For example, we are proposing to require funds to disclose their investments in derivatives in the financial statements, as opposed to in the notes to the financial statements.
Other parties that would be affected by the amendments to Regulation S–X include the Commission and other market participants that would use shareholder reports and registration statements to obtain fund information. Although the amendments to Regulation S–X would primarily benefit investors and particularly individual investors, the Commission and other market participants could use the information reported in a fund's shareholder report such as the proposed notes to financial statement relating to income and expenses from securities lending activities, as well as the terms governing the compensation of securities lending agents, and would benefit from an increase in transparency into a fund's investments and financial statements during examinations. Commission staff believes that a large number of funds currently adhere to industry practices from which the amendments to Regulation S–X are derived. The proposal to amend Regulation S–X, therefore, would effectively standardize the information that all funds disclose in financial statements, and make the schedule of investments and financial statement disclosures consistent and thus more comparable across funds. Similar to the introduction of Form N–PORT, the amendments to Regulation S–X, to the extent that it increases the transparency of shareholder reports, could improve the ability of investors, particularly individual investors, to differentiate investment companies and make investment decisions. An increase in the ability of investors to differentiate investment companies and allocate capital across reporting funds closer to their risk preferences would increase the competition among funds for investor capital. In addition, by improving the ability of investors to understand investment risks and hence their ability to allocate capital across funds and other investments more efficiently, the introduction of Form N–PORT could also promote capital formation.
We believe that registrants on average will likely incur minimal costs from our proposed amendments to Regulation S–X because, as discussed above, based upon staff experience, we believe that a majority of funds are already providing the information that would be required by the proposed amendments to Regulation S–X in their financial statements.
For example, similar to our disclosures proposed in Form N–PORT,
As another example, the proposal includes an instruction to disclose the variable financing rates for swaps which pay or receive financing payments.
Funds would incur one-time and ongoing costs to comply with the amendments to Regulation S–X in addition to the costs attributable to new Form N–PORT. For the amendments to Regulation S–X, funds would incur one-time and ongoing costs to obtain the additional information that would be disclosed on shareholder reports and registration statements, and that would also not be disclosed on Form N–PORT; and funds would also incur one-time costs to format for presentation all additional information that would be disclosed on shareholder reports and registration statements. In addition, our proposal would require funds, to the extent they do not already do so, to present the schedules associated with rules 12–13 through 12–13D and 12–14 in the financial statements, as opposed to in the notes to the financial statements.
To the extent possible, we have attempted to quantify these costs. As discussed below, we estimate that management investment companies would incur certain one-time additional paperwork and other costs associated with preparing, reviewing, and filing semi-annual reports in accordance with our proposed amendments to Regulation S–X in the amount of approximately $2,417 per fund
As discussed above, the Commission is proposing new rule 30e–3 under the Investment Company Act, which would permit, but not require, a fund to satisfy requirements under the Act and rules thereunder to transmit reports to shareholders if the fund meets certain requirements. These requirements include making the reports and certain other materials accessible on its Web site and periodically notifying investors of the materials' availability.
The current set of requirements under which funds transmit shareholder reports to investors is the baseline from which we will discuss the economic effects of proposed rule 30e–3. The baseline also includes the current practice of many funds to make some or all of these reports—or other materials listing portfolio investment information such as reports on Form N–Q—accessible on their own Web sites. The baseline also reflects that some funds transmit these materials electronically today, pursuant to Commission guidance that permits such a transmission method on a shareholder-by-shareholder “opt in” basis, provided that certain other conditions are met.
Today, most funds are required to disclose their portfolio holdings on a quarterly basis, with holdings as of the end of the second and fourth fiscal quarters disclosed in the fund's semiannual and annual reports, respectively, and holdings as of the end of the first and third fiscal quarters disclosed in reports on Form N–Q. Funds are generally required to transmit reports to shareholders on a semiannual basis, and these reports have historically been paper copies mailed to shareholders.
As technology has developed, so has the need to modernize the manner in which shareholder reports and portfolio investment information are delivered to investors. As discussed above, recent investor testing and Internet usage trends have highlighted that investor preferences about electronic delivery of information have evolved, and that many investors would prefer enhanced availability of fund information on the Internet.
The economic effects of proposed rule 30e–3 are dependent on a number of factors, including the number of funds that would rely on the rule, the number of funds which currently rely on Commission guidance to transmit shareholder reports electronically, and the extent to which shareholders become more aware of the availability of portfolio investment information, view the information, and use the information to make investment decisions. Due to the optionality of the rule, we would expect that, in general, each fund would only rely on the rule if the benefits to that fund exceeded the costs. We have provided estimates of the costs associated with printing and mailing shareholder reports. However, information that would allow the Commission to quantify the other economic effects of the rule, such as how the availability of shareholder reports online will affect investors' use of the information, is not known to us.
Funds can transmit shareholder reports electronically today pursuant to Commission guidance. However, funds wishing to rely on this Commission guidance must satisfy certain conditions, including that shareholders agree to electronic transmission on a shareholder-by-shareholder “opt in” basis. We recognize that express shareholder consent can be difficult to obtain even for practices that many shareholders may prefer.
The proposed rule, to the extent that it is relied upon by funds and alters the current transmission of reports, would increase the accessibility of portfolio investment information including information from the first and third fiscal quarters that might otherwise be only available on EDGAR. The proposed rule would thereby increase the awareness of fund shareholders of the availability of portfolio investment information, and therefore also increase the likelihood that fund investors review portfolio investment information. The proposed rule would also increase the likelihood that fund shareholders view the portfolio
Funds and their shareholders would also benefit from a reduction in expenses related to the physical distribution of shareholder reports. Although the proposed rule would not have much of an effect, if any, on the expenses associated with the preparation of reports, we expect that the expenses associated with printing and mailing of shareholder reports would be substantially reduced if the rule is adopted. As discussed in detail below, of the estimated $116 million in annual paperwork expenses associated with the printing and mailing of shareholder reports,
The expected benefits would not necessarily be distributed uniformly across funds and across a fund's shareholders. Some funds already transmit materials electronically to some or all of their shareholders, and these funds would experience fewer benefits from electing to rely on the proposed rule. Some funds, such as funds that do not currently maintain Web sites, may choose not to rely on the proposed rule.
Although we believe that permitting electronic delivery “by default” would improve overall alignment of transmission method with investor preferences,
As discussed above, reliance on proposed rule 30e–3 would be optional, and funds that rely on the rule would incur costs to adhere to the rule. Relying funds would incur paperwork expenses associated with satisfying the conditions of the proposed rule, such as making the materials publicly accessible; preparing, reviewing, and transmitting a notice to shareholders; soliciting the consent of each shareholder by sending them an initial statement; and printing and mailing shareholder reports and other materials upon request. As discussed in detail below, we estimate that these paperwork expenses would be, in the aggregate, about $32 million each year.
Below, we also estimate that funds that elect to rely on proposed rule 30e–3 would incur average annual external costs of $500 per fund in connection with the requirement to provide a complete shareholder report upon request of a shareholder.
Below, we also estimate that funds that elect to rely on proposed rule 30e–3 would incur about 0.38 annual burden hours in connection with the initial statement conditions of the rule.
Below, we also estimate that funds that elect to rely on proposed rule 30e–3 would incur about 1.5 annual burden hours in connection with the notice conditions of the rule.
Thus, we estimate that the total annual paperwork expenses associated with satisfying the conditions of proposed rule 30e–3 would be $31,531,880. This estimate is based upon the following calculation: $2,477,934 associated with Web site accessibility conditions + $5,380,500 associated with provision of print report upon request condition + $5,476,428 associated with initial statement condition + $18,197,018 associated with notice condition = $31,531,880.
Below, we also estimate that funds that elect to rely on rule 30e–3 will, on average, incur an additional 0.92 one-time burden hours per fund in the first year to comply with the initial statement conditions.
Below, we also estimate that funds that elect to rely on rule 30e–3 will, on average, incur an additional 0.8 one-time burden hours per fund in the first year to comply with the notice conditions.
Thus, we estimate that the total one-time paperwork expenses associated with satisfying the conditions of proposed rule 30e–3 would be $15,891,066. This estimate is based upon the following calculation: $486,883 associated with Web site accessibility conditions + $11,506,482 associated with initial statement condition + $3,897,701 associated with notice condition = $15,891,066.
We have endeavored to mitigate the costs associated with compliance with the rule's conditions by, for example, requiring that the required schedule of portfolio investment information as of the end of the first and third fiscal quarters be presented consistent with the reporting requirements of Regulation S–X. Most funds would have established procedures in place to prepare and review such disclosures and would be familiar with the disclosure requirements. Because reliance on the proposed rule would be optional, a particular fund would not be expected to rely on the proposed rule if the costs of the rule to that fund would exceed its benefits. Funds that do not rely on the proposed rule would therefore not incur compliance costs.
Form N–CEN, as proposed, would require funds to report census information to the Commission on an annual basis. Although Form N–CEN would include many of the same data elements as the current census-type reporting form, Form N–SAR, it would replace items that are outdated or no longer informative with items of greater importance. Form N–CEN would also eliminate certain items that are reported to the Commission in other forms. Reports would also be filed in a structured, XML format to allow for easier aggregation and manipulation of the data. Form N–SAR would be rescinded.
The current set of requirements—management companies must file reports on Form N–SAR semi-
At the time it was adopted, Form N–SAR was intended to reduce reporting burdens and better align the information reported with the characteristics of the fund industry. As the fund industry has developed, including the development of new products, so has the need to update the information the Commission requires in order to improve its ability to monitor the compliance and risks of reporting funds. The format in which information is reported in Form N–SAR is also outdated, which reduces the ability of Commission staff to obtain and aggregate the information. The technology in which Form N–CEN would be filed allows for both the sender and recipient to validate the information against identical definitions, thereby increasing the accuracy of the information and therefore the ability of Commission staff to compare the information across funds.
The economic effects from the introduction of new Form N–CEN and the rescission of Form N–SAR would largely result from an update to the format of the information reported, as well as the update to the census information that investment companies would report. The economic effects would therefore depend on the extent to which investment companies become more transparent, and the ability of Commission staff and investors to utilize the updated disclosures. Form N–CEN would require census information about the fund industry reported in a structured format. However, while Form N–SAR is also reported in a structured format, Form N–CEN would modernize the information funds report and the required format of the filings. Therefore, although the introduction of Form N–CEN would increase the transparency of the fund industry, we do not know the extent to which the transparency would increase or the significance of its economic implications.
As discussed above, the Commission is proposing to rescind Form N–SAR and replace it with new Form N–CEN in order to improve the quality and utility of the information reported to the Commission. The improvement in the quality and utility of the information would allow Commission staff to better understand industry trends, inform policy, and assist with the Commission's examination program.
Similar to Form N–PORT, the ability of the Commission to most effectively use the information is dependent on the ability of staff to compile and aggregate the information into a single database. The structuring of the information in an XML format would improve the ability and efficiency of Commission staff to obtain and analyze the information. An improved structured format could also promote additional efficiency to the extent that the new reporting requirements encourage modernization of internal systems and standardization for the disclosure and transmission of information. An XML format would also improve its accuracy by providing sophisticated constraints as to how information could be provided and by allowing for built-in validation.
Form N–CEN would also modernize the census information that funds provide and increase its utility to Commission staff, investors, and other interested parties by reflecting the changes to the fund industry. The Commission would use the information in Form N–CEN to improve its understanding of fund industry trends and practices, and assist with the Commission's examination program. Commission staff has identified specific information that could improve its ability to effectively oversee funds including identifying information, when applicable, about the fund's service providers, information describing financial support by an affiliated entity, classification of fund type, and information describing investments in CFCs.
Along with the additional information, Form N–CEN would add new requirements for information specifically relating to the ETF primary markets, including more detailed information on authorized participants and creation unit requirements.
Form N–CEN would also add new requirements for information relating to a management company's securities lending activities, including information concerning the management company's securities lending agents and cash collateral managers.
We expect funds to also benefit from replacing Form N–SAR with Form N–CEN through reduced expenses. First, we estimate that N–CEN has a lower cost per filing than Form N–SAR, as a result of filing in an XML format, as opposed to the outdated format of Form N–SAR, and the elimination of certain information items on Form N–SAR that funds would not be required to report on Form N–CEN. Second, funds that are management investment companies would experience reduced paperwork related costs from decreasing the reporting frequency of census information from semi-annual to annual. We estimate that filers would have an aggregate annual paperwork related expenses of $12,395,064 for reports on Form N–CEN.
The rescission of Form N–SAR and the introduction of Form N–CEN, to the extent relevant, could provide similar benefits to investors, to third-party information providers, and to other potential users from an update to the census information that investment companies report and from an update to its structured format. Similar to Form N–PORT, we expect that institutional investors and other market participants could use the information from Form N–CEN more so than individual investors, and that the format of the data may make the information difficult for individual investors to understand. However, individual investors may indirectly benefit from the increase in information to the extent that it becomes available through third-party information providers. For the investors and other potential users that would obtain and use the information reported in Form N–CEN, the update to the structure of the information would improve their ability to efficiently aggregate the information collected on Form N–CEN across all investment companies.
The changes to the reporting of census information, including the reporting of the information in a modern structured format, could improve the ability of investors to differentiate investment companies and could therefore lead to an increase in competition among funds for investor capital. These changes would not significantly relate to the ability of investors to understand the investment risks of investment companies, and therefore would not significantly improve the ability of investors to efficiently allocate capital. Consequently, the reporting changes would not significantly promote capital formation.
As discussed above, we expect the adoption of N–CEN and rescission of Form N–SAR would result in reduced costs to funds in the form of lower expenses related to filing Form N–CEN relative to Form N–SAR. ETFs and closed-end funds, however, may have higher expenses in filing reports on Form N–CEN relative to other investment companies, as they will generally be required to provide more information. There could, however, be costs as a result of the change in the disclosure of census information. For example, the Commission would receive census information on an annual instead of semi-annual basis, and therefore the information would be more dated than if the information was reported to the Commission on a semi-annual basis.
Form N–CEN could impose costs on investors and other potential users of the information to obtain the information from a new or additional source, including the information that would not be included on Form N–CEN but would be available through other filings. The information that would not be included on Form N–CEN and that would not be available elsewhere would impose costs on investors and other potential users from a loss of information to the extent that the information is found to be useful.
The Commission has explored ways to modernize and improve the utility and the quality of the information that funds provide to the Commission and to investors. Commission staff examined how information reported to the Commission could be improved to assist the Commission in its rulemaking, inspection, examination, policymaking, and risk-monitoring functions, and how technology could be used to facilitate those ends. Commission staff also examined enhancements that would benefit investors and other potential users of this information, including updating the reporting obligations of funds to keep pace with the changes in the fund industry.
In formulating our proposal, we have considered many alternatives to the individual elements contained in our proposal, and those alternatives are outlined above in the sections discussing each of the five parts of our proposal, and we have requested comment on these alternatives.
We considered the frequency at which Commission staff believed it to be important to receive information from investment companies. A possible alternative to the monthly reporting of portfolio investment information in Form N–PORT is a quarterly reporting of the information, with the quarterly reports containing information for each month in the quarter. The quarterly reporting of portfolio investment information could decrease the ongoing burden of the proposal on investment companies. We do not believe, however, that the quarterly reporting of portfolio investment information would be as useful for Commission staff to oversee investment companies on an ongoing basis given the increase in alternative strategies and the use of derivatives, as this information, even if broken out into monthly data, would result in the Commission receiving the information with a longer time lag. For example, a longer time lag for the Commission to receive portfolio investment information could reduce its effectiveness to analyze the effect of a market or other event on the fund industry.
Likewise, a possible alternative to the annual reporting of census information in Form N–CEN is a semiannual
We also considered alternatives to extend or shorten the filing period of Form N–PORT from thirty days and Form N–CEN from sixty days. While a shorter filing period would provide more timely information to the Commission, it would also place a burden on funds that need time to collect, verify, and report the required information to the Commission. Conversely, a longer filing period would give funds more time to report the information and would decrease the potential costs to front-running or copycatting by other investors, but would decrease the utility of the information for the Commission. We therefore believe that the thirty-day filing period for Form N–PORT and the sixty-day filing period for Form N–CEN would appropriately balance the staff's need for timely information against the appropriate amount of time for funds to collect, verify, and report information to the Commission.
Other significant alternatives relate to the public dissemination of information reported on Form N–PORT. Alternatives to the proposal include making more of the portfolio and other information reported on the form either non-public or public, including making all or none of the information reported on Form N–PORT each month publicly available, and increasing or decreasing the lag from the date funds would file this information to when the information would be publicly released. Making more of the portfolio and other information reported on the form non-public or increasing the time-lag to release the information would reduce the amount of information investors have access to when making investment decisions. However, as discussed above, making more of the portfolio and other information reported on the form public or decreasing the time-lag could increase the risk of front-running, predatory trading, and copycatting/reverse engineering of trading strategies by other investors.
Other alternatives relate to the information that the Commission could require when determining the specific items to include and exclude on From N–PORT and Form N–CEN. The Commission considered what information it believes to be important for the Commission's oversight activities and to the public, and the costs to investment companies to provide the information. In particular, the Commission considered the benefits and costs of the information already disclosed in Form N–CSR, Form N–Q, and Form N–SAR, and that could be required on Form N–PORT and Form N–CEN. Commission staff believes that the benefits of the information currently disclosed by investment companies that would be reported on Form N–PORT and Form N–CEN, especially in a structured format, justify the costs to investment companies to report the information in these forms.
The Commission also considered the information that would be required on Form N–PORT as compared to the information on Form N–CEN. Commission staff considered the benefits to having the information more frequently updated as well as the cost to funds to report the information. Although the costs to report information on a more frequent basis imposes additional costs on funds, Commission staff believes the information that would be reported more frequently on Form N–PORT, relative to the annual reporting on Form N–CEN, is necessary for the Commission's oversight activities and could be important to other interested third-parties.
The Commission also considered the benefits and costs of the new information that would be required on Form N–PORT and Form N–CEN. The new information that would be required includes contractual terms for debt securities and derivatives, a description of reference instruments, if any, and information describing securities lending and repurchase and reverse repurchase agreements. A reasonable alternative would be to not require some of the new information, and another reasonable alternative would be to require information in addition to what is currently proposed.
As discussed, the Commission would require information which provides staff an ability to identify investment risks and engage in further outreach as necessary, and not requiring the information would substantially reduce the ability of the Commission to oversee the fund industry. In addition, the information would be important to investors to differentiate investment companies. Although the new information that would be reported on Form N–PORT and Form N–CEN could increase the initial and ongoing reporting costs for investment companies, and increase the likelihood of front-running or copycatting by other investors, Commission staff believes that the information is important to fully describe a fund's investments.
The Commission is also proposing to require risk-sensitivity measures at the portfolio and position level on Form N–PORT. These measures would aid Commission staff to efficiently understand the risk exposures of investment companies, especially those funds that invest in debt securities and derivatives. The portfolio risk-sensitivity measures, DV01 and SDV01, and the position level risk-sensitivity measure, delta, would improve the ability of Commission staff to efficiently approximate the risk exposures of reporting funds.
A reasonable alternative is to require additional portfolio and position level risk-sensitivity measures that would provide Commission staff a more precise approximation of the risk exposures of reporting funds for larger changes in the value of the reference instrument. For example, Form N–PORT could require at the portfolio level measures that describe the sensitivity of a reporting fund to a 50 or 100 basis point change in interest rates and credit spreads, and a measure of convexity; and Form N–PORT at the position level could require gamma.
The Commission is proposing a tiered compliance for filing reports on Form N–PORT—funds that together with other investment companies in the same group of related investment companies with assets over $1 billion would have eighteen months to file reports, and smaller groups of related investment companies with assets less than $1 billion would have thirty months to file reports. An alternative would be to not allow for tiered compliance and require all investment companies to begin filing reports on Form N–PORT within eighteen months. We believe it is appropriate to tier the compliance period to improve the ability of smaller fund complexes to make the system and internal process changes necessary to prepare reports on Form N–PORT. Although the Commission, investors, and other interested parties would potentially not have access to structured portfolio investment information for the smaller fund complexes until thirty months after the effective date, information similar to the proposed requirements concerning disclosures of derivatives that would be required on reports on proposed Form N–PORT would be available elsewhere, such in the fund's financial statements as a result of amendments to Regulation S–X. Although another alternative would be to tier the compliance period for our proposed amendments to Regulation S–X, we believe that it is less likely that smaller fund complexes would benefit from additional time to modify systems to adhere to the amendments to Regulation S–X because the proposed amendments are largely consistent with current disclosure practices and would therefore be unnecessary. Likewise, we could propose a tiered compliance period for reports on proposed Form N–CEN. However, as discussed above, we believe that it is less likely that smaller fund complexes would need additional time to comply with the requirements to file Form N–CEN because the requirements are similar to the current requirements to file Form N–SAR, and we expect that filers will prefer the updated, more efficient filing format of Form N–CEN. Commission staff also considered requiring funds to continue to report Form N–Q, and to amend Form N–SAR instead of replacing it with Form N–CEN. Commission staff believes, however, that the new reporting requirements for portfolio investment information, including the amendments to the certification requirements of Form N–CSR, would cause Form N–Q to become redundant if not outdated, and therefore impose costs on funds to file reports that would result in little benefit. Although requiring that certifying officers state that they have disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year would increase the burden of filing Form N–CSR, these certifications are necessary to ensure that the information reported continues to be accurate. The Commission also believes that the technology associated with Form N–SAR required the introduction of a new form in order to increase the benefits from the changes made to the reporting of census information. One effect of the amendments to Regulation S–X would be to provide investors with more transparency in a fund's investments. For example, as discussed above, we are proposing to require funds, under certain circumstances, to disclose the components of a custom index underlying swaps or option contracts. As an alternative, we could require funds to only disclose a brief description of the index or require a different threshold for identifying the components of the swap or options contract, such as a custom basket that represents a larger portion of the fund's assets under management. Although these alternatives would attenuate the information disclosed and reduce the potential costs to funds and index providers, these alternatives would result in less transparency for investors into the assets underlying a swap or options contract and any related risks associated with these investments.
The accessibility of information about a fund's investments would also increase as a result of the new option for transmission of shareholder reports and other portfolio investment information. In general, the requirements of proposed rule 30e–3 are designed to allow funds to take advantage of the cost efficiencies from the advancements in technology and to more closely align the transmission format to investor preferences, while at the same time ensuring that shareholders would have an opportunity to view reports in their desired form and have an opportunity to view portfolio investment information in a central and more familiar location. One alternative would be to require different notice and consent procedures, and another alternative would be for funds to report different portfolio investment information on their Web sites. We believe that the requirements of rule 30e–3, as proposed, provide investors an ability to receive shareholder reports in their desired format and become aware of the availability of portfolio investment information, while at the same time providing funds an opportunity to take advantage of advancements in technology and reduce burdens.
Lastly, the Commission is proposing that investment companies file Form N–PORT and Form N–CEN in an XML structured format. One alternative is to not structure the information. As discussed, the ability of Commission staff investors, third-party information providers, and other potential users to utilize the information is dependent on the efficiency in which the information investment companies provide can be compiled and aggregated. Commission staff believes that the affected parties to this proposal would experience substantially less benefit from the reporting of investment company information if the information is not structured. In addition, based on the Commission's understanding of current practices, it is likely that investment companies and third party service providers have systems in place to accommodate the use of XML. Therefore, requiring information in a format such as XML should impose minimal costs. The proposal would require funds to file certain attachments to their reports on Form N–PORT and Form N–CEN, and these attachments would not be required in a structured format. Commission staff believes that only marginal benefits would result from requiring funds to file these attachments in a structured, XML format due to the narrative format of the information provided.
The technology used to structure the data could affect the benefits and costs associated with the proposed rules, and we have therefore considered alternative formats for structuring the data, such as XBRL. Sending a data file from a sender to a recipient requires many conditions to be satisfied, and one of crucial importance to regulatory data collection is the need for validation. XML provides for a built-in validation framework, and is supported in all modern programming languages. Other data formats can achieve validation but through custom software. The nature of the information we are collecting also lends itself to an XML format due to the non-complex requirements to structure the information, and does not necessitate
Throughout this release, we have discussed the anticipated benefits and costs of the proposed rules and their potential impact on efficiency, competition, and capital formation. While the Commission does not have comprehensive information on all aspects of asset management industry reporting, the Commission is using the data currently available in considering the effects of the proposals. The Commission requests comment on all aspects of this initial economic analysis, including on whether the analysis has: (1) Identified all benefits and costs, including all effects on efficiency, competition, and capital formation; (2) given due consideration to each benefit and cost, including each effect on efficiency, competition, and capital formation; and (3) identified and considered reasonable alternatives to the proposed new rules and rule amendments. We request and encourage any interested person to submit comments regarding the proposed rules, our analysis of the potential effects of the rules and other matters that may have an effect on the proposed rules. The Commission requests that commenters identify sources of data and information as well as provide data and information to assist the Commission in analyzing the economic consequences of the proposed rules. We are also interested in comments on the qualitative benefits and costs we have identified and any benefits and costs we may have overlooked. We urge commenters to be as specific as possible.
Comments on the following questions are of particular interest.
• To what extent would the monthly public reporting or the quarterly public reporting of monthly portfolio investment information aid in the ability of other investors to front-run, predatory trade, or copycat/reverse engineer the investment strategy of reporting funds? To what extent would the monthly public reporting or the quarterly public reporting of monthly portfolio investment information reduce the incentives of fund companies to develop new or alternative strategies, and what would be the effect on fund competition? How would investors benefit from the public reporting of portfolio investment information in the first and second month of each fiscal quarter as compared to the public reporting of the third month only? Would investors benefit from the quarterly public reporting of monthly portfolio investment information? Why?
• To what extent would the additional information required on Form N–PORT, especially with respect to the contractual terms for debt securities and derivatives, including information describing reference instruments, if any, and to securities lending and repurchase and reverse repurchase result in additional front-running, predatory trading, or copycatting/reverse engineering by other investors? Does this raise any confidentiality or other concerns?
• What are the benefits, costs, and other economic effects from funds providing portfolio investment information in a structured XML format? In particular, what are the effects of structured portfolio investment information on the ability of other investors to front-run, predatory trade, or copycat/reverse engineer the investment strategy of reporting funds? How would the effect of structured portfolio investment information differ between funds that engage in alternative strategies or utilize derivatives as part of its investment strategy and those funds that do not? To what extent would portfolio investment information that is structured reduce the incentives of fund companies to develop new or alternative strategies, and what would be the effect on fund competition? Also, would the public reporting of portfolio investment information in an XML format result in a decrease in the costs to investors from obtaining the information?
• What are the operational benefits and costs to investment companies to file Form N–PORT and Form N–CEN in a structured format? What are the costs to funds from adapting systems to the new filing requirements? To what extent would the fund industry benefit from a standard format to report information?
• Is there additional information that Form N–PORT and Form N–CEN, as proposed, could require that would aid in the ability of the Commission to oversee the fund industry or that could be beneficial to other potential users? Are any of the proposed information requirements duplicative or unnecessary? What are the benefits and costs of reporting this additional information? Is there information that Form N–PORT and Form N–CEN, as proposed, would require that does not aid in the ability of the Commission to oversee the fund industry and would not benefit other potential users? What are the benefits and costs of not reporting this information?
• What are the costs, benefits, and other economic effects from investment companies reporting risk-sensitivity measures on Form N–PORT? What is the current availability of the measures to investment companies, in particular for more complex or exotic derivatives? Are there competitive or other economic effects from the reporting of risk-sensitivity measures? Would the public reporting of the risk-sensitivity measures disclose information relating to proprietary risk management practices of investment companies?
• To what extent would the proposal affect the ability of investors to understand the investment risks of investment companies as a result of the proposal and to efficiently allocate capital? Would investors be more likely to allocate additional capital to investment companies? What would be the effect on fund competition for investor capital?
• Under what circumstances and to what extent would funds choose to rely on proposed rule 30e–3 by making shareholder reports publicly accessible on a Web site and satisfying the other conditions of the rule? Would allowing funds that choose to rely on the proposed rule to transmit shareholder reports to their investors “by default” result in more investors viewing shareholder reports in a format that the investors prefer, or would the need for each investor who wishes to receive a printed report to affirmatively “opt-out” of electronic delivery reduce the number of shareholders that receive reports in the format that they prefer? Why or why not? What is the likelihood that investors would mistakenly opt-out and consent to Web site posting? Lastly, to what extent do investors compare portfolio investment information between fiscal quarters, and would investors benefit from the requirement that a fund's shareholder reports as well as its complete portfolio holdings from its most recent first and third fiscal quarters be publicly accessible on a Web site?
• What are the costs, benefits, and other economic effects to other market participants including third-party information providers, index providers, and swap dealers? For instance, what would be the economic effects of structured data on the cost to service providers to offer aggregated information to investors? Are there other market participants that would be affected by the proposal that are not discussed above? What are the benefits and costs to these other market participants?
• What are the benefits and costs of providing an additional twelve months for smaller entities to comply with the requirements to file Form N–PORT? Are there potential costs from smaller fund
• What are the costs associated with rescinding N–Q and replacing Form N–SAR? How reliant are investors, third-party information providers, and other interested parties on the data reported on these forms? What are the costs to investors, third-party information providers, and other interested parties to obtain the information from alternative sources? What are the benefits from the amendments to certification requirements of Form N–CSR? What are the costs?
• Are there alternatives to the proposal that the Commission did not consider that would result in a more robust disclosure regime for investment companies? What are the costs associated with those alternatives? Similarly, are there alternatives to the proposal that would result in the same benefits but that would be less costly? Which alternatives and why?
Proposed new forms, Form N–CEN and Form N–PORT, and proposed new rule 30e–3 contain “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The titles for the existing collections of information are: “Form N–Q–Quarterly Schedule of Portfolio Holdings of Registered Management Investment Company” (OMB Control No. 3235–0578);
The Commission is proposing new forms, Form N–CEN and Form N–PORT, new rule 30e–3, and amendments to Regulation S–X and the relevant registration forms, as well as the rescission of Forms N–Q and Form N–SAR as part of a set of reporting and disclosure reforms. These reforms are designed to harness the benefits of advanced technology and to modernize the fund reporting regime in order to help investors and other market participants better assess different fund products and to assist the Commission in carrying out our regulatory functions. We discuss below the collection of information burdens associated with these reforms.
Under our proposal, certain funds would be required to file an electronic monthly report on proposed Form N–PORT within thirty days after the end of each month. Proposed Form N–PORT is intended to improve transparency of information about funds' portfolio holdings and facilitate oversight of funds. The information required by proposed Form N–PORT would be data-tagged in XML format. The respondents to proposed Form N–PORT would be management investment companies (other than money market funds and small business investment companies) and UITs that operate as ETFs. Compliance with proposed Form N–PORT would be mandatory for all such funds. Responses to the reporting requirements would be kept confidential for reports filed with respect to the first two months of each quarter; the third month of the quarter would not be kept confidential, but made public sixty days after the quarter end.
We estimate that 10,710 funds
We estimate that 65% of funds (6,962 funds) would retain the services of a third party to provide data aggregation, validation and/or filing services as part of the preparation and filing of reports on proposed Form N–PORT on the fund's behalf.
In addition to the costs associated with the hour burdens discussed above, funds would also incur other external costs in connection with reports on proposed Form N–PORT. Based on our experience with other interactive data filings, we estimate that funds that would file reports on proposed Form N–PORT in house would license a third-party software solution to assist in filing their reports at an average cost of $4,805 per fund per year.
Our proposed reforms would rescind Form N–Q in order to eliminate unnecessarily duplicative reporting requirements. The proposed rescission of Form N–Q would affect all management investment companies required to file reports on the form.
We currently estimate that each fund requires an average of approximately 21 hours per year to prepare and file two reports on Form N–Q annually, for a total estimated annual burden of 219,513 hours.
As proposed, amended rule 30a–1 would require all funds to file reports on proposed Form N–CEN with the Commission on an annual basis.
The staff estimates that the Commission would receive an average of 3,146 reports per year, based on the number of existing Form N–SAR filers.
As discussed below, we currently estimate that management investment companies spend as much as 15.35 hours preparing and filing each report on Form N–SAR. We have generally sought with proposed Form N–CEN, where appropriate, to simplify and decrease the census-type reporting burdens placed on registrants by current Form N–SAR. For example, proposed Form N–CEN would reduce the number of attachments that may need to be filed with the reports and largely eliminate financial statement-type information from the reports. Additionally, we believe that reports in XML on proposed Form N–CEN will be less burdensome to produce than the reports on Form N–SAR currently required to be filed using outdated technology. Accordingly, for management investment companies we believe the estimated hour burden for filing reports on proposed Form N–CEN should be a reduced burden from the hour burden associated with Form N–SAR.
UITs may, however, experience an increase in the hour burden associated with census-type reporting if proposed Form N–CEN is adopted because UITs would be required to respond to more items in the form than they are currently required to respond to under Form N–SAR. For example, UITs would be required to provide certain background information and attachments in their reports on proposed Form N–CEN, which they are not currently required to provide in their reports on Form N–SAR. As a result, we have increased the annual hour burden for UITs from 7.11 hours in the currently approved collection for Form N–SAR to 9.11 hours for proposed Form N–CEN.
The Commission also believes that, in the first year reports on the form are filed, funds may require additional time to prepare and file reports. We estimate that, for the first year, funds would require 20 additional hours.
We estimate that the average annual hour burden per response for proposed Form N–CEN for the first year would be 32.37 hours
With respect to the initial filing of a report on Form N–CEN, we estimate an external cost of $220 per fund and, with respect to subsequent filings, we estimate an annual external cost of $120 per fund.
Our proposed reforms would rescind Form N–SAR in order to eliminate unnecessarily duplicative reporting requirements. The proposed rescission would affect all management investment companies and UITs.
We currently estimate that the weighted average annual hour burden per response for Form N–SAR is 14.25 hours,
Section 30(e) of the Investment Company Act requires every registered investment company to transmit to its stockholders, at least semiannually, reports containing such information and financial statements or their equivalent, as of a reasonably current date, as the Commission may prescribe by rules and regulations.
Rule 30e–1 also permits, under certain conditions, delivery of a single shareholder report to investors who share an address (“householding”).
Compliance with the disclosure requirements of rule 30e–1 is mandatory. Responses to the disclosure requirements are not be kept confidential.
Based on staff conversations with fund representatives, we currently estimate that it takes approximately 84 hours per fund to comply with the collection of information associated with rule 30e–1, including the householding requirements. This time is spent, for example, preparing, reviewing, and certifying the reports. The current total estimated annual hour burden of responding to rule 30e–1 is approximately 903,000 hours.
As discussed above, we are proposing certain amendments to Articles 6 and 12 of Regulation S–X. As outlined in Part II.C. above, the amendments would: (1) Require new, standardized disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts, and additional disclosures regarding fund holdings of written and purchased options; (2) update the disclosures for other investments, as well as reorganize the order in which some investments are presented; (3) amend the rules regarding the general form and content of fund financial statements; and (iv) require a new disclosure in the notes to the financial statements relating to a fund's securities lending activities.
We estimate that that there are 11,230 management companies that would have to comply with these amendments.
With respect to the amendments to article 12 of Regulation S–X, we estimate each fund would
We estimate that the annual external cost burden of compliance with the information collection requirements of rule 30e–1, which is currently $31,061 per fund, will not change as a result of the proposed amendments to Regulation S–X.
Rule 30e–2 requires registered UITs that invest substantially all of their assets in shares of a management investment company to send their unitholders annual and semiannual reports containing financial information on the underlying company.
Compliance with the disclosure requirements of rule 30e–2 is mandatory. Responses to the disclosure requirements are not kept confidential.
The Commission currently estimates that the annual burden associated with rule 30e–2, including the householding requirements, is 121 hours per respondent. The Commission currently estimates that the total hour burden is approximately 91,960 hours.
As discussed above, we are proposing certain amendments to Articles 6 and 12 of Regulation S–X that, if adopted, would likely increase the time spent preparing, reviewing and certifying reports.
In addition, we estimate that the annual external cost burden of compliance with the information collection requirements of rule 30e–2, which are currently $20,000 per respondent, will not change as a result of the proposed amendments to Regulation S–X.
We are also proposing new rule 30e–3, which would permit, but not require, a fund to transmit its reports to shareholders by posting them on its Web site, as long as the fund meets certain other conditions of the rule regarding (a) availability of the report and other materials, (b) shareholder consent, (c) notice to shareholders, and (d) delivery of materials upon request of the shareholder.
Proposed rule 30e–3 would provide that a fund's annual or semiannual report to shareholders would be considered transmitted to a shareholder of record if certain conditions set forth in the rule are satisfied. Among these conditions are the requirements that (i) the fund's shareholder report, any previous shareholder report transmitted to shareholders of record within the last 244 days, and in the case of a fund that is not an SBIC, the fund's complete portfolio holdings as of the close of its most recent first and third fiscal quarters, be publicly accessible, free of charge, at a specified Web site
We estimate that 11,957 funds could rely on proposed new rule 30e–3.
Of the remaining funds estimated to rely on proposed rule 30e–3, we further estimate that approximately 90% of those funds
Accordingly, we estimate that the posting requirements will result in an average annual hour burden of 0.84 hours per fund in the first year of compliance
In addition, with respect to those funds that would rely on proposed rule 30e–3 but that do not currently have a Web site, we estimate that the posting requirements of the proposed rule will result in an external cost burden of $2000 per fund in the first year to develop a Web site,
Furthermore, we also estimate that funds may incur external costs in connection with the requirement to provide a complete shareholder report upon request of a shareholder. We estimate that the annual costs associated with printing and mailing these reports would be $500 per fund.
Proposed rule 30e–3 would permit electronic transmission of a shareholder report to a particular shareholder only if the shareholder has either previously consented to this method of transmission or has been determined to have provided implied consent under certain conditions specified in the rule.
As discussed in Part V.D.1. above, we estimate that 90% of all eligible funds (or 10,761 funds) will choose to rely on proposed rule 30e–3.
Accordingly, we estimate that the Initial Statement will result in an average hourly burden per fund of 1.3 hours in the first year
In addition, we estimate that funds will incur external costs if they rely on proposed rule 30e–3. The external cost burden is the cost of goods and services purchased in connection with complying with the rule, which, with respect to the Initial Statement and Notice, we estimate would include the costs associated with outside counsel and printing and mailing costs.
We estimate outside counsel retained by the fund will incur 25% of the hourly burden associated with each of the Initial Statement and Notice at a rate of $380 per hour.
We also estimate that, in the first year, each fund will incur approximately $1000 in printing and mailing costs related to each of the first Initial Statement and Notice.
In total, proposed rule 30e–3 would impose an average total annual hour burden of 17,379 hours on applicable funds
As discussed in Sections V.C.1. and 2. above, rule 30e–1 under the Investment Company Act requires management companies to transmit semi-annual reports to their shareholders and rule 30e–2 under the Investment Company Act requires certain UITs to similarly transmit semi-annual reports to their unitholders.
As discussed above, we estimate that 90% of all funds will rely on proposed rule 30e–3. In addition, we estimate that a fund's hourly burden associated with rule 30e–1 or rule 30e–2 will not change as result of proposed rule 30e–3. However, we estimate that, for those funds that rely on proposed rule 30e–3, the fund's external cost burden would decrease. In this regard, we estimate that for 90% of funds relying on rule 30e–3, their annual cost burden related to rule 30e–1 would decrease from $31,061 to $20,707.
In connection with the rescission of Form N–Q, we are proposing to amend Form N–CSR, the reporting form used by management companies to file certified shareholder reports under the Investment Company Act and the Exchange Act. Form N–Q currently requires principal executive and financial officers of the fund to make certifications for the first and third fiscal quarters relating to (1) the accuracy of information reported to the Commission, and (2) disclosure controls and procedures and internal control over financial reporting.
Form N–CSR requires similar certification with respect to the fund's second and fourth fiscal quarters. As a result of the proposed rescission of Form N–Q, we are proposing to amend the form of certification in Form N–CSR to require each certifying officer to state that he or she has disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year, rather than the registrant's most recent fiscal quarter as currently required by the form.
Compliance with the amended certification requirements would be mandatory and responses would not be kept confidential.
We currently estimate that the annual burden associated with Form N–CSR is 14.42 hours per fund
In addition, we currently estimate that the annual cost of outside services associated with Form N–CSR is approximately $129 per fund.
We are also proposing to amend Forms N–1A, N–2, N–3, N–4, and N–6 to exempt funds from those forms' respective books and records disclosures if the information is provided in a fund's most recent report on Form N–CEN.
Currently, we estimate the following total hour burden for each of the relevant forms: (i) Form N–1A—1,579,974 hours; (ii) Form N–2—86,533 hours; (iii) Form N–3—2,173 hours; (iv) Form N–4—256,835 hours; and (v) Form N–6—34,349 hours. We estimate the total hour burden, as discussed above, for each respective form will not change as result of the proposed amendments. Additionally, we do not believe the total cost burden for any of the relevant forms would change as a result of the proposed amendments and, therefore, we continue to estimate the following total cost burden for each of the respective forms: (i) Form N–1A—$124,820,197; (ii) Form N–2—$5,488,048; (iii) Form N–3—$139,300; (iv) Form N–4—$26,609,241; and (v) Form N–6—$3,820,447.
We request comment on whether our estimates for burden hours and any external costs as described above are reasonable. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments in order to: (i) Evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility; (ii) evaluate the accuracy of the Commission's estimate of the burden of the proposed collections of information; (iii) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and (iv) determine whether there are ways to minimize the burden of the collections of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology.
The agency has submitted the proposed collection of information to OMB for approval. Persons wishing to submit comments on the collection of information requirements of the proposed amendments should direct them to the Office of Management and Budget, Attention Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should send a copy to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549 1090, with reference to File No. S7–08–15. OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication of this
This Initial Regulatory Flexibility Analysis (“IRFA”) has been prepared in accordance with section 3 of the Regulatory Flexibility Act (“RFA”).
The Commission collects certain information about the funds that it regulates. The Commission is proposing new rules, rule amendments, and new forms and form amendments that would improve the quality of information that funds report to the Commission, benefitting the Commission's risk monitoring and oversight, examination, and enforcement programs.
We believe that our proposals would improve the information that funds report to their shareholders and the Commission. In addition, the proposed new forms would require reports be filed in a structured data format (XML) to allow for easier collection and analysis of data by Commission staff and the public. This is the format used by Form N–MFP, Form 13F, and Form D, which greatly improves the ability of Commission staff and other potential users to aggregate and analyze the data reported.
The Commission's objective is to gain more timely and useful information about funds' operations and portfolio holdings. The Commission also believes that its risk monitoring and oversight, examination, and enforcement programs would be improved by requiring enhanced information from funds.
The Commission is proposing the rules and forms contained in this document under the authority set forth in the Securities Act, particularly, section 19 thereof [15 U.S.C.
An investment company is a small entity if, together with other investment companies in the same group of related investment companies, it has net assets of $50 million or less as of the end of its most recent fiscal year.
The proposed amendments would create, amend, or eliminate current reporting requirements for small entities.
Funds currently report portfolio holdings information quarterly on Form N–Q (first and third fiscal quarters) and Form N–CSR (second and fourth fiscal quarters). The Commission is proposing to adopt new Form N–PORT on which funds, other than MMFs, UITs, and SBICs, would be required to report portfolio holdings information and information related to liquidity, derivatives, securities lending, purchases and redemptions, and counterparty exposure each month. Funds would be required to file Form N–PORT within 30 days after the end of the monthly period using a structured format. Only information reported for the third month of each quarter would be available to the public and such information would not be made public until 60 days after the end of the third month of the fund's fiscal quarter. For smaller funds and fund groups (
Based on our experience with other interactive data filings, we estimate that funds would prepare and file their reports on proposed Form N–PORT by either (1) licensing a software solution and preparing and filing the reports in house, or (2) retaining a service provider to provide data aggregation and validation services as part of the preparation and filing of reports on proposed Form N–PORT on behalf of the fund. We estimate that approximately 132 open and closed-end funds (other than money market funds and SBICs), are small entities that would be required to file, on a monthly basis, a complete report on proposed Form N–PORT reporting certain information regarding the fund and its portfolio holdings. As discussed above, we estimate, for funds that choose to license a software solution to file reports on Form N–PORT, that completing, reviewing, and filing Form N–PORT would cost $55,970 for each fund, including small entities, in its first year of reporting and $46,745 per year for each subsequent year.
Our proposal would rescind Form N–Q in order to eliminate unnecessarily duplicative reporting requirements. The proposed rescission of Form N–Q would affect all management investment companies required to file reports on the form. We expect that approximately 132 open and closed-end funds are small entities that would be affected by the recession of Form N–Q.
As discussed above, we estimate that the rescission of Form N–Q would save $6,762 per year for each fund, including small entities.
Funds currently report census type information relating to the fund's organization, service providers, fees and expenses, portfolio strategies and investments, portfolio transactions, and share transactions on Form N–SAR. Funds file this form semi-annually with the Commission, except for UITs, which must file such reports annually.
Because of these limitations, the Commission is proposing to replace Form N–SAR with new Form N–CEN. This new form would streamline and updated the required data items to reflect current Commission staff needs. The Commission is also proposing that funds file reports on Form N–CEN in a structured (XML) format, which would allow for easier data analysis and use in the Commission's rulemaking, inspection, and risk monitoring functions and reduce burdens on filers. Finally, the Commission is proposing that funds file reports on Form N–CEN annually, opposed to semi-annually, which is currently required for Form N–SAR (except UITs, which currently must file reports annually).
We estimate that approximately 146 registered investment companies, including 133 open and closed-end funds (including one SBIC) and 13 UITs, are small entities that would be required to file a complete report on Form N–CEN. Although UITs are required to complete fewer items on Form N–CEN than other registered investment companies, the burden on UITs would increase because UITs would be required to respond to more items in Form N–CEN than they are currently required to respond to under Form N–SAR.
As discussed above, the SEC estimates that completing, reviewing, and filing Form N–CEN would cost $10,622 for each fund,
Our proposal would rescind Form N–SAR in order to eliminate unnecessarily duplicative reporting requirements. We estimate that that approximately 146 registered investment companies that are small entities, including 133 open and closed-end funds (including one SBIC) and 13 UITs would be affected by the rescission of Form N–SAR.
We estimate that rescinding Form N–SAR would save $9,778 per year for each fund, including small entities.
The Commission is also proposing to amend Regulation S–X to require new, standardized disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts, and additional disclosures regarding fund holdings of written and purchased options, update the disclosures for other investments with conforming amendments, and amend the rules regarding the form and content of fund financial statements. We believe that the amendments we are proposing today are generally consistent with how many funds are currently reporting investments (including derivatives), and other information according to current industry practices. The Commission believes investors would benefit from our proposed amendments because increased disclosure and standardization of fund holdings would improve comparability among funds including transparency for investors regarding a fund's use of derivatives and the liquidity of certain investments. The Commission also believes that greater clarity would benefit the industry, while any additional burdens would be reduced since similar disclosures would be proposed to be required on Form N–PORT.
We expect that approximately 146 registered investment companies, including 133 open and closed-end funds (including one SBIC) and 13 UITs and, approximately 28 BDCs, are small entities that would be affected by the amendments to Regulation S–X. As discussed above, we estimate that amending Regulation S–X would cost $2,417 for each fund, including small entities, in its first year of reporting, and $806 per year for each subsequent year.
The Commission is proposing new rule 30e–3 under the Investment Company Act, which would, if adopted, permit, but not require, a fund to satisfy requirements under the Act and rules thereunder to transmit reports to shareholders if the fund makes the reports and certain other materials accessible on its Web site and periodically notifies investors of the materials' availability.
We expect that approximately 146 registered investment companies, including 133 open and closed-end funds (including one SBIC) and 13 UITs, are small entities that would rely on the Web site reporting rules. As discussed above, the SEC estimates that our proposed Web site reporting would save $4,792 for each fund, including small entities, in its first year of reporting, and $6,122 per year for each subsequent year.
Form N–Q and Form N–CSR currently require a quarterly SOX certification relating to the accuracy of information reported to the Commission and disclosure controls and procedures and internal control over financial reporting. To facilitate the elimination of Form N–Q, we are proposing to expand the SOX certification for Form N–CSR to six months to maintain coverage for the entire fiscal year. We expect that approximately 146 registered investment companies, including 133 open and closed-end funds (including one SBIC) and 13 UITs, are small entities that would be affected by the amendments to Form N–CSR. As discussed above, the Commission does not believe that the costs associated with reporting on Form N–CSR for will change for funds, including small entities, as a result of the proposed amendments to Form N–CSR.
We are also proposing to amend Forms N–1A, N–2, N–3, N–4, and N–6 to exempt funds from those forms' respective books and records disclosures if the information is provided in a fund's most recent report on Form N–CEN.
We expect that approximately 146 registered investment companies, including 133 open and closed-end funds (including one SBIC) and 13 UITs, and approximately 28 BDCs, are small entities that would be required to file registration statements. As discussed above, the SEC estimates that our proposed amendments would not change for funds, including small entities, as a result of our proposed amendments to Forms N–1A, N–2, N–3, N–4, and N–6.
Funds currently report portfolio holdings information for the first and third fiscal quarters on Form N–Q and for the second and fourth fiscal quarters on Form N–CSR. As a result of our proposal to create new Form N–PORT, on which funds will report portfolio holdings information monthly, the Commission is proposing to eliminate Form N–Q, which will reduce duplication of portfolio holdings information for the first and third fiscal quarters. We acknowledge that Form N–CSR, Form N–PORT, Regulation S–X, and Web reporting would require reporting of some duplicative information, including information currently reported on the fund's registration statements and annual reports. However, we believe that both the nature and structure of the reporting are sufficiently different to justify overlapping information requirements on the fund's Web site or on respective Commission forms.
Funds currently report census information on Form N–SAR. As part of our proposed amendments, the Commission is proposing to replace Form N–SAR with new Form N–CEN. In addition, we are proposing that reports on Form N–CEN be filed annually, as opposed to semi-annually, which is generally required for Form N–SAR. Again, we acknowledge that Form N–CEN would require reporting of some duplicative information, including information currently reported on the fund's registration statements and annual reports. Like Form N–PORT and Form N–CSR, we believe that both the nature and structure of the reporting are sufficiently different to justify overlapping information requirements.
Finally, in order to reduce duplicative information in Form N–CEN and fund registration statements, we are proposing to amend Forms N–1A, N–2, N–3, N–4, and N–6 to exempt funds from those forms' respective books and records disclosures if the information is provided in a fund's most recent report on Form N–CEN.
The RFA directs the Commission to consider significant alternatives that would accomplish our stated objective, while minimizing any significant economic impact on small entities. The Commission considered the following alternatives for small entities in relation our proposed amendments: (i) Establishing different reporting requirements or frequency to account for resources available to small entities; (ii) using performance rather than design standards; and (iii) exempting small entities from all or part of the proposal.
Small entities currently follow the same requirements that large entities do when filing reports on Form N–SAR, Form N–CSR, and Form N–Q. The Commission believes that establishing different reporting requirements or frequency for small entities would not be consistent with the Commission's goal of industry oversight and investor protection. However, as discussed above, we are proposing a delayed compliance period for small entities that would file reports on Form N–PORT.
The Commission requests comments regarding this IRFA. We request comments on the number of small entities that may be affected by our proposed rules and guidelines, and whether the proposed rules and guidelines would have any effects not considered in this analysis. We request that commenters describe the nature of any effects on small entities subject to the rules, and provide empirical data to support the nature and extent of such effects. We also request comment on the proposed compliance burdens and the effect these burdens would have on smaller entities.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA”),
• An annual effect on the economy of $100 million or more;
• A major increase in costs or prices for consumers or individual industries; or
• Significant adverse effects on competition, investment, or innovation.
We request comment on whether our proposal would be a “major rule” for purposes of SBREFA. We solicit comment and empirical data on:
• The potential effect on the U.S. economy on an annual basis;
• Any potential increase in costs or prices for consumers or individual industries; and
• Any potential effect on competition, investment, or innovation.
Commenters are requested to provide empirical data and other factual support for their views to the extent possible.
We are proposing the rules and forms contained in this document under the authority set forth in the Securities Act, particularly, section 19 thereof [15 U.S.C. 77a
Administrative practice and procedure, Organization and functions (Government agencies).
Accounting, Investment companies, Reporting and recordkeeping requirements, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
Administrative practice and procedure, Reporting and recordkeeping requirements, Securities.
Reporting and recordkeeping requirements, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
For reasons set forth in the preamble, Title 17, Chapter II of the Code of Federal Regulations is proposed to be amended as follows:
44 U.S.C. 3506; 44 U.S.C. 3507.
(b) * * *
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z–2, 77z–3, 77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j–1, 78
Sections 210.6–01 to 210.6–10 shall be applicable to financial statements filed for registered investment companies and business development companies.
The financial statements filed for persons to which §§ 210.6–01 to 210.6–10 are applicable shall be prepared in accordance with the following special
(a)
(b)
(c)
(i) Statements of the registrant may be consolidated only with the statements of subsidiaries which are investment companies;
(ii) A consolidated statement of the registrant and any of its investment company subsidiaries shall not be filed unless accompanied by a consolidating statement which sets forth the individual statements of each significant subsidiary included in the consolidated statement:
(iii) Consolidated or combined statements filed for subsidiaries not consolidated with the registrant shall not include any investment companies unless accompanied by consolidating or combining statements which set forth the individual statements of each included investment company which is a significant subsidiary.
(2) If consolidating or combining statements are filed, the amounts included under each caption in which financial data pertaining to affiliates is required to be furnished shall be subdivided to show separately the amounts:
(i) Eliminated in consolidation; and
(ii) Not eliminated in consolidation.
(d)
(e)
(f)
(1) The policy of the person with regard to acquisition of restricted securities.
(2) The policy of the person with regard to valuation of restricted securities. Specific comments shall be given as to the valuation of an investment in one or more issues of securities of a company or group of affiliated companies if any part of such investment is restricted and the aggregate value of the investment in all issues of such company or affiliated group exceeds five percent of the value of total assets. (As used in this paragraph, the term
(3) A description of the person's rights with regard to demanding registration of any restricted securities held at the date of the latest balance sheet.
(g)
(h)
(i)
(1) The number of shares, units, or principal amount of bonds sold during the period of report, the amount received therefor, and, in the case of shares sold by closed-end management investment companies, the difference, if any, between the amount received and the net asset value or preference in involuntary liquidation (whichever is appropriate) of securities of the same class prior to such sale; and
(2) The number of shares, units, or principal amount of bonds repurchased during the period of report and the cost thereof. Closed-end management investment companies shall furnish the following additional information as to securities repurchased during the period of report:
(i) As to bonds and preferred shares, the aggregate difference between cost and the face amount or preference in involuntary liquidation and, if applicable net assets taken at value as of the date of repurchase were less than such face amount or preference, the aggregate difference between cost and such net asset value;
(ii) As to common shares, the weighted average discount per share, expressed as a percentage, between cost of repurchase and the net asset value applicable to such shares at the date of repurchases.
(j)
(2) If the particular class or series for which information is provided may be affected by other classes or series of such investment company, such as by the offset of realized gains in one series with realized losses in another, or through contingent liabilities, such situation shall be disclosed.
(k)
(2) For other companies, balance sheets shall reflect reserves for outstanding certificates determined as follows:
(i) For certificates of the installment type, such amount which, together with the lesser of future payments by certificate holders as and when accumulated at a rate not to exceed 3
(ii) For certificates of the fully-paid type, such amount which, as and when accumulated at a rate not to exceed 3
(iii) Such amount or accrual therefor, as shall have been credited to the account of any certificate holder in the form of any credit, or any dividend, or any interest in addition to the minimum maturity or face amount specified in the certificate, plus any accumulations on any amount so credited or accrued at rates required under the terms of the certificate.
(iv) An amount equal to all advance payments made by certificate holders, plus any accumulations thereon at rates required under the terms of the certificate.
(v) Amounts for other appropriate contingency reserves, for death and disability benefits or for reinstatement rights on any certificate providing for such benefits or rights.
(l)
(m)
(1) The gross income from securities lending activities, including income from cash collateral reinvestment;
(2) The dollar amount of all fees and/or compensation paid by the registrant for securities lending activities and related services, including borrower rebates and cash collateral management services;
(3) The net income from securities lending activities;
(4) The terms governing the compensation of the securities lending agent, including any revenue sharing split, with the related percentage split between the registrant and the securities lending agent, and/or any fee-for-service, and a description of services included;
(5) The details of any other fees paid directly or indirectly, including any fees paid directly by the registrant for cash collateral management and any management fee deducted from a pooled investment vehicle in which cash collateral is invested; and
(6) The monthly average of the value of portfolio securities on loan.
This section is applicable to balance sheets filed by registered investment companies and business development companies except for persons who substitute a statement of net assets in accordance with the requirements specified in § 210.6–05, and issuers of face-amount certificates which are subject to the special provisions of § 210.6–06. Balance sheets filed under this rule shall comply with the following provisions:
1.
2.
3.
4.
5.
(b) If the aggregate amount of notes receivable exceeds 10 percent of the aggregate amount of receivables, the above information shall be set forth separately, in the balance sheet or in a note thereto, for accounts receivable and notes receivable.
6.
7.
8.
9.
10.
11.
12.
13.
(b) Provide in a note the information required under § 210.5–02.19(b) regarding unused lines of credit for short-term financing and § 210.5–02.22(b) regarding unused commitments for long-term financing arrangements.
14.
15.
16.
(b) Unit investment trusts, including those which are issuers of periodic payment plan certificates, also shall state in a note to the financial statements: (1) The total cost to the investors of each class of units or shares; (2) the adjustment for market depreciation or appreciation; (3) other deductions from the total cost to the investors for fees, loads and other charges, including an explanation of such deductions; and (4) the net amount applicable to the investors.
17.
(a) The accumulated undistributed investment income-net,
(b) accumulated undistributed net realized gains (losses) on investment transactions, and
(c) net unrealized appreciation (depreciation) in value of investments at the balance sheet date.
18.
19.
In lieu of the balance sheet otherwise required by § 210.6–04, persons may substitute a statement of net assets if at least 95 percent of the amount of the person's total assets are represented by investments in securities of unaffiliated issuers. If presented in such instances, a statement of net assets shall consist of the following:
1. A schedule of investments in securities of unaffiliated issuers as prescribed in § 210.12–12.
2. The excess (or deficiency) of other assets over (under) total liabilities stated in one amount, except that any amounts due from or to officers, directors, controlled persons, or other affiliates, excluding any amounts owing to noncontrolled affiliates which arose in the ordinary course of business and which are subject to usual trade terms, shall be stated separately.
3. Disclosure shall be provided in the notes to the financial statements for any item required under § 210.6–04.3 and §§ 210.6–04.9 to 210.6–04.13.
4. The balance of the amounts captioned as
5. The information required by (i) § 210.6–04.16, (ii) § 210.6–04.17 and (iii) § 210.6–04.18 shall be furnished in a note to the financial statements.
Statements of operations filed by registered investment companies and business development companies, other than issuers of face-amount certificates subject to the special provisions of § 210.6–08, shall comply with the following provisions:
1.
2.
(b) State separately any other expense item the amount of which exceeds five percent of the total expenses shown under this caption.
(c) A note to the financial statements shall include information concerning management and service fees, the rate of fee, and the base and method of computation. State separately the amount and a description of any fee reductions or reimbursements representing: (1) Expense limitation agreements or commitments; and (2) offsets received from broker-dealers showing separately for each amount received or due from (i) unaffiliated persons; and (ii) affiliated persons. If no management or service fees were incurred for a period, state the reason therefor.
(d) If any expenses were paid otherwise than in cash, state the details in a note.
(e) State in a note to the financial statements the amount of brokerage commissions (including dealer markups) paid to affiliated broker-dealers in connection with purchase and sale of investment securities. Open-end management companies shall state in a note the net amounts of sales charges deducted from the proceeds of sale of capital shares which were retained by any affiliated principal underwriter or other affiliated broker-dealer.
(f) State separately all amounts paid in accordance with a plan adopted
(g)(1)
(2)
(3)
3.
4.
5.
6.
7.
(b) Distributions of realized gains by other investment companies shall be shown separately under this caption.
(c) State separately the amount of the net increase or decrease during the period in the unrealized appreciation or depreciation in the value of: (1) Investment securities of unaffiliated issuers, (2) investment securities of affiliated issuers, (3) option contracts written, (4) short positions in securities, (5) futures contracts, (6) forward foreign currency contracts, (7) swap contracts, and (8) other investments held at the end of the period.
(d) State separately any: (1) Federal income taxes and (2) other income taxes applicable to realized and unrealized gain (loss) on investments, distinguishing taxes payable currently from deferred income taxes.
8.
9.
(a) The schedules shall be examined by an independent accountant if the related financial statements are so examined.
(b)
(2) When permitted by the applicable form, the schedule specified in this paragraph may be filed for management investment companies as of the dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for each person or group.
(c)
(1) Schedules I and II, specified below in this section, shall be filed for unit investment trusts as of the dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for each person or group.
(2) Schedule III, specified below in this section, shall be filed for unit investment trusts for each period for which a statement of operations is required to be filed for each person or group.
(d)
(1) Schedules I, V and X, specified below, shall be filed for face-amount certificate investment companies as of the dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for each person or group.
(2) All other schedules specified below in this section shall be filed for face-amount certificate investment companies for each period for which a statement of operations is filed, except as indicated for Schedules III and IV.
15 U.S.C. 77b, 77b note, 77c, 77d, 77d note, 77f, 77g, 77h, 77j, 77r, 77s, 77z–3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78
15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z–3, 77sss(a), 78c(b), 78
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z–2, 77z–3, 77sss, 78c, 78l, 78m, 78n, 78o(d), 78o–7, 78o–7 note, 78u–5, 78w(a), 78ll, 78mm, 80a–2(a), 80a–3, 80a–8, 80a–9, 80a–10, 80a–13, 80a–24, 80a–26, 80a–29, 80a–30, 80a–37, and Pub. L. 111–203, sec. 939A, 124 Stat. 1376 (2010), unless otherwise noted.
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j–1, 78k, 78k–1, 78
15 U.S.C. 78a
Section 249.330 is also issued under 15 U.S.C. 80a–29(a).
This form shall be used by registered unit investment trusts and small business investment companies for annual reports to be filed pursuant to § 270.30a–1 of this chapter in satisfaction of the requirement of section 30(a) of the Investment Company Act of 1940 (15 U.S.C. 80a–29(a)) that every registered investment company must file annually with the Commission such information, documents, and reports as investment companies having securities registered on a national securities exchange are required to file annually pursuant to section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) and the rules and regulations thereunder.
The text of Form N–CEN will not appear in the
15 U.S.C. 80a–1
Every registered investment company must file an annual report on Form N–CEN (§ 274.101 of this chapter) at least every twelve months and not more than sixty calendar days after the close of each fiscal year. A registered investment company that has filed a registration statement with the Commission registering its securities for the first time under the Securities Act of 1933 is relieved of this reporting obligation with respect to any reporting period or portion thereof prior to the date on which that registration statement becomes effective or is withdrawn.
Notwithstanding the provisions of § 270.30a–1, a registered management investment company that is a wholly-owned subsidiary of a registered management investment company need not file an annual report on Form N–CEN if financial information with respect to that subsidiary is reported in the parent's annual report on Form N–CEN.
Each registered management investment company or exchange-traded fund organized as a unit investment trust, or series thereof, other than a registered open-end management investment company that is regulated as a money market fund under § 270.2a–7 or a small business investment company registered on Form N–5 (§§ 239.24 and 274.5 of this chapter), must file a monthly report of portfolio holdings on Form N–PORT (§ 274.150 of this chapter), current as of the last business day, or last calendar day, of the month. A registered investment company that has filed a registration statement with the Commission registering its securities for the first time under the Securities Act of 1933 is relieved of this reporting obligation with respect to any reporting period or portion thereof prior to the date on which that registration statement becomes effective or is withdrawn. Reports on Form N–PORT must be filed with the Commission no later than 30 days after the end of each month.
(a)
(b)
(1) The following materials are publicly accessible, free of charge, at the Web site address specified in the Notice from the date of the transmission in reliance on paragraph (a) of this section until the Fund next transmits a report required by § 270.30e–1 or § 270.30e–2:
(i) The Fund's current report required by § 270.30e–1 or § 270.30e–2.
(ii) Any report required by § 270.30e–1 or § 270.30e–2 transmitted to shareholders of record within the last 244 days.
(iii) In the case of a Fund that is a management company, other than a
(2) In the case of a Fund that is a management company, other than a Fund that is regulated as a money market fund under § 270.2a–7 or a small business investment company registered on Form N–5 (§§ 239.24 and 274.5 of this chapter), the Fund's complete portfolio holdings as of the close of the next fiscal quarter, presented in accordance with the schedules set forth in §§ 210.12–12—12–14 of Regulation S–X [17 CFR 210.12–12—12–14], which need not be audited, are publicly accessible, free of charge, at the Web site address specified in the Notice from a date not more than 60 days after the close of the fiscal period until the Fund next transmits a report required by § 270.30e–1 or § 270.30e–2.
(3) The Web site address relied upon for compliance with this section may not be the address of the Commission's electronic filing system.
(4) The materials that are accessible in accordance with paragraphs (b)(1) through (b)(2) of this section must be presented on the Web site in a format, or formats, that are convenient for both reading online and printing on paper.
(5) Persons accessing the materials specified in paragraphs (b)(1) through (b)(2) of this section must be able to permanently retain, free of charge, an electronic version of such materials in a format, or formats, that meet the conditions of paragraph (b)(4) of this section.
(6) The conditions set forth in paragraphs (b)(1) through (b)(5) of this section shall be deemed to be met, notwithstanding the fact that the materials specified in paragraphs (b)(1) through (b)(2) of this section are not available for a time in the manner required by paragraphs (b)(1) through (b)(5) of this section, provided that:
(i) The Fund has reasonable procedures in place to ensure that the specified materials are available in the manner required by paragraphs (b)(1) through (b)(5) of this section; and
(ii) The Fund takes prompt action to ensure that the specified documents become available in the manner required by paragraphs (b)(1) through (b)(5) of this section, as soon as practicable following the earlier of the time at which it knows or reasonably should have known that the documents are not available in the manner required by paragraphs (b)(1) through (b)(5) of this section.
(c)
(1) The Fund has transmitted a separate written statement (“Initial Statement”) to the shareholder at least 60 days before the Fund begins to rely on this section concerning transmission of reports to that shareholder. The Initial Statement must be written using plain English principles pursuant to paragraph (e) of this section and:
(i) State that future shareholder reports will be accessible, free of charge, at a Web site;
(ii) Explain that the Fund will no longer mail printed copies of shareholder reports to the shareholder unless the shareholder notifies the Fund that he or she wishes to receive printed reports in the future;
(iii) Include a toll-free telephone number and be accompanied by a reply form that is pre-addressed with postage provided and that includes the information the Fund would need to identify the shareholder, and explain that the shareholder can use either of those two methods at any time to notify the Fund that he or she wishes to receive printed reports in the future;
(iv) State that the Fund will mail printed copies of future shareholder reports within 30 days after the Fund receives notice of the shareholder's preference; and
(v) Contain a prominent legend in bold-face type that states: “How to Continue Receiving Printed Copies of Shareholder Reports”. This legend must appear on the envelope in which the Initial Statement is delivered. Alternatively, if the Initial Statement is delivered separately from other communications to investors, this legend may appear either on the Initial Statement or on the envelope in which the Initial Statement is delivered.
(2) The Initial Statement may not be incorporated into, or combined with, another document.
(3) The Initial Statement must be sent separately from other types of shareholder communications and may not accompany any other document or materials;
(4) The Fund has not received the reply form or other notification indicating that the shareholder wishes to continue to receive a print copy of the report, within 60 days after the Fund sent the Initial Statement.
(d)
(1) The Notice must be written using plain English principles pursuant to paragraph (e) of this section and:
(i) Contain a prominent legend in bold-face type that states “[A]n Important Report[s] to Shareholders of [insert Fund name or fund complex name] [is/are] Now Available Online and In Print by Request”;
(ii) State that each report to shareholders contains important information about their Fund, including its portfolio holdings, and is available on the Internet or, upon request, by mail, and that encourages the shareholder to access and review the report.
(iii) Include a Web site address that leads directly to each report the Fund is transmitting to the recipient shareholder in reliance on this section.
(iv) Include a Web site address where the report to shareholders and other materials specified in paragraphs (b)(1) through (b)(2) of this section are available. The Web site address must be specific enough to lead investors directly to the documents that are required to be accessible under paragraphs (b)(1) through (b)(2) of this section, rather than to the home page or section of the Web site other than on which the documents are posted. The Web site may be a central site with prominent links to each document.
(v) Provide instructions describing how a shareholder may request a paper copy of the shareholder report and other materials specified in paragraphs (b)(1) through (b)(2) of this section at no charge, and an indication that they will not otherwise receive a paper or email copy.
(vi) Include a toll-free telephone number and be accompanied by a reply form that is pre-addressed with postage provided and that includes the information the Fund would need to identify the shareholder, and explain that the shareholder can use either of those two methods at any time to notify the Fund that he or she wishes to receive printed reports in the future.
(2) The Notice may not be incorporated into, or combined with, another document.
(3) The Notice may contain only the information required by paragraph (d)(1) of this section.
(4) The Notice must be sent separately from other types of shareholder communications and may not accompany any other document or materials;
(5) A Notice required by this paragraph (d) will be considered sent to a shareholder of record if the Fund satisfies the conditions set forth in § 270.30e–1(f) with respect to that shareholder.
(6) The Fund must file a form of the Notice with the Commission not later than 10 business days after it is sent to shareholders.
(e)
(1) To enhance the readability of the Initial Statement and the Notice, the Fund must use plain English principles in the organization, language, and design of those materials.
(2) The Fund must draft the language in the Initial Statement and the Notice so that, at a minimum, the materials substantially comply with each of the following plain English writing principles:
(i) Short sentences;
(ii) Definite, concrete, everyday words;
(iii) Active voice;
(iv) Tabular presentation or bullet lists for complex material, whenever possible;
(v) No legal jargon or highly technical business terms; and
(vi) No multiple negatives.
(f)
(g) A Fund may not rely on this section to transmit a copy of its currently effective Statutory Prospectus or Statement of Additional Information, or both, under the Securities Act as permitted by paragraph (d) of § 270.30e–1.
(h)
(1)
(2)
(3)
(4)
(5)
(6)
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78
The revisions to Item 27(d), Instruction 4, and Item 33 of Form N–1A read as follows:
The text of Form N–1A does not, and this amendment will not, appear in the Code of Federal Regulations.
(d) Annual and Semi-Annual Reports.
4.
State the name and address of each person maintaining physical possession of each account, book, or other document required to be maintained by section 31(a) [15 U.S.C. 80a–30(a)] and the rules under that section.
1. The instructions to Item 20.4 of this form shall also apply to this item.
2. Information need not be provided for any service for which total payments of less than $5,000 were made during each of the last three fiscal years.
3. A fund may omit this information to the extent it is provided in its most recent report on Form N–CEN [17 CFR 274.101].
The revisions to Form N–2 read as follows:
The text of Form N–2 does not, and this amendment will not, appear in the Code of Federal Regulations.
6. * * *
b.
7. Schedule IX—Summary schedule of investments in securities of unaffiliated issuers [17 CFR 210.12–12B] may be included in the financial statements required under Instructions 4.a. and 5.a. of this Item in lieu of Schedule I—Investments in securities of unaffiliated issuers [17 CFR 210.12–12] if: (a) The Registrant states in the report that the Registrant's complete schedule of investments in securities of unaffiliated issuers is available (i) without charge, upon request, by calling a specified toll-free (or collect) telephone number; (ii) on the Registrant's Web site, if applicable; and (iii) on the Commission's Web site at
Furnish the name and address of each person maintaining physical possession of each account, book, or other document required to be maintained by Section 31(a) of the 1940 Act [15 U.S.C. 80a–30(a)] and the rules thereunder [17 CFR 270.31a–1 through 31a–3].
Instruction. A fund may omit this information to the extent it is provided in its most recent report on Form N–CEN [17 CFR 274.101].
The revisions to Item 28(a), Instructions 6 and 7(i), and Item 36 of Form N–3 read as follows:
The text of Form N–3 does not, and this amendment will not, appear in the Code of Federal Regulations.
6. * * * *
(ii)
7. * * * *
(i) Schedule IX—Summary schedule of investments in securities of unaffiliated issuers [17 CFR 210.12–12B] may be included in the financial statements required under Instructions 4.(i) and 5.(i) of this Item in lieu of Schedule I—Investments in securities of unaffiliated issuers [17 CFR 210.12–12] if: (A) The Registrant states in the report that the Registrant's complete schedule of investments in securities of unaffiliated issuers is available (1) without charge, upon request, by calling a specified toll-free (or collect) telephone number; (2) on the Registrant's Web site, if applicable; and (3) on the Commission's Web site at
Give the name and address of each person who maintains physical possession of each account, book, or other document required to be maintained by Section 31(a) of the 1940 Act [15 U.S.C. 80a–30(a)] and Rules under it [17 CFR 270.31a–1 to 31a–3].
Instruction. A fund may omit this information to the extent it is provided in its most recent report on Form N–CEN [17 CFR 274.101].
This form shall be used by registered investment companies for annual reports to be filed pursuant to 17 CFR 270.30a–1.
The text of Form N–CEN will not appear in the Code of Federal Regulations.
Form N–CEN is to be used by all registered investment companies, other than face amount certificate companies, to file annual reports with the Commission, not later than 60 days after the close of the fiscal year for which the report is being prepared, pursuant to rule 30a–1 under the Investment Company Act of 1940 (“Act”) (17 CFR 270.30a–1). Face amount certificate companies should continue to file periodic reports pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”). The Commission may use the information provided on Form N–CEN in its regulatory, enforcement, examination, disclosure review, inspection, and policymaking roles.
Form N–CEN is the reporting form that is to be used for annual reports filed pursuant to rule 30a–1 under the Act (17 CFR 270.30a–1) by registered investment companies, other than face amount certificate companies, under section 30(a) of the Act and, in the case of small business investment companies and registered unit investment trusts, under section 13 or 15(d) of the Exchange Act, if applicable.
Registrants must respond to all items in the relevant Parts of Form N–CEN, as listed below in this General Instruction A. If an item within a required Part is inapplicable, the Registrant should respond “N/A” to that item. Registrants are not, however, required to respond to items in Parts of Form N–CEN that they are not required by this General Instruction A to respond to.
The General Rules and Regulations under the Act contain certain general requirements that are applicable to reporting on any form under the Act. These general requirements should be carefully read and observed in the preparation and filing of reports on this form, except that any provision in the form or in these instructions shall be controlling.
All registered investment companies with shares outstanding (other than shares issued in connection with an initial investment to satisfy section 14(a) of the Investment Company Act) must file a report on Form N–CEN at least annually. If a Registrant changes its fiscal year, a report filed on Form N–CEN may cover a period shorter than 12 months, but in no event may a report filed on Form N–CEN cover a period longer than 12 months or a period that overlaps with a period covered by a previously filed report. For example, if in 2014 a Registrant with a September 30 fiscal year end changes its fiscal year end to December 31, the Registrant could file a report on this Form for the fiscal period ending September 30, 2014 and a report for the period ending December 31, 2014. A Registrant could not, however, only file a report for the fiscal period ending December 31, 2014 if its last report was filed for the fiscal period ending September 30, 2013. An extension of time of up to 15 days for filing the form may be obtained by following the procedures specified in rule 12b–25 under the Exchange Act (17 CFR 240.12b–25).
Reports must be filed electronically using the Commission's Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system in accordance with Regulation S–T. Consult the EDGAR Filer Manual and Appendices for EDGAR filing instructions.
A registrant is required to disclose the information specified by Form N–CEN, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N–CEN unless the form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. 3507.
If the report is filed in paper pursuant to a hardship exemption from electronic filing (see Item 201
A registrant may file an amendment to a previously filed report at any time, including an amendment to correct a mistake or error in a previously filed report. A registrant that files an amendment to a previously filed report must provide information in response to all required items of Form N–CEN, regardless of why the amendment is filed.
The report must be signed by the Registrant, and on behalf of the Registrant, by an authorized officer of the Registrant. The name of each person who signs the report shall be typed or printed beneath his or her signature. Attention is directed to rule 8b–11 under the Act (17 CFR 270.8b–11) concerning manual signatures and signatures pursuant to powers of attorney.
Except as defined below or where the context clearly indicates the contrary, terms used in Form N–CEN have meanings as defined in the Act and the rules and regulations thereunder. Unless otherwise indicated, all references in the form or its instructions to statutory sections or to rules are sections of the Act and the rules and regulations thereunder.
In addition, the following definitions apply:
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Insurance company separate accounts that may not hold themselves out to investors as related companies (products) for purposes of investment and investor services should consider themselves part of the same family if the operational or accounting or control systems under which these entities function are substantially similar.
1. “Fund of Funds” means a fund that acquires securities issued by any other investment company in excess of the amounts permitted under paragraph (A) of section 12(d)(1) of the Act (15 U.S.C. 80a–12(d)(1)(A)).
2. “Index Fund” means an investment company, including an Exchange-Traded Fund, that seeks to track the performance of a specified index.
3. “Interval Fund” means a closed-end management investment company that makes periodic repurchases of its shares pursuant to rule 23c–3 under the Act (17 CFR 270.23c–3).
4. “Master-Feeder Fund” means a two-tiered arrangement in which one or more funds (each a feeder fund) holds shares of a single Fund (the master fund) in accordance with section 12(d)(1)(E) of the Act (15 U.S.C. 80a–12(d)(1)(E)).
5. “Target Date Fund” means an investment company that has an investment objective or strategy of providing varying degrees of long-term appreciation and capital preservation through a mix of equity and fixed income exposures that changes over time based on an investor's age, target retirement date, or life expectancy.
To help Registrants distinguish between agency and principal transactions, and to promote consistent reporting of the information required by these items, the following criteria should be used:
1. If a security is purchased or sold in a transaction for which the confirmation specifies the amount of the commission to be paid by the Registrant, the transaction should be considered an agency transaction and included in determining the answers to Item 41.
2. If a security is purchased or sold in a transaction for which the confirmation specifies only the net amount to be paid or received by the Registrant and such net amount is equal to the market value of the security at the time of the transaction, the transaction should be considered a principal transaction and included in determining the amounts in Item 42.
3. If a security is purchased by the Registrant in an underwritten offering, the acquisition should be considered a principal transaction and included in answering Item 42 even though the Registrant has knowledge of the amount the underwriters are receiving from the issuer.
4. If a security is sold by the Registrant in a tender offer, the sale should be considered a principal transaction and included in answering Item 42 even though the Registrant has knowledge of the amount the offeror is paying to soliciting brokers or dealers.
5. If a security is purchased directly from the issuer (such as a bank CD), the purchase should be considered a principal transaction and included in answering Item 42.
6. The value of called or maturing securities should not be counted in either agency or principal transactions and should not be included in determining the amounts shown in Item 41 and Item 42. This means that the
7. The purchase or sales of securities in transactions not described in paragraphs (1) through (6) above should be evaluated by the Fund based upon the guidelines established in those paragraphs and classified accordingly. The agents considered in Item 41 may be persons or companies not registered under the Exchange Act as securities brokers. The persons or companies from whom the investment company purchased or to whom it sold portfolio instruments on a principal basis may be persons or entities not registered under the Exchange Act as securities dealers.
1. Title of class: ____
2. Exchange where listed: ____
3. Ticker symbol: ____
8. The term “creation unit” means a specified number of Exchange-Traded Fund or Exchange-Traded Managed Fund shares that the fund will issue to (or redeem from) an authorized participant in exchange for the deposit (or delivery) of specified securities, cash, and other assets.
9. For this item, the term “primarily” means greater than 50%.
This item may be used by a unit investment trust that divested itself of securities in accordance with section 13(c). A unit investment trust is not required to include disclosure under this item; however, the limitation on civil, criminal, and administrative actions under section 13(c) does not apply with respect to a divestment that is not disclosed under this item.
If a unit investment trust divests itself of securities in accordance with section 13(c) during the period that begins on the fifth business day before the date of filing a report on Form N–CEN and ends on the date of filing, the unit investment trust may disclose the divestment in either the report or an amendment thereto that is filed not later than five business days after the date of filing the report.
For purposes of determining when a divestment should be reported under this item, if a unit investment trust divests its holdings in a particular security in a related series of transactions, the unit investment trust may deem the divestment to occur at the time of the final transaction in the series. In that case, the unit investment trust should report each transaction in the series on a single report on Form N–CEN, but should separately state each date on which securities were divested and the total number of shares or, for debt securities, principal amount divested, on each such date.
10. Item 79.a.i. Legal proceedings.
(a) If the Registrant responded “YES” to Item 12.a., provide a brief description of the proceedings. As part of the description, provide the case or docket number (if any), and the full names of the principal parties to the proceeding.
(b) If the Registrant responded “YES” to Item 12.b., identify the proceeding and give its date of termination.
11. Item 79.a.ii. Provision of financial support. If the Registrant responded “YES” to Item 15, provide the following information (unless the Registrant is a Money Market Fund):
(a) Description of nature of support.
(b) Person providing support.
(c) Brief description of relationship between the person providing support and the Registrant.
(d) Date support provided.
(e) Amount of support.
(f) Security supported (if applicable). Disclose the full name of the issuer, the title of the issue (including coupon or yield, if applicable) and at least two identifiers, if available (
(g) Value of security supported on date support was initiated (if applicable).
(h) Brief description of reason for support.
(i) Term of support.
(j) Brief description of any contractual restrictions relating to support.
12. Item 79.a.iii. Change in the Registrant's independent public accountant. If the Registrant responded “YES” to Item 18.f., provide the information called for by Item 4 of Form 8–K under the Exchange Act (17 CFR 249.308). Unless otherwise specified by Item 4, or related to and necessary for a complete understanding of information not previously disclosed, the information should relate to events occurring during the reporting period. Notwithstanding requirements in Item 4 of Form 8–K to file more frequently, Registrants need only file reports on Form N–CEN annually in accordance with the requirements of this form.
13. Item 79.a.iv. Independent public accountant's report on internal control (management investment companies only). Small business investment companies are not required to respond to this item. Each management investment company shall furnish a report of its independent public accountant on the company's system of internal accounting controls. The accountant's report shall be based on the review, study and evaluation of the accounting system, internal accounting controls, and procedures for safeguarding securities made during the audit of the financial statements for the reporting period. The report should disclose any material weaknesses in: (a) The accounting system; (b) system of internal accounting control; or (c) procedures for safeguarding securities which exist as of the end of the Registrant's fiscal year. The accountant's report shall be furnished as an exhibit to the form and shall: (1) Be addressed to the Registrant's shareholders and board of directors; (2) be dated; (3) be signed manually; and (4) indicate the city and state where issued.
Attachments that include a report that discloses a material weakness should include an indication by the Registrant of any corrective action taken or proposed.
The fact that an accountant's report is attached to this form shall not be regarded as acknowledging any review of this form by the independent public accountant.
14. Item 79.a.v. Change in accounting principles and practices. If the Registrant responded “YES” to Item 22, provide an attachment that describes the change in accounting principles or practices, or the change in the method of applying any such accounting principles or practices. State the date of the change and the reasons therefor. A letter from the Registrant's independent accountants, approving or otherwise commenting on the change, shall accompany the description.
15. Item 79.a.vi. Information required to be filed pursuant to exemptive orders. File as an attachment any information
16. Item 79.a.vii. Other information required to be included as an attachment pursuant to Commission rules and regulations. File as an attachment any other information required to be included as an attachment pursuant to Commission rules and regulations.
17. Item 79.b.i. Material amendments to organizational documents. Provide copies of all material amendments to the Registrant's charters, by-laws, or other similar organizational documents that occurred during the reporting period.
18. Item 79.b.ii. Instruments defining the rights of the holders of any new or amended class of securities. Provide copies of all constituent instruments defining the rights of the holders of any new or amended class of securities for the current reporting period. If the Registrant has issued a new class of securities other than short-term paper, furnish a description of the class called for by the applicable item of Form N–2. If the constituent instruments defining the rights of the holders of any class of the Registrant's securities have been materially modified during the reporting period, give the title of the class involved and state briefly the general effect of the modification upon the rights of the holders of such securities.
19. Item 79.b.iii. New or amended investment advisory contracts. Provide copies of any new or amended investment advisory contracts that became effective during the reporting period.
20. Item 79.b.iv. Information called for by Item 405 of Regulation S–K. Provide the information called for by Item 405 of Regulation S–K concerning failure of certain closed-end management investment company and small business investment company shareholders to file certain ownership reports.
21. Item 79.b.v. Code of ethics (small business investment companies only).
(a)(1) Disclose whether, as of the end of the period covered by the report, the Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party. If the Registrant has not adopted such a code of ethics, explain why it has not done so.
(2) For purposes of this instruction, the term “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely, and understandable disclosure in reports and documents that a Registrant files with, or submits to, the Commission and in other public communications made by the Registrant; (iii) compliance with applicable governmental laws, rules, and regulations; (iv) the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (v) accountability for adherence to the code.
(3) The Registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (a)(2) of this instruction. The Registrant must file a copy of any such amendment as an exhibit to this report on Form N–CEN, unless the Registrant has elected to satisfy paragraph (a)(6) of this instruction by posting its code of ethics on its Web site pursuant to paragraph (a)(6)(ii) of this Instruction, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (a)(6)(iii) of this instruction.
(4) If the Registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, that relates to one or more of the items set forth in paragraph (a)(2) of this instruction, the Registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver.
(5) If the Registrant intends to satisfy the disclosure requirement under paragraph (a)(3) or (4) of this instruction regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the code of ethics definition enumerated in paragraph (a)(2) of this instruction by posting such information on its Internet Web site, disclose the Registrant's Internet address and such intention.
(6) The Registrant must: (i) file with the Commission a copy of its code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as an exhibit to its report on this Form N–CEN; (ii) post the text of such code of ethics on its Internet Web site and disclose, in its most recent report on this Form N–CEN, its Internet address and the fact that it has posted such code of ethics on its Internet Web site; or (iii) undertake in its most recent report on this Form N–CEN to provide to any person without charge, upon request, a copy of such code of ethics and explain the manner in which such request may be made.
(7) A Registrant may have separate codes of ethics for different types of officers. Furthermore, a “code of ethics” within the meaning of paragraph (a)(2) of this instruction may be a portion of a broader document that addresses additional topics or that applies to more persons than those specified in paragraph (a)(1) of this instruction. In satisfying the requirements of paragraph (a)(6) of this instruction, a Registrant need only file, post, or provide the portions of a broader document that constitutes a “code of ethics” as defined in paragraph (a)(2) of this instruction
(8) If a Registrant elects to satisfy paragraph (a)(6) of this instruction by posting its code of ethics on its Internet Web site pursuant to paragraph (a)(6)(ii), the code of ethics must remain accessible on its Web site for as long as the Registrant remains subject to the requirements of this instruction and chooses to comply with this instruction by posting its code on its Internet Web site pursuant to paragraph (a)(6)(ii).
(9) The Registrant does not need to provide any information pursuant to paragraphs (a)(3) and (4) of this instruction if it discloses the required information on its Internet Web site within five business days following the date of the amendment or waiver and the Registrant has disclosed in its most recently filed report on this Form N–CEN its Internet Web site address and intention to provide disclosure in this manner. If the amendment or waiver occurs on a Saturday, Sunday, or holiday on which the Commission is not open for business, then the five business day period shall begin to run on and include the first business day thereafter. If the Registrant elects to disclose this information through its Web site, such information must remain available on the Web site for at least a 12-month period. The Registrant must retain the information for a period of not less than six years following the end of the fiscal year in which the amendment or waiver occurred. Upon request, the Registrant must furnish to the Commission or its staff a copy of any or all information retained pursuant to this requirement.
(10) The Registrant does not need to disclose technical, administrative, or other non-substantive amendments to its code of ethics.
(11) For purposes of this instruction: (i) the term “waiver” means the approval by the Registrant of a material departure from a provision of the code of ethics; and (ii) the term “implicit waiver” means the Registrant's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer, as defined in rule 3b–7 under the Exchange Act (17 CFR 240.3b–7), of the Registrant.
(b)(1) Disclose that the Registrant's board of directors has determined that the Registrant either: (i) has at least one audit committee financial expert serving on its audit committee; or (ii) does not have an audit committee financial expert serving on its audit committee.
(2) If the Registrant provides the disclosure required by paragraph (b)(1)(i) of this instruction, it must disclose the name of the audit committee financial expert and whether that person is “independent.” In order to be considered “independent” for purposes of this instruction, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) be an “interested person” of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a–2(a)(19)).
(3) If the Registrant provides the disclosure required by paragraph (b)(1)(ii) of this instruction, it must explain why it does not have an audit committee financial expert.
(4) If the Registrant's board of directors has determined that the Registrant has more than one audit committee financial expert serving on its audit committee, the Registrant may, but is not required to, disclose the names of those additional persons. A Registrant choosing to identify such persons must indicate whether they are independent pursuant to paragraph (b)(2) of this instruction.
(5) For purposes of this instruction, an “audit committee financial expert” means a person who has the following attributes: (i) an understanding of generally accepted accounting principles and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves; (iii) experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Registrant's financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions.
(6) A person shall have acquired such attributes through: (i) education and experience as a principal financial officer, principal accounting officer, controller, public accountant, or auditor or experience in one or more positions that involve the performance of similar functions; (ii) experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions; (iii) experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing, or evaluation of financial statements; or (iv) other relevant experience.
(7)(i) A person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for purposes of Section 11 of the Securities Act (15 U.S.C. 77k), as a result of being designated or identified as an audit committee financial expert pursuant to this instruction; (ii) the designation or identification of a person as an audit committee financial expert pursuant to this instruction does not impose on such person any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification; (iii) the designation or identification of a person as an audit committee financial expert pursuant to this instruction does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.
(8) If a person qualifies as an audit committee financial expert by means of having held a position described in paragraph (b)(6)(iv) of this Instruction, the Registrant shall provide a brief listing of that person's relevant experience.
Pursuant to the requirements of the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
*Print full name and title of the signing officer under his/her signature.
The text of Form N–CSR does not and these amendments will not appear in the
(a) Except as provided in paragraph (b) of this section, this form shall be used by registered management investment companies or exchange-traded funds organized as unit investment trusts, or series thereof, to file reports pursuant to § 270.30b1–9 of this chapter not later than 30 days after the end of each month.
(b) Form N–PORT shall not be filed by a registered open-end management investment company that is regulated as a money market fund under § 270.2a–7 of this chapter or a small business investment company registered on Form N–5 (§§ 239.24 and 274.5 of this chapter), or series thereof.
The text of Form N–PORT will not appear in the
Form N–PORT is to be used by a registered management investment company, or an exchange-traded product organized as a unit investment trust, or series thereof (“fund”), other than a fund that is regulated as a money market fund (“money market fund”) under rule 2a–7 under the Investment Company Act of 1940 [15 U.S. C. 80a] (“Act”) (17 CFR 270.2a–7) or a small business investment company (“SBIC”) registered on Form N–5 (17 CFR 239.24 and 274.5), to file monthly portfolio holdings reports pursuant to rule 30b1–9 under the Act (17 CFR 270.30b1–9). The Commission may use the information provided on Form N–PORT in its regulatory, enforcement, examination, disclosure review, inspection, and policymaking roles.
Form N–PORT is the reporting form that is to be used for monthly reports of funds other than money market funds and SBICs under section 30(b) of the Act, as required by rule 30b1–9 under the Act (17 CFR 270.30b1–9). Funds must report information about their portfolios and each of their portfolio holdings as of the last business day, or last calendar day, of the month. Reports on Form N–PORT must be filed with the Commission no later than 30 days after the end of each month. Each fund is required to file a separate report.
A fund may file an amendment to a previously filed report at any time, including an amendment to correct a mistake or error in a previously filed report. A fund that files an amendment to a previously filed report must provide information in response to all items of Form N–PORT, regardless of why the amendment is filed.
The General Rules and Regulations under the Act contain certain general requirements that are applicable to reporting on any form under the Act. These general requirements shall be carefully read and observed in the preparation and filing of reports on this Form, except that any provision in the Form or in these instructions shall be controlling.
Reports must be filed electronically using the Commission's Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system in accordance with Regulation S–T. Consult the EDGAR Filer Manual and Appendices for EDGAR filing instructions.
A fund is not required to respond to the collection of information contained in Form N–PORT unless the form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. 3507.
References to sections and rules in this Form N–PORT are to the Act, unless otherwise indicated. Terms used in this Form N–PORT have the same meanings as in the Act or related rules, unless otherwise indicated.
As used in this Form N–PORT, the terms set out below have the following meanings:
“Class” means a class of shares issued by a Multiple Class Fund that represents interests in the same portfolio of securities under rule 18f–3 [17 CFR 270.18f–3] or under an order exempting the Multiple Class Fund from one or more provisions of section 18 [15 U.S.C. 80a–18].
“Controlled Foreign Corporation” has the meaning provided in section 957 of the Internal Revenue Code [26 U.S.C. 957].
“Exchange-Traded Product” means an open-end management investment company (or Series or Class thereof) or unit investment trust, the shares of which are listed and traded on a national securities exchange, and that has formed and operates under an exemptive order under the Act granted by the Commission or in reliance on an exemptive rule under the Act adopted by the Commission.
“Fund” means the Registrant or a separate Series of the Registrant. When an item of Form N–PORT specifically applies to a Registrant or a Series, those terms will be used.
“Illiquid Asset” means an asset that cannot be sold or disposed of by the Fund in the ordinary course of business within seven calendar days, at approximately the value ascribed to them by the Fund.
“Investment Grade” refers to an investment that is sufficiently liquid that it can be sold at or near its carrying value within a reasonably short period of time and is subject to no greater than moderate credit risk.
“ISIN” means, with respect to any security, the “international securities identification number” assigned by a national numbering agency, partner, or substitute agency that is coordinated by the Association of National Numbering Agencies.
“LEI” means, with respect to any company, the “legal entity identifier” as assigned or recognized by the Global LEI Regulatory Oversight Committee or the Global LEI Foundation. In the case of a financial institution, if a “legal entity identifier” has not been assigned, then provide the RSSD ID, if any, assigned by the National Information Center of the Board of Governors of the Federal Reserve System.
“Multiple Class Fund” means a Fund that has more than one Class.
“Non-Investment Grade” refers to an investment that is not Investment Grade.
“Registrant” means a management investment company, or an Exchange-Traded Product organized as a unit investment trust, registered under the Act.
“Restricted Security” has the meaning defined in rule 144(a)(3) under the Securities Act of 1933 [17 CFR 230.144(a)(3)].
“Series” means shares offered by a Registrant that represent undivided interests in a portfolio of investments and that are preferred over all other series of shares for assets specifically allocated to that series in accordance with rule 18f–2(a) [17 CFR 270.18f–2(a)].
“Swap” means either a “security-based swap” or a “swap” as defined in sections 3(a)(68) and (69) of the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(68) and (69)] and any rules, regulations, or interpretations of the Commission with respect to such instruments.
Information reported on Form N–PORT for the third month of each fund's fiscal quarter will be made publicly available 60 days after the end of the fund's fiscal quarter.
The SEC does not intend to make public the information reported on Form N–PORT for the first and second months of each fund's fiscal quarter, or any information reported in Part D of this Form. However, the SEC may use information reported on this Form in its regulatory programs, including examinations, investigations, and enforcement actions.
In responding to the items on this Form, the following guidelines apply unless otherwise specifically indicated:
• A fund is required to respond to every item of this form. If an item requests information that is not applicable, for example, an LEI for a counterparty that does not have an LEI, respond N/A;
• If an item requests the name of an entity, provide the full name to the extent known, and do not use abbreviations (other than abbreviations that are part of the full name);
• If an item requests information expressed as a percentage, enter the response as a percentage (not a decimal), rounded to the nearest hundredth of one percent (
• If an item requests a monetary value, report the amount rounded to the nearest hundredth (
• For currencies other than U.S. dollars, also report the applicable three-letter alphabetic currency code pursuant to the International Organization for Standardization (“ISO”) 4217 standard;
• If an item requests a unique identifier, such an identifier may be internally generated by the fund or provided by a third party, but should be consistently used across the fund's filings for reporting that investment so that the Commission, investors, and other users of the information can track the investment from report to report;
• If an item requests a numerical value other than a percentage or a dollar value, provide information rounded to the nearest hundredth;
• If an item requests a date, provide information in mm/dd/yyyy format; and
• If an item requests information regarding a “holding” or “investment,” separately report information as to each holding or investment that is recorded in the Fund's books as part of a larger transaction. For example, two or more partially offsetting legs of a transaction entered into with the same counterparty under a common master agreement shall each be separately reported.
If the report is filed in paper pursuant to a hardship exemption from electronic filing (see Item 201
The report must be signed by the Registrant, and on behalf of the Registrant by an authorized officer of the Registrant. The name of each person who signs the report shall be typed or printed beneath his or her signature. See rule 302 of Regulation S–T [17 CFR 232.302] regarding signatures on forms filed electronically and rule 8b–11 under the Act (17 CFR 270.8b–11) concerning signatures pursuant to powers of attorney.
Report the following information for the Fund and its consolidated subsidiaries.
Calculate notional value as the sum of the absolute values of: (i) the value of each debt security, (ii) the notional amount of each swap, including, but not limited to, total return swaps, interest rate swaps credit default swaps, for which the underlying reference asset or assets are debt securities or an interest rate; and (iii) the delta-adjusted notional amount of any option for which the underlying reference asset is an asset described in clause (i) or (ii). Report zero for maturities to which the fund has no exposure. For exposures that fall between any of the listed maturities in (a) and (b), use linear interpolation to approximate exposure to each maturity listed above. For exposures outside of the range of maturities listed above, include those exposures in the nearest maturity.
For each investment held by the Fund and its consolidated subsidiaries, disclose the information requested in Part C. A Fund may report information for securities in an aggregate amount not exceeding five percent of its total assets as miscellaneous securities in Part D in lieu of reporting those securities in Part C, provided that the securities so listed are not restricted, have been held for not more than one year prior to the end of the reporting period covered by this report, and have not been previously been reported by name to the shareholders of the Fund or to any exchange, or set forth in any registration statement, application, or annual report or otherwise made available to the public.
Report miscellaneous securities, if any, using the same Item numbers and reporting the same information that would be reported for each investment in Part C if it were not a miscellaneous security. Information reported in this Item will be nonpublic.
The Fund may provide any information it believes would be helpful in understanding the information reported in this Form. The Fund may also explain any assumptions that it made in responding to any Item in this Form. To the extent responses relate to a particular Item, provide the Item number(s), as applicable.
For reports filed for the end of the first and third quarters of the Fund's fiscal year, attach the Fund's complete portfolio holdings as of the close of the period covered by the report. These portfolio holdings must be presented in accordance with the schedules set forth in §§ 210.12–12—12–14 of Regulation S–X [17 CFR 210.12–12—12–14].
The Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
By the Commission.
Securities and Exchange Commission.
Proposed rule.
The Securities and Exchange Commission is proposing amendments to Form ADV that are designed to provide additional information regarding advisers, including information about their separately managed account business; incorporate a method for private fund adviser entities operating a single advisory business to register using a single Form ADV; and make clarifying, technical and other amendments to certain Form ADV items and instructions. The Commission also is proposing amendments to the Advisers Act books and records rule and technical amendments to several Advisers Act rules to remove transition provisions that are no longer necessary.
Comments should be received on or before August 11, 2015.
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Use the Federal eRulemaking Portal (
• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
Studies, memoranda or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the Commission's Web site. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Bridget D. Farrell, Senior Counsel, Sarah A. Buescher, Branch Chief, or Daniel S. Kahl, Assistant Director, at (202) 551–6787 or
The Commission is proposing amendments to rules 204–2 [17 CFR 275.204–2], 202(a)(11)(G)–1 [17 CFR 275.202(a)(11)(G)–1], 203–1 [17 CFR 275.203–1], and 204–1 [17 CFR 275.204–1] under the Investment Advisers Act of 1940 [15 U.S.C. 80b] (“Advisers Act” or “Act”),
Form ADV is used by investment advisers to register with the Commission and with the states. The information collected on Form ADV serves a vital role in our regulatory program and our ability to protect investors. Our staff uses Form ADV data to prepare for, conduct, and implement our risk-based examination program of investment advisers, and that data also assists our staff in conducting investigations and bringing enforcement actions. In addition to providing information about each investment adviser, Form ADV data is also aggregated by our staff across investment advisers to obtain census data and to monitor industry trends. Census data and industry trend information inform our regulatory program and the assessment of emerging risks. Importantly, Form ADV also benefits clients and prospective clients because the information filed by advisers is available to the public on our Web site.
We have amended Form ADV several times to improve our ability to oversee investment advisers. Most recently we significantly enhanced reporting requirements for advisers to private funds in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act's (“Dodd-Frank Act's”)
Several of the proposed amendments to Form ADV relate to separately managed accounts. Investment advisers manage assets of pooled investment vehicles, including registered and unregistered funds. Advisers also manage assets of other clients, such as pension plans, endowments, foundations, other institutional clients and retail clients, through separately managed accounts. We currently collect detailed information about pooled investment vehicles,
We also are proposing amendments to Part 1A that would establish a more efficient method for the registration of multiple private fund adviser entities operating a single advisory business on one Form ADV (“umbrella registration”). Form ADV was designed to accommodate the typical registration of an investment adviser that is a single legal entity. Advisers of private funds frequently are organized using multiple legal entities, and the staff has provided guidance to private fund advisers regarding umbrella registration within the confines of the current form.
The last group of amendments we are proposing to Part 1A are clarifying, technical, and other amendments that are informed by our staff's experience with the form and responding to inquiries by advisers and their service providers. Among other things, these amendments should assist filers and their service providers by making the form easier to understand and complete.
We also are proposing several amendments to Advisers Act rules unrelated to the revisions to Form ADV described above. First, we are proposing amendments to the books and records rule, rule 204–2, that would require advisers to make and keep supporting documentation that demonstrates performance calculations or rates of return in any written communications that the adviser circulates or distributes, directly or indirectly, to any person. The proposed amendments also would require advisers to maintain originals of all written communications received and copies of written communications sent by an investment adviser related to the performance or rate of return of any or all managed accounts or securities recommendations.
We note that in December 2014, the Financial Stability Oversight Council (“FSOC”) issued a notice requesting comment on aspects of the asset management industry, which includes, among other entities, registered investment advisers. Although this rulemaking proposal is independent of FSOC, the notice included requests for comment on additional data or information that would be helpful to regulators and market participants. In response to the notice, several commenters discussed issues concerning data that are relevant to this proposal, including data regarding separately managed accounts and are cited in the discussion below.
Several of the amendments to Form ADV that we are proposing today are designed to collect more specific information about advisers' separately managed accounts.
The proposed amendments regarding separately managed accounts would require more detailed information than we currently receive in response to Item 5 of Part 1A and Section 5 of Schedule D.
First, we propose to require advisers to report the approximate percentage of separately managed account regulatory assets under management invested in ten broad asset categories, such as exchange-traded equity securities and U.S. government/agency bonds.
Second, we propose to require advisers with at least $150 million in regulatory assets under management attributable to separately managed accounts to report information on the use of borrowings and derivatives in those accounts.
Advisers would be required to update the derivatives and borrowings information annually when filing their annual updating amendment to Form ADV, which is consistent with the requirement for updating other information in Item 5 of Form ADV. In addition, advisers with at least $10 billion in separately managed account regulatory assets under management would be required to report both mid-year and year-end information as part of their annual filing.
Finally, we propose to require advisers to identify any custodians that account for at least ten percent of separately managed account regulatory assets under management, and the amount of the adviser's regulatory assets under management attributable to separately managed accounts held at the custodian.
We request comment on the changes we propose to make to Form ADV regarding separately managed accounts.
• Advisers would be required to update separately managed account information annually. Should we require more frequent reporting, such as quarterly reporting? Should an adviser be required to update information on separately managed accounts any time the adviser files an other-than-annual amendment to Form ADV? Is it appropriate to require semi-annual data in annual reporting instead of semi-annual reporting for advisers that manage at least $10 billion in separately managed accounts? Why or why not?
• In order to better understand the use of derivatives in separately managed accounts, would we need more data points from each adviser than the annual and semi-annual proposed data points? Why or why not?
• Are the $10 million, $150 million and $10 billion thresholds appropriate? Why or why not? Should we require advisers that manage less than $150 million in assets under management attributable to separately managed accounts to report additional information about those accounts or report semi-annual information?
• Should we ask about the investment strategies used in separately managed accounts as opposed or in addition to asset types? If so, how should we define the investment strategies so that information reported to us is meaningful? Should we use some or all of the investment strategies listed in Form PF for private funds?
• Is there any overlap among the proposed asset types? If so, which particular types? Are there any additional asset types that should be included?
• Would disclosure of aggregate holdings, derivatives and borrowings in separately managed accounts raise concerns, in light of Section 210(c) of the Advisers Act, regarding the identity, investments, or affairs of any clients owning those accounts when clients are not identified? If so, please explain, and address whether there are ways in which the Commission could address these concerns and still request comparable information.
• Would the disclosure of information about separately managed accounts in the aggregate be useful for risk monitoring and data analysis purposes? Why or why not?
• Are the proposed definitions related to Schedule D, Section 5.K.(1) and (2) sufficiently clear to allow advisers to provide the requested information? If not, please explain why and provide alternative definitions or suggestions. Would a definition of “derivatives” improve the reporting requirements? If so, how should that term be defined? For instance, should it be defined broadly to include instruments whose price is dependent on or derives from one or more underlying assets? Alternatively, should it be defined to mean futures and forward contracts, options, swaps, security-based swaps, combinations of the foregoing, or any similar instruments, or should it be defined in some other manner? If, so, how?
• Are gross notional exposures and gross notional values appropriate measures of the use of derivatives? Are there alternative or additional measures that we should consider?
• Would the disclosure of information about separately managed accounts affect or influence business or other decisions by advisers?
• Is ten percent an appropriate threshold for information on custodians that serve a significant number of separately managed accounts? Should it be higher or lower? If so, why?
• Should we require advisers to report information about the use of securities lending and repurchase agreements in separately managed accounts? If so, is there specific information we should collect, and should we require information only from advisers that manage a large amount of separately managed account assets? Are securities lending arrangements and repurchase agreements used by separately managed accounts to such an extent that we should require all advisers that manage separately managed accounts to report this information?
• Is there additional information we should collect that would assist us in
• Is the information required to answer these proposed questions readily available to advisers? If not, why?
In addition to the proposals outlined above regarding separately managed accounts, we are proposing to add several new questions and amend existing questions on Form ADV regarding identifying information, an adviser's advisory business, and affiliations. These items, developed through our staff's experience in examining and monitoring investment advisers, are designed to enhance our understanding and oversight of investment advisers and to assist our staff in its risk-based examination program.
We propose several amendments to Item 1 of Part 1A of Form ADV to improve certain identifying information that we obtain. Item 1 currently requires an adviser to provide a Central Index Key number (“CIK Number”) in Item 1.N only if the adviser is a public reporting company under Sections 12 or 15(d) of the Securities Exchange Act of 1934.
Item 1.I of Part 1A of Form ADV currently asks whether an adviser has one or more Web sites, and Section 1.I. of Schedule D requests the Web site address. We propose to amend Item 1.I. to ask whether the adviser has one or more Web sites or Web sites for social media platforms, such as Twitter, Facebook and LinkedIn, and request the social media addresses in addition to the adviser's Web site address in Section 1.I. of Schedule D.
We propose amending Item 1.F of Part 1A of Form ADV and Section 1.F. of Schedule D to expand the information provided about an adviser's offices other than its principal office and place of business. We currently require an adviser to provide contact and other information about its principal office and place of business, and, if an adviser conducts advisory activities from more than one location, about its largest five offices in terms of number of employees.
In addition to providing contact information for the 25 largest offices, we propose to amend Section 1.F. of Schedule D to require advisers to report each office's CRD branch number (if applicable) and the number of employees who performed advisory functions from each office, identify from a list of securities-related activities the business activities conducted from each office, and describe any other investment-related business conducted from each office. This information would help our staff assess risk, because it provides a better understanding of an investment adviser's operations and the nature of activities conducted in its top 25 offices. In addition, if the staff wanted to focus on offices that conducted a combination of activities, such as those that engaged in municipal advisory activities as well as investment advisory activities, it would have that information readily available.
Item 1.J. of Form ADV currently requires each adviser to provide the name and contact information for the adviser's chief compliance officer. We propose to amend Item 1.J. to require an adviser to report whether its chief compliance officer is compensated or employed by any person other than the adviser (or a related person of the adviser) for providing chief compliance officer services, and, if so, to report the name and IRS Employer Identification Number (if any) of that other person. Our examination staff has observed a wide spectrum of both quality and effectiveness of outsourced chief compliance officers and firms. Identifying information for these third-party service providers, like others on Form ADV,
We propose to amend Item 1.O. to require advisers to report their own assets within a range.
We request comment on the proposed changes to Item 1 of Part 1A and Section 1 of Schedule D.
• Are there concerns with providing all CIK numbers assigned to an adviser? If so, please explain those concerns.
• Are there concerns with providing social media information for advisers? If so, please explain those concerns. Are there ways that we could address these concerns and still request comparable information?
• Would the proposed social media information be useful to investors? Why or why not?
• Is there additional social media information that we should collect? Should we ask advisers whether they permit employees to have social media accounts associated with the advisers' business? And, if so, should we ask advisers to identify the number or percentage of employees that have those accounts? How burdensome would it be for advisers to report that information?
• As proposed, information would be required regarding an adviser's 25 largest offices. We selected 25 in order to balance the burden to investment advisers with providing this information with our need for information about additional offices. If instead we were to require all offices to be reported, would the burden on advisers be significant? Should we decrease the number of offices or provide another standard to identify the offices that should be reported?
• Would additional information about an adviser's offices be helpful to investors? Why or why not?
• Are there concerns related to disclosure of information regarding outsourced chief compliance officers? If so, please explain those concerns.
• In addition to the identification of outsourced chief compliance officers, should we also request information about advisers' use of third-party compliance auditors? If so, what information should we request?
• Are there any concerns related to disclosing the range of an adviser's own assets? If so, please explain those concerns. Should the ranges be different than proposed? Why or why not?
• Are the proposed requirements clearly stated?
• Do advisers readily have access to the data and information requested by these proposed changes?
In addition to the proposed amendments to Item 5 regarding separately managed accounts discussed above, we are proposing a number of other amendments to Item 5. Item 5 currently requires an adviser to provide approximate ranges for three important data points concerning the adviser's business—the number of advisory clients, the types of advisory clients, and regulatory assets under management attributable to client types.
We are proposing several targeted additions to Item 5 and Section 5 of Schedule D to inform our risk-based exam program and other risk monitoring initiatives. An adviser that elects to report client assets in Part 2A of Form ADV differently from the regulatory assets under management it reported in Part 1A of Form ADV would be required to check a box noting that election.
Section 5.G.(3) of Schedule D currently requires the SEC File Number for registered investment companies and business development companies advised by the adviser. We propose adding to Section 5.G.(3) a requirement that advisers report the regulatory assets under management of all parallel managed accounts related to a registered investment company or business development company that is advised by the adviser.
Finally, we propose to amend Item 5 to obtain additional information concerning wrap fee programs.
We request comment on the additional changes we propose to make to Item 5 and related sections of Schedule D.
• Please describe any benefits or concerns with using more precise numbers in Item 5, rather than ranges.
• Is there any overlap among the categories of clients, and if so, among which particular categories? How could we address any overlaps?
• Please describe any concerns with providing information on: (a) The number of clients for whom investment advisers provide advisory services but do not have regulatory assets under management; (b) the regulatory assets under management attributable to non-U.S. clients; or (c) parallel managed accounts. Are there other types of information advisers could report that would meet our goals?
• Would the additional information on wrap fee programs be helpful to investors and other market participants? Should any additional information be required?
• Would advisers readily have access to the data requested?
• Are the proposed requirements clearly stated?
Part 1A, Section 7.A. of Schedule D requires information on an adviser's financial industry affiliations and Section 7.B.(1) of Schedule D requires information on private funds managed by the adviser. We are proposing amendments to Sections 7.A. and 7.B.(1) of Schedule D that would require advisers to provide identifying numbers (
We request comment on the proposed changes to Sections 7.A. and 7.B.(1) of Schedule D.
• Would advisers readily have access to the data requested?
• Please describe any concerns with providing: (a) Identifying numbers; or (b) the percentage of a private fund owned by qualified clients.
• Are the requirements clearly stated?
The Dodd-Frank Act, among other things, repealed the private adviser exemption that used to be in section 203(b)(3) of the Advisers Act.
For a variety of tax, legal and regulatory reasons, advisers to private funds may be organized as a group of related advisers that are separate legal entities but effectively operate as—and appear to investors and regulators to be—a single advisory business. Although these separate legal entities effectively operate as a single advisory business,
Our staff provided guidance to private fund advisers before the compliance date of the Dodd-Frank Act private fund adviser registration requirements
The method outlined in the staff guidance for filing Form ADV on behalf of multiple entities is limited, however, by the form being designed for a single legal entity, and in some cases complicates data collection and analysis on umbrella registrants and can confuse filers and the public.
Under the amendments we are proposing, umbrella registration would be available where a filing adviser and one or more relying advisers conduct a single private fund advisory business and each relying adviser is controlled by or under common control with the filing adviser. As proposed, umbrella registration would only be available in the scenario of a private fund adviser operating as a single business through multiple legal entities. At this time, we do not believe umbrella registration would be appropriate for advisers that are related but that operate separate advisory businesses as it would compromise data quality and complicate analyses that rely on data from Form ADV.
Accordingly, we are proposing amendments to Form ADV's General Instructions that would establish conditions for an adviser to assess whether umbrella registration is available. The conditions, which are indicia of a single advisory business, include the following:
1. The filing adviser and each relying adviser advise only private funds and clients in separately managed accounts that are qualified clients (as defined in rule 205–3 under the Advisers Act) and are otherwise eligible to invest in the private funds advised by the filing adviser or a relying adviser and whose accounts pursue investment objectives and strategies that are substantially similar or otherwise related to those private funds;
2. The filing adviser has its principal office and place of business in the United States and, therefore, all of the substantive provisions of the Advisers Act and the rules thereunder apply to the filing adviser's and each relying adviser's dealings with each of its clients, regardless of whether any client or the filing adviser or relying adviser providing the advice is a United States person;
3. Each relying adviser, its employees and the persons acting on its behalf are subject to the filing adviser's supervision and control and, therefore, each relying adviser, its employees and the persons acting on its behalf are “persons associated with” the filing adviser (as defined in section 202(a)(17) of the Advisers Act);
4. The advisory activities of each relying adviser are subject to the Advisers Act and the rules thereunder, and each relying adviser is subject to examination by the Commission; and
5. The filing adviser and each relying adviser operate under a single code of ethics adopted in accordance with rule 204A–1 under the Advisers Act and a single set of written policies and procedures adopted and implemented in accordance with rule 206(4)–(7) under the Advisers Act and administered by a single chief compliance officer in accordance with that rule.
The conditions are drawn from our experience with examining investment advisers and are designed to capture advisers to private funds that operate as a single business through commonality of the application of the Advisers Act and rules to all entities, implementation of compliance requirements, and advisory services. They are designed to include advisers to private funds (as discussed in condition 1) that operate as a single business. Conditions 2 and 4 provide assurance that our staff has access to and can readily examine the filing and relying advisers and that the Advisers Act and the rules thereunder fully apply to all advisers under the umbrella registration and clients of those advisers. Conditions 3 and 5 are designed to address the requirement that the filing and relying advisers operate as a single business. Advisers that operate under common supervision and control and have a single set of compliance policies and procedures and code of ethics are likely to operate as a
In addition, we propose to amend the General Instructions to provide advisers using umbrella registration directions on completing Form ADV for the filing adviser and each relying adviser, including details for filing umbrella registration requests and the timing of filings and amendments in connection with an umbrella registration.
We also are proposing a new schedule to Part 1A—Schedule R—that would have to be filed for each relying adviser.
Advisers registering in reliance on the staff's umbrella registration approach outlined in the 2012 ABA Letter do not provide information about each relying adviser's address, CRD, unique identifier numbers, basis for registration or form of organization. Our proposal would require this information to be reported. We believe that certain information that we propose requiring as part of umbrella registration (such as mailing address and basis for registration) would be the same for nearly all relying advisers, and the filing adviser could check a box indicating that the mailing address of the relying advisers is the same as that of the filing adviser. Advisers relying on the 2012 ABA Letter do not currently identify the filing adviser or relying adviser that advises private funds reported on Section 7.B.(1) of Schedule D, and our proposal would require this information to be reported. We believe that this information would help us better understand the management of private funds, would provide information to contact relying advisers, and would help us better understand the relationship between relying advisers and filing advisers.
We request comment on the changes we propose to make to Form ADV regarding umbrella registration.
• Should we amend Form ADV to accommodate umbrella registration? Why or why not?
• Would these amendments be helpful for private fund advisers and investors?
• Is umbrella registration appropriate or should we require separate registration by each adviser?
• Would umbrella registration provide more consistent and clear information about groups of private fund advisers that operate as a single business? Why or why not?
• Are there additional or different conditions we should consider for umbrella registration?
• Should we require that the availability of umbrella registration be expanded to include advisers with clients that are not primarily private funds, and if so, what are the legal structures that it should accommodate and are the proposed conditions sufficient to capture only single advisory businesses?
• We are not proposing to make filing an umbrella registration mandatory, because we believe it is appropriate to permit advisers to file a separate Form ADV for each relying adviser if they choose to do so.
• Are the proposed amendments to the instructions and Form ADV sufficient to implement umbrella registration? If not, what amendments are necessary?
• Should we require more, less or different information on proposed Schedule R? What information should be added or deleted?
We are proposing several amendments to Form ADV that are designed to clarify the form and its instructions. We believe these proposed amendments to Form ADV would make the filing process clearer and therefore more efficient for advisers, and increase the reliability and the consistency of information provided by investment
Item 2.A. of Part 1A of Form ADV requires an adviser to select the basis upon which it is eligible to register with the Commission, and Item 2.A.(9) includes as a basis that the adviser is eligible for registration because it is a “newly formed adviser” relying on rule 203A–2(c) because it expects to be eligible for SEC registration within 120 days.
Item 4 of Part 1A of Form ADV addresses successions of investment advisers, and the Instructions to Item 4 provide that a new organization has been created under certain circumstances, including if the adviser has changed its structure or legal status (
Item 7 of Part 1A of Form ADV and corresponding sections of Schedule D require advisers to report information about their financial industry affiliations and the private funds they advise. We propose several technical amendments to Item 7. We propose to revise Item 7.A., which requires advisers to check whether their related persons are within certain categories of the financial industry, to clarify that advisers should not disclose in response to this item that some of their employees perform investment advisory functions or are registered representatives of a broker-dealer, because this information should instead be reported on Items 5.B.(1) and 5.B.(2) of Part 1A, respectively. Items 5.B.(1) and 5.B.(2) request information about an adviser's employees. Adding this text to Form ADV should assist filers in filling out the form as well as provide more accurate data to us and the general public.
Item 7.B. of Part 1A of Form ADV asks whether the adviser serves as adviser to any private fund. Section 7.B.(1) of Schedule D requires advisers to provide information about the private funds they manage. We propose adding text to Item 7.B. clarifying that Section 7.B.(1) of Schedule D should not be completed if another SEC-registered adviser or SEC exempt reporting adviser reports the information required by Section 7.B.(1) of Schedule D. Currently the instructions only refer to another adviser. We also propose several amendments to Section 7.B.(1) of Schedule D. Question 8 of Section 7.B.(1) currently asks whether the private fund is a “fund of funds,” and if it is, whether the private fund invests in funds managed by the adviser or a related person of the adviser. Below those two questions there is currently a note informing advisers when they should answer yes to the first question regarding whether the private fund is a “fund of funds.” We propose renaming the first question as Question 8(a), moving the note to directly after Question 8(a), and making the second question Question 8(b).
Question 10 of Section 7.B.(1) of Schedule D asks the adviser to identify the category of the private fund. We propose to delete text in Question 10 that directs advisers to refer to the underlying funds of a fund of funds when selecting the type of fund, in order to reconcile differences with Form PF, which permits advisers to disregard any private fund's equity investments in other private funds.
We propose a revision to Question 23(a)(2). Currently, this question requires an adviser to check a box to indicate whether the private fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
In order to address a frequent question from filers, we propose to clarify that advisers should answer Item 8 based on the types of participation and interest the adviser expects to engage in during the next year. Item 8.B.(2) of Part 1A of Form ADV currently asks whether the adviser or any related person of the adviser recommended purchase of securities to advisory clients for which the adviser or any related person of the adviser serves as underwriter, general or managing partner, or purchaser representative.
Item 8.H. of Part 1A of Form ADV asks whether the adviser or any related person of the adviser, directly or indirectly, compensates any person for client referrals. We are proposing revisions to Item 8.H. to break the question into two parts to increase our understanding of compensation for client referrals. Proposed Item 8.H.(1) would cover compensation to persons other than employees for client referrals.
Section 9.C. of Schedule D requests information about independent public accountants that perform surprise examinations in connection with the Advisers Act custody rule, rule 206(4)–2. We propose two changes to Section 9.C. of Schedule D. First, we propose to add text requiring an adviser to provide the PCAOB registration number of the adviser's independent public accountant to improve our staff's ability to cross-reference information submitted through other systems and monitor compliance with the custody rule.
Item 11 of Part 1A of Form ADV requires registered advisers and exempt reporting advisers to provide information about their disciplinary history and the disciplinary history of their advisory affiliates. Those advisers who report an event for purposes of Item 11 are directed to complete a Disclosure Reporting Page (“DRP”) to provide the details of the event. DRPs can be removed from Form ADV under certain circumstances, including when “the adviser is registered or applying for registration with the SEC and the event was resolved in the adviser's or advisory affiliate's favor.”
Together with the proposed amendments to Part 1A, we are also proposing conforming amendments to the General Instructions and the Glossary for Form ADV. As discussed above, we propose to amend the General Instructions to include instructions regarding umbrella registration. We also propose to remove outdated references to “Special One-Time Dodd-Frank Transition Filing for SEC Registered Advisers” and “recent” amendments to Form ADV Part 2 that are no longer needed. We propose to update the definition of “Legal Entity Identifier” to reflect recent advancements in this protocol.
Where applicable, we propose to make technical revisions to specify that an adviser must “apply for registration” (rather than simply “register”) to more accurately reflect the rule text. We also propose to delete text in the instructions related to Item 1.O. because this text is proposed to appear directly in the corresponding section of Part 1 of Form ADV. We propose to add text clarifying that a change in information related to Item 1.O. does not necessitate a prompt other-than-annual amendment (as changes to Item 1 otherwise do).
We request comment on our proposed clarifying, technical and other amendments.
• Are the proposed amendments necessary? Should we consider different or additional amendments? If so, please specify.
• Are there any ambiguities or concerns that we should address in the form, instructions or glossary?
• Should we ask additional questions in Section 7.B.(1) of Schedule D regarding an adviser's reliance on Regulation D? If so, what additional information should we request?
• Are the proposed amendments regarding payment for client referrals in Item 8 clear? Why or why not?
We are proposing two amendments to the Advisers Act books and records rule, rule 204–2, that would require investment advisers to maintain additional materials related to the calculation and distribution of performance information.
Rule 204–2(a)(16) currently requires advisers that are registered or required to be registered with us to maintain records supporting performance claims in communications that are distributed or circulated to ten or more persons.
Rule 204–2(a)(7) currently requires advisers that are registered or required to be registered with us to maintain certain categories of written communications received and copies of written communications sent by such advisers.
Based on our staff's experience, we believe that most advisers already maintain this information as part of their compliance with rule 206(4)–1 under the Advisers Act, which regulates advertisements by investment advisers. The proposed amendments would provide our examination staff with additional information to review an adviser's compliance with rule 206(4)–1 and would assist us in enforcing rule 206(4)–1 in cases of fraudulent advertising. Investors would benefit to the extent that the proposed amendments reduce the incidence of misleading or fraudulent advertising.
We request comment on the proposed amendments to rule 204–2.
• Do investment advisers currently maintain these records? If so, are there concerns with making these required records?
• Are there alternate means that would be sufficient to collect performance information and client communications regarding performance?
• Are there exceptions that we should consider?
We are proposing technical amendments to several rules under the Advisers Act and the withdrawal of transition rule 203A–5 under the Advisers Act. The proposed amendments would remove transition provisions from rules where the transition process is complete. Three of the provisions were added as part of the implementation of the Dodd-Frank Act. Two provisions were added when we amended Form ADV and several Advisers Act rules to require advisers to electronically file their brochures with the Commission.
The Dodd-Frank Act amended section 203A of the Advisers Act to prohibit from SEC registration “mid-sized” advisers that generally have assets under management of between $25 million and $100 million.
Section 409 of the Dodd-Frank Act created a new exclusion from the definition of “investment adviser” in
Rule 203–1 outlines the procedures for advisers to register with the Commission. Paragraph (e) of the rule was added as part of the implementation of the Dodd-Frank Act and allowed companies that were relying on the rescinded “private adviser” exemption
Rule 203–1 and Rule 204–1 were amended in 2010 to provide transition periods for advisers to file narrative brochures required by Part 2A of Form ADV electronically with the Investment Adviser Registration Depository (“IARD”).
We request comment on these proposed changes.
• Is there any benefit to keeping any of these provisions?
The Commission is sensitive to the benefits and costs of its rules. The following economic analysis identifies and considers the benefits and costs—including the effects on efficiency, competition, and capital formation—that would result from the proposed amendments to Form ADV and the proposed amendments to and rescission of certain rules under the Investment Advisers Act. The economic effects of the proposed amendments are discussed below and have informed the policy choices described in this release.
We are proposing amendments to Form ADV and the Advisers Act books and records rule 204–2, and technical amendments to several other rules under the Advisers Act. In summary, and as discussed in greater detail in section II. above, we are proposing the following amendments to Form ADV and Advisers Act rules:
• Amendments to Form ADV that are designed to fill certain data gaps and enhance current reporting provided by investment advisers in order to improve the depth and quality of the information we collect on investment advisers and to facilitate our risk monitoring objectives;
• Amendments to Form ADV to incorporate “umbrella registration” for private fund advisers;
• Clarifying, technical and other amendments to Part 1A of Form ADV;
• Amendments to the Advisers Act books and records rule that would require advisers to make and keep supporting documentation that demonstrates performance calculations or rates of return in any written communications that the investment adviser circulates or distributes; and
• Technical amendments to several rules under the Advisers Act to remove transition provisions that are no longer necessary.
We rely on information reported by investment advisers to us on Form ADV to monitor trends, assess emerging risks, inform policy choices and rulemaking, and assist Commission staff in examination and enforcement efforts. We believe that the proposed amendments to Form ADV would improve the information provided by investment advisers to the Commission, clients and prospective clients and would improve investor protection by informing policy choices and focusing examination activities. We also believe that the proposed amendments to the Advisers Act books and records rule would improve investor protections by providing useful information to evaluate advisers' performance claims.
The regulatory regime as it exists today for investment advisers serves as the economic baseline against which the costs and benefits, as well as the impact on efficiency, competition, and capital formation of the proposed amendments are discussed. The baseline includes the current requirement for investment advisers to file Form ADV, the staff guidance that permits filing advisers to file a single Form ADV on behalf of itself and each relying adviser,
Based on IARD system data as of April 2015, approximately 11,600 investment advisers are registered with the Commission, and 2,914 exempt reporting advisers file reports with the Commission. Approximately 8,500 investment advisers registered with us (73%) reported assets under management attributable to separately managed account clients. Of those 8,500 advisers, approximately 5,366 advisers reported regulatory assets under management attributable to separately managed account clients of at least $150 million but less than $10 billion and approximately 535 advisers reported regulatory assets under management attributable to separately managed account clients of at least $10 billion.
We have sought, where possible, to quantify the costs, benefits, and effects on efficiency, competition, and capital formation expected to result from the proposed amendments to Form ADV and Investment Advisers Act rules, and reasonable alternatives. As discussed below, in certain cases, we are unable to quantify the economic effects because we lack the information necessary to provide reasonable estimates. The economic effects of the proposal also depend upon a number of factors some of which we cannot estimate, such as the extent to which investor protection and our ability to oversee investment advisers will improve, and the extent to which investors would utilize the information in Form ADV to choose or retain an investment adviser. Therefore, some of the discussion below is qualitative in nature. We request comment on all aspects of the economic effects of the amendments that we are proposing, such as the costs and benefits, effects on efficiency, competition and capital formation, and reasonable alternatives to the proposed amendments. We request that commenters identify sources of data and information as well as provide data and information to assist us in analyzing the economic consequences of the proposed rulemaking.
Some of the proposed amendments to Form ADV are designed to address certain gaps in information, such as information about advisers' separately managed accounts. We are also proposing to collect additional information on Form ADV on topics such as social media, offices, foreign clients, and wrap fee accounts. These items are designed to improve the depth and quality of information that we collect on investment advisers, which would be important for oversight activities. We are also proposing amendments to Form ADV to establish a more efficient method for advisers to private funds that are organized as multiple legal entities to register with us using a single Form ADV (“umbrella registration”). Finally, we are proposing a number of clarifying, technical and other amendments to Form ADV.
As noted above, the investment adviser regulatory regime currently in effect serves as the economic baseline against which the costs and benefits, as well as the impact on efficiency, competition, and capital formation, of the proposed amendments to Form ADV are discussed. Form ADV is used by investment advisers to register with the SEC and with the states. Once registered, an investment adviser is required to file an annual amendment within 90 days of the end of its fiscal year end, and more frequently if required by the instructions to Form ADV.
As discussed in section II. above, the proposed amendments to Form ADV would improve our ability to oversee investment advisers and identify potential risks by increasing the amount, usefulness, consistency, and reliability of the information disclosed by investment advisers, which would enhance our staff's ability to effectively carry out the risk-based examination program and other risk monitoring activities, and could improve investor protection by informing policy choices and focusing examination activities. The enhanced reporting requirements should also improve the ability of clients and potential clients of investment advisers to make more informed decisions about the selection and retention of investment advisers.
We are proposing that advisers report additional information on Form ADV regarding separately managed accounts, which are clients other than registered investment companies, business development companies and other pooled investment vehicles, such as private funds, and are designed to meet the needs of institutional and individual investors. Based on IARD data, more than 73% of investment advisers registered with us indicate that they manage assets of separately managed accounts.
The proposed amendments are intended to enhance our ability to effectively carry out our risk-based examination program and other risk-monitoring activities in relation to advisers of separately managed accounts. The additional information regarding separately managed accounts would assist us in addressing regulatory issues, anticipating the implications of various regulatory actions that we may consider, and identifying areas for additional examination and enforcement activities. The proposed amendments are also intended to improve our ability to monitor risks related to those advisers that manage greater amounts of regulatory assets under management in separately managed accounts, while reducing the potential reporting burden for those advisers that manage lesser amounts of regulatory assets under management in these accounts.
In addition to information regarding separately managed accounts, the proposed amendments to Form ADV include requests for additional information that we believe would be useful to our risk assessment, examination and oversight of
For several items, we are proposing additional identifying information, such as the CIK numbers for all advisers that have obtained one or more of them, PCAOB registration numbers for auditing firms, and the SEC file number and the CRD number for sponsors of wrap fee programs. The identifiers will improve our ability and that of other current and future users of Form ADV information to cross-reference information from Form ADV with information from other sources to investigate and obtain a more complete understanding of the business and relationships of investment advisers.
The proposed amendments to Form ADV that would incorporate the concept of umbrella registration and establish a method on Form ADV for certain private fund advisers to use umbrella registration would clarify, simplify, and therefore make more efficient the filing procedures for these advisers and provide greater certainty about the availability of umbrella registration. The proposed amendments also would improve the consistency and quality of the information that private fund advisers disclose about their business and provide a more complete picture of groups of private fund advisers that operate as a single business, thus allowing for greater comparability across private fund advisers. As of April 1, 2015, approximately 750 registered advisers indicated on Form ADV that they relied on the 2012 ABA Letter. Additional advisers may be eligible to use umbrella registration but do not currently do so.
The proposed clarifying, technical and other amendments to Form ADV would make the filing process clearer and therefore more efficient for advisers, and increase the reliability and the consistency of information provided by investment advisers. More reliable and consistent information would improve our staff's ability to interpret and evaluate the information provided by advisers, make comparisons across investment advisers, and better identify the investment advisers that may need additional outreach or examination. To the extent the proposed clarifying and technical amendments would make Form ADV easier to understand and complete, the proposed amendments would decrease future costs, especially for those investment advisers registering with us for the first time.
As discussed above, an improvement in our ability to oversee the business and assess the risks of investment advisers would benefit clients and prospective clients of investment advisers. To the extent that these proposed amendments would allow our staff to identify potential risks at investment advisers before any clients are disadvantaged, clients and potential clients would benefit. In addition, an increase in the amount, consistency and usefulness of information disclosed by investment advisers would allow advisory clients and potential advisory clients to make more informed decisions about the selection and retention of investment advisers. For example, these proposed amendments should allow prospective clients to review, either directly from Form ADV or through third-party information providers, additional or more precise information about the number of clients and amount of regulatory assets under management attributable to various client types which may provide useful information about an adviser's experience and business practices. As another example, the proposed amendments should allow clients and potential clients to identify the social media platforms of an investment adviser from which additional information about the adviser may be available. An increase in the ability of clients and potential clients to differentiate investment advisers could result in a limited increase in competition among investment advisers for clients. The proposed amendments would likely not have a significant effect on capital formation or on the ability of investors to efficiently allocate capital across investments because the proposed amendments do not directly relate to the amount of capital investors allocate to investments or their ability to allocate capital across investments.
The proposed amendments to Form ADV would require investment advisers to provide additional information about certain aspects of their business, including separately managed accounts, social media platforms, wrap fee programs and offices. Reporting this additional information would impose additional costs on investment advisers, but we believe that much of the information we propose requesting on Form ADV would be readily available because, based on our experience, we understand that it is information used by advisers to conduct their business.
Costs would vary across advisers, depending on the nature of an adviser's business and its business model. For example, advisers that manage a limited number of separately managed accounts or that manage smaller amounts of assets under management in those accounts would have fewer reporting requirements than advisers that manage a large number of or assets in such accounts. In addition, advisers with a large number of offices would be required to report more information on a greater number of offices than what is currently required in Form ADV. To the extent possible, we have attempted to quantify these costs. As discussed in section IV., for purposes of the increased Paperwork Reduction Act burden for Form ADV, we estimate that each adviser would incur average costs in connection with the proposed amendments to Form ADV of approximately $750,
The proposed amendments regarding the reporting of information about
Regarding the proposed amendments to Form ADV that would codify umbrella registration, we estimate that each adviser that files Schedule R would incur average costs of approximately $250,
We do not believe that the proposed clarifying, technical and other amendments to Form ADV would result in any additional costs for investment advisers and could result in some cost savings to the extent that advisers have fewer questions to research when completing the form. We have identified provisions of Form ADV that have caused confusion among filers in the past or that have resulted in inconsistent or unreliable information. Discussed above, the proposed clarifications and revisions to the questions and instructions of Form ADV would increase the efficiency of investment advisers to disclose information, and our ability to oversee investment advisers. We do not anticipate that the proposed clarifying, technical and other amendments would have a significant impact on competition or capital formation because they do not directly relate to investors' ability to differentiate among investment advisers or the amount of capital that investors allocate to investments or their ability to efficiently allocate capital across securities.
We do not believe the proposed amendments to Form ADV would increase costs for exempt reporting advisers. Exempt reporting advisers are required to complete only a limited number of items in Part 1A of Form ADV (consisting of Items 1, 2.B., 3, 6, 7, 10, 11 and corresponding schedules) and would not be eligible to file proposed Schedule R. We are proposing limited amendments to the items that exempt reporting advisers are required to complete, including the proposed amendments to Item 1 regarding the use of social media and the reporting of information on up to 25 offices. Of the approximately 2,914 exempt reporting advisers that file information with us on Form ADV, approximately 17 reported that they had five or more other offices. Therefore, there would be a minimal increase in costs for these advisers to report this information.
Alternatives to the proposed amendments to Form ADV include the disclosure of different additional information from investment advisers. For example, with respect to separately managed accounts, we could have proposed requiring information as of each quarter, proposed other reporting thresholds to differentiate smaller and larger amounts of regulatory assets under management, or proposed narrower asset categories. Other examples include additional information describing an adviser's use of social media platforms, and additional information about the size and operations of offices.
When determining the specific proposed amendments to Form ADV for purposes of this proposal, we considered what information would be important for our oversight activities and for advisory clients and prospective clients, and the costs to investment advisers to provide this information. Additional information could improve our ability to oversee investment advisers and protect advisory clients and potential advisory clients, and increase clients' ability to make more informed decisions about the selection and retention of investment advisers. However, we currently believe the one-time and ongoing reporting costs for investment advisers to provide this information in addition to what we have proposed could be significant when compared to its potential benefits. Another alternative to the proposed amendments to Form ADV would be for us not to require investment advisers to report additional information but instead for us to undertake targeted examinations of investment advisers. We believe it is more efficient to compile information about advisers that can then be utilized to identify specific advisers for examination. An absence of information about advisers would reduce our ability to identify industry trends and assess risks.
As discussed above, we are proposing amendments to the Advisers Act books and records rule, and technical amendments to several other rules to remove transition provisions where the transition process is complete. The discussion below focuses on the proposed amendments to the Advisers Act books and records rule, because the technical amendments are clarifying or ministerial in nature and therefore should have little, if any, economic effects.
The proposed amendments to rule 204–2 would require investment advisers to maintain records supporting performance claims in communications that are distributed or circulated to any person. Advisers also would be required to maintain originals of all written communications received and copies of all written communications sent relating to the performance or rate of return of any or all managed accounts or securities recommendations. The proposal would require investment advisers to maintain records that they have already created, rather than create new records. We believe that most investment advisers currently maintain the information proposed to be required under the rule, as part of their compliance with the Advisers Act advertising rule (rule 206(4)–1) or as a result of their implementation of recordkeeping controls to comply with the current requirements of rule 204–2. Under the proposed amendments, each
As noted above, the investment adviser regulatory regime currently in effect serves as the economic baseline against which the costs and benefits, as well as the impact on efficiency, competition, and capital formation, of the proposed amendments to the Advisers Act books and records rule (rule 204–2). The parties that would be directly affected by the proposed amendments to rules under the Advisers Act include: Investment advisers registered with the Commission; the Commission; and current and future investment advisory clients. As discussed above, approximately 11,600 investment advisers are currently registered with the Commission.
The proposed amendments to the Advisers Act books and records rule (rule 204–2) would benefit the clients and prospective clients of investment advisers by improving our ability to oversee investment advisers and making available to our examination staff all records necessary to evaluate performance information.
The proposed amendments to the books and records rule would provide our enforcement and examination staff with additional information to review an adviser's compliance with the Advisers Act advertising rule, rule 206(4)–1, regardless of the number of clients or prospective clients that receive performance communications. The increased efficiency in examining and enforcing the rule may increase investor protection by increasing the disincentive for misleading or fraudulent communications, which may reduce the incidence of fraud. In addition, investors may benefit from the proposed amendments to the books and records rule as these records would assist us in enforcing rule 206(4)–1 against, for example, fraudulent performance advertising.
To the extent that the proposed amendments to the rule reduce misleading or fraudulent communications, the competitive position of investment advisers could be improved because clients and potential clients would receive more accurate information regarding an adviser's performance and thus would be better able to differentiate advisers based on skill. In addition, to the extent that the proposed amendments to the rule improve the ability of clients and potential clients to differentiate advisers based on skill, potential clients may be more likely to obtain investment advice from an investment adviser, which would increase the ability of investment advisers to compete for investor capital. The proposed amendments could improve the ability of investors to better or more efficiently allocate capital across investments to the extent that the current allocation of capital is based on misleading or fraudulent information, which in turn could promote capital formation.
We estimate that for purposes of the PRA, advisers would incur an aggregate cost of approximately $324,800 per year for the total hours advisory personnel would spend in complying with the proposed recordkeeping requirements.
Included in this cost estimate is our expectation that these costs would vary among firms, depending on a number of factors, including the degree to which advisers already maintain correspondence, performance information, and the inputs and worksheets used to generate performance information. Compliance costs also would vary depending on the degree to which performance figure determination and the recordkeeping process is automated, and the amount of updating to the adviser's recordkeeping policy that would be required.
An alternative to the proposed amendments to rule 204–2 would be to not propose the amendments. The proposed amendments are designed to address a potential recordkeeping gap that could limit our ability to examine and oversee advisers and ultimately protect investors. The proposed amendment to require maintenance of the performance calculations and communications regardless of the number of clients or potential clients that receive the information would address this issue. An alternative that would require maintenance of records supporting performance claims in communications that are distributed or circulated to less than the current threshold of ten persons could reduce our ability to examine and oversee advisers. We believe that the limited costs of these amendments are appropriate given its benefits.
We request comment on our estimates and assumptions regarding the costs and benefits of the proposed amendments to Form ADV and certain rules under the Investment Advisers Act. Commenters are requested to provide empirical data to support their views. In addition to our general request for comment on the costs and benefits of the proposed amendments, we request the following specific comment on certain aspects of our economic analysis.
• To what extent would clients and prospective clients use information reported in Form ADV to select or retain investment advisers? Are there other benefits to clients and prospective clients or to other interested parties not outlined above?
• To what extent would advisers benefit from incorporation of umbrella registration into Form ADV?
• Do commenters expect that advisers would incur costs in addition to, or that differ from, the costs we outlined above? In particular, do commenters expect that advisers would incur costs different from the costs we outline above with respect to the collection or retention of additional information?
• What are the benefits and costs of the proposed reporting thresholds for separately managed account information? Are there other thresholds that would increase benefits and be just as costly or provide similar benefits and be more cost effective? Please explain.
• Would any of the effects of these proposed amendments be large enough to affect the behavior of investment advisers or their clients? For instance, would the public disclosure of aggregate separately managed account information raise confidentiality concerns, and would disclosure impact a client's
Certain provisions of our proposal contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”),
Form ADV (OMB Control No. 3235–0049) is the two-part investment adviser registration form. Part 1 of Form ADV contains information used primarily by Commission staff, and Part 2 is the client brochure. We are not proposing changes to Part 2 at this time. We use the information to determine eligibility for registration with us and to manage our regulatory and examination programs. Clients use certain of the information to determine whether to hire or retain an adviser. The collection of information is necessary to provide advisory clients, prospective clients, and the Commission with information about the adviser and its business, conflicts of interest and personnel. Rule 203–1 under the Advisers Act requires every person applying for investment adviser registration with the Commission to file Form ADV. Rule 204–4 under the Advisers Act requires certain investment advisers exempt from registration with the Commission (“exempt reporting advisers”) to file reports with the Commission by completing a limited number of items on Form ADV. Rule 204–1 under the Advisers Act requires each registered and exempt reporting adviser to file amendments to Form ADV at least annually, and requires advisers to submit electronic filings through the IARD. The paperwork burdens associated with rules 203–1, 204–1, and 204–4 are included in the approved annual burden associated with Form ADV and thus do not entail separate collections of information.
These collections of information are found at 17 CFR 275.203–1, 275.204–1, 275.204–4 and 275.279.1 and are mandatory. Responses are not kept confidential. The respondents are investment advisers registered with the Commission or applying for registration with the Commission and exempt reporting advisers. Based on IARD system data as of April 2015, approximately 11,600 investment advisers are registered with the Commission, and 2,914 exempt reporting advisers file reports with the Commission.
The currently approved total annual burden estimate for all advisers of completing, amending and filing Form ADV (Part 1 and Part 2) with the Commission is 154,402 hours. This burden is based on an average total hour burden of 40.74 hours per Commission-registered adviser for the first year that an adviser completes Form ADV but excluding private fund reporting.
As discussed above, we are proposing amendments to Form ADV that are designed to provide additional information about investment advisers and their clients, including clients in separately managed accounts, provide for umbrella registration for private fund advisers and clarify and address technical and other issues in certain Form ADV items and instructions. The amendments we are proposing would increase the information requested in Part 1A of Form ADV, and we expect that this would correspondingly increase the average burden to an adviser filing Form ADV.
We discuss below, in three subsections, the estimated revised collection of information requirements for Form ADV: First, we provide estimates for the revised and new burdens resulting from the proposed amendments to Part 1A; second, we determine how those estimates will be reflected in the annual burden attributable to Form ADV; and third, we calculate the total revised burdens associated with Form ADV.
As a result of the differing burdens on advisers to complete Form ADV, we have divided the effect of the proposed amendments to the form into three subsections; first we address the change to the collection of information for registered advisers as a result of our proposed amendments to Part 1A of Form ADV excluding those changes related to private funds; second, we discuss the proposed amendments to Form ADV related to registered advisers to private funds, including the proposed amendments to Section 7.B. of Schedule D and the proposed new Schedule R that would implement umbrella registration; and third, we address the proposed amendments to Form ADV affecting exempt reporting advisers.
We are proposing amendments to Part 1A, some of which are merely technical changes or very simple in nature, and others that would require more time for an adviser to prepare a response. The paperwork burdens of filing an amended Form ADV, Part 1A would vary among advisers, depending on factors such as the size of the adviser, the complexity of its operations, and the number or extent of its affiliations. Advisers should have ready access to all the information necessary to respond to the proposed items in their normal course of operations because, among other things, they likely maintain and use the proposed requested information in connection with managing client assets. We anticipate that the responses to many of the questions would be unlikely to change from year to year, which would minimize the ongoing reporting burden associated with these questions.
The proposed amendments to Part 1A, Items 5.K.(1), 5.K.(2), 5.K.(3) and 5.K.(4) and Schedule D, Sections 5.K.(1), 5.K.(2) and 5.K.(3) are designed to collect information about the separately managed accounts managed by advisers. Those proposed amendments would enhance existing information we receive and permit us to conduct more robust risk monitoring with respect to advisers of separately managed accounts. As discussed above, the information collected about separately managed accounts would include regulatory assets under management reported by asset type, borrowings and derivatives information, and the identity of custodians that account for at least ten percent of separately managed account regulatory assets under management. We believe much of this information is readily available to advisers to separately managed accounts because, among other things, they may maintain and use this or similar information for operational reasons (
Although we understand that much of the proposed information is readily available to advisers to separately managed accounts, we expect that these amendments could subject advisers, particularly those that advise a large number of separately managed accounts and engage in borrowings and derivatives transactions on behalf of separately managed accounts, to an increased paperwork burden. For this and other reasons, as we explained above, we propose to minimize the burden on advisers with a smaller amount of separately managed account assets under management by proposing to require advisers with regulatory assets under management attributable to separately managed accounts of at least $150 million but less than $10 billion to report borrowings and derivatives information as of the date the adviser calculates its regulatory assets under management for purposes of its annual updating amendment, while those advisers with regulatory assets under management attributable to separately managed accounts of at least $10 billion would report information as of that date and six months before that date.
Considering the proposed changes in Part 1A, Items 5.K.(1), 5.K.(2), 5.K.(3) and 5.K.(4) and Schedule D, Sections 5.K.(1), 5.K.(2) and 5.K.(3) as well as our efforts to mitigate the reporting burden to advisers that manage a smaller amount of separately managed account regulatory assets under management, we estimate that each adviser will spend, on average, 2 hours to complete the questions regarding separately managed accounts in the first year a new or existing investment adviser completes these questions.
We are proposing to add several new questions and amend existing questions on Form ADV regarding identifying information, an adviser's advisory business, and affiliations. The proposed questions primarily refine or expand existing questions or request information we believe that advisers already have for compliance purposes. For example, we propose to require each adviser to provide Central Index Key (CIK) numbers if it has one or more such numbers and to provide identifying information for social media platforms that it uses. Other proposed questions would require advisers to provide readily available or easily accessible information, such as the proposed amendment to Part IA, Item 1.O. that would require advisers to report their assets within ranges. However, some of the proposed questions may take longer for advisers to complete, such as the proposed amendments to Schedule D, Section 1.F that would require information about an adviser's 25 largest offices other than its principal office and place of business. While this information is readily available to an adviser because it should be aware of its offices, a clerk would be required to manually enter expanded information about the adviser's offices in the first year the adviser responds to the proposed item and then make updates in subsequent years.
We are proposing a number of amendments to Item 5 in addition to the questions relating to separately managed accounts discussed above. Like other new or revised items, we believe several of these new Item 5 questions would merely require advisers to provide readily available or easily accessible information, such as the number of clients and regulatory assets under management attributable to each category of clients during the last fiscal year. Advisers currently provide this information in ranges, and therefore likely already have available to them the more precise numbers to report. In addition, information such as whether the adviser uses different assets under management numbers in Part 1A vs. Part 2A of Form ADV should be readily available. Other proposed items would likely present greater burdens for some advisers but not others, depending on the nature and complexity of their businesses. For instance, the burden associated with the proposed disclosure regarding wrap fee programs or non-U.S. clients would depend on whether and to what extent an adviser allocates client assets to wrap fee programs or the extent to which the adviser has non-U.S. clients.
We estimate that these proposed amendments to Part 1A of Form ADV and Schedule D would take each adviser approximately 1 hour, on average, to complete in the first year a new or existing adviser responds to these proposed questions. We have arrived at this estimate, in part, by comparing the relative complexity and availability of the information required by the proposed amended items to the current form and its approved burden, and by considering the advisers affected by the proposed amendments.
We are proposing several further amendments to Form ADV that are designed to clarify the Form and its instructions and address technical issues. These proposed changes primarily refine existing questions, such as deleting the phrase “newly formed adviser” from Part IA, Item 2.A.(9) because of questions from filers about whether that phrase refers to only newly formed corporate entities, and the proposed amendments to Part IA, Item 8.B.(2) to clarify that the question applies to any related person who recommends the adviser to advisory clients or acts as a purchaser representative. Because these proposed changes do not change the scope or amount of information required to be reported on Form ADV, we do not believe that these proposed clarifying, technical and other amendments to Part 1A of Form ADV would increase or decrease the average total collection of information burden for advisers in their first year filing Form ADV.
As a result of the proposed amendments to Form ADV Part 1A discussed above, including the proposed amendments related to separately managed accounts, additional items and technical and clarifying amendments, we estimate the average total collection of information burden would increase 3 hours to 43.74 hours per adviser for the first year that an adviser completes Form ADV (Part 1 and Part 2).
We propose several amendments to Part 1A, Schedule D, Section 7.B. that refine and enhance existing information we receive about advisers to private funds. In addition, as part of our proposal to provide for umbrella registration, we propose a new schedule to Part 1A—Schedule R—to be submitted by advisers to private funds that use umbrella registration to file a single Form ADV.
We believe the information required by the few proposed amendments to Part 1A, Schedule D, Section 7.B would be readily available or easily accessible to advisers to private funds, such as information about the percentage of a private fund owned by qualified clients, and the PCAOB registration number for a private fund auditor. Other amendments to Section 7.B. are designed to make the questions easier to answer, but do not cause a change in reporting burden, including moving certain “notes” to questions and changes to the current question regarding unqualified opinions. The currently approved total annual burden estimate for advisers making their initial filing in completing Item 7.B. and Schedule D, Section 7.B. is 1 hour per private fund. We do not estimate that the proposed amendments to Schedule D, Section 7.B would increase or decrease the total annual burden because the information is readily available to advisers.
The proposal to incorporate umbrella registration into Form ADV would codify a staff position and provide a method for certain private fund advisers that operate as a single advisory business to file a single registration form. Umbrella registration would only be available if the filing adviser and each relying adviser advise only private funds and clients in separately managed accounts that are qualified clients, as defined in rule 205–3 under the Advisers Act, that are otherwise eligible to invest in the private funds advised by the filing or a relying adviser. The filing and relying advisers would also have to satisfy certain requirements, including that each relying adviser is controlled by or under common control with the filing adviser. There has been staff guidance for single registration under defined circumstances since 2012,
We believe that much of the information we are proposing to include in Schedule R should be readily available to private fund advisers because it is information that they are already reporting either on Form ADV filings for separate advisers or on a single Form ADV filing, in reliance on the staff guidance. Accordingly, although these proposed requirements would be an increase in the information collected, the increased burden should largely be attributable to data entry and not data collection. Furthermore, some advisers who currently separately file Form ADV for each of their advisers may cumulatively have a reduced Form ADV burden by switching to umbrella registration should the new process be codified and Schedule R available. We also believe that new filing advisers using umbrella registration would readily have information available about relying advisers, because they are operating as a single advisory business.
There is no currently approved annual burden estimate of completing Schedule R because it is a new Schedule. Taking into account the scope of information we propose to request, our understanding that much of the information is readily available and currently required on Form ADV, and our belief that many private fund advisers that file an umbrella registration will have only a small number of relying advisers,
Exempt reporting advisers are required to complete a limited number of items in Part 1A of Form ADV (consisting of Items 1, 2.B., 3, 6, 7, 10, 11 and corresponding schedules), and are not required to complete Part 2 and would not be eligible to file proposed Schedule R. The proposed amendments to Part 1A would revise only Items 1 and 7 for exempt reporting advisers. We believe the information required by these proposed revisions should be readily available to any adviser as part of their ongoing operations and management of client assets, and, moreover, are unlikely to require additional reporting for most exempt reporting advisers. For instance, we estimate that almost all exempt reporting advisers currently have five or fewer offices (the number of offices currently required by Form ADV) and thus would not have to provide information on additional offices.
We estimate that, as a result of the proposed amendments to Form ADV Part 1A discussed above, other than those applicable to private funds, the average total collection of information burden per respondent would increase 3 hours to 43.74 hours per adviser for the first year that an adviser completes Form ADV (Part 1 and Part 2).
Approximately 11,600 investment advisers are currently registered with the Commission.
Based on IARD system data, we estimate that there will be approximately 1,000 new investment advisers filing Form ADV with us annually. Therefore, we estimate that the total annual burden applicable to these advisers for the first year that they complete Form ADV but excluding private fund reporting requirements is 43,740 hours (1,000 advisers x 43.74 hours). Amortizing the burden imposed by Form ADV for new registrants over a three-year period to reflect the anticipated period of time that advisers would use the revised Form would result in an average annual burden of an estimated 14,580 hours per year
The amount of time that a registered adviser managing private funds would incur to complete Item 7.B. and Section 7.B. of Schedule D will vary depending on the number of private funds the adviser manages. Of the advisers currently registered with us, we estimate that approximately 4,364 registered advisers advise a total of 28,532 private funds, and, on average, 300 SEC-registered advisers annually would make their initial filing with us reporting approximately 1,100 private funds.
We also propose a new Schedule R to Form ADV for umbrella filing. Of the advisers currently registered with us, we estimate based on current Form ADV filings that approximately 750 registered advisers currently submit a single Form ADV on behalf of themselves and approximately 2,500 relying advisers.
The current approved collection of information burden for Form ADV has three elements in addition to those discussed above: (1) The annual burden associated with annual and other amendments to Form ADV; (2) the annual burden associated with creating new Part 2 brochure supplements for advisory employees throughout the year; and (3) the annual burden associated with delivering codes of ethics to clients as a result of the offer of such codes contained in the brochure. We anticipate that our proposed amendments to Form ADV would increase the currently approved annual burden estimate associated with annual amendments to Form ADV from 6 hours to 7 hours per adviser, but would not impact interim updating amendments to Form ADV.
We continue to estimate that, on average, each adviser filing Form ADV through the IARD will likely amend its form two times during the year. We estimate, based on IARD data, that advisers, on average, make one interim updating amendment (at an estimated 0.5 hours per amendment) and one annual updating amendment (at an estimated 7 hours per amendment) each year.
In addition, the currently approved annual burden estimates are that each investment adviser registered with us will, on average, spend 1 hour per year making interim amendments to brochure supplements,
The currently approved total annual collection of information burden estimate for Form ADV has a one-time initial cost for outside legal and compliance consulting fees in
We expect that 1,000 new advisers will register annually with the Commission. We estimate that the initial cost related to preparation of Part 2 of Form ADV would be $4,400 for legal services and $5,000 for compliance consulting services, in each case, for those advisers who engaged legal counsel or consultants. We anticipate that a quarter of these advisers would seek the help of outside legal services and half would seek the help of compliance consulting services. Accordingly, we estimate that 250 of these advisers would use outside legal services, for a total cost burden of $1,100,000,
We estimate that 3% of registered advisers have at least one private fund client that may not be audited. These advisers therefore may incur costs to fair value their private fund assets. Based on current IARD data, 4,364 registered advisers currently advise private funds. We therefore estimate that approximately 131 registered advisers may incur costs of $37,625 each on an annual basis, for an aggregate annual total cost of $4,928,875.
Together, we estimate that the total cost burden among all respondents for outside legal and compliance consulting fees related to third party or outside valuation services and for drafting outside legal and compliance consulting fees to be $8,528,875.
Based on IARD system data, there are approximately 2,914 exempt reporting advisers currently filing reports with the SEC.
The currently approved estimate of the average total collection of information burden per exempt reporting adviser for the first year that an exempt reporting adviser completes a limited subset of Part 1 of Form ADV, other than Item 7.B. and Section 7.B. of Schedule D, is 2 hours. As discussed above, we do not anticipate that our proposed amendments to Form ADV would affect the per exempt reporting adviser burden estimate. Based on IARD system data, we estimate that there will be 500 new exempt reporting advisers filing Form ADV annually. Therefore, we estimate that the total annual burden applicable to the existing and new exempt reporting advisers for the first year that they complete Form ADV but excluding private fund reporting requirements is 6,828 hours.
As discussed above, we estimate the burden of completing Item 7.B. and Section 7.B. of Schedule D to be 1 hour per private fund. We do not anticipate that our proposed amendments to Form ADV would affect the per exempt reporting adviser burden of completing Item 7.B. and Section 7.B. of Schedule D. Based on IARD data, we estimate that, on average, the 2,914 current exempt reporting advisers will report 9,896 funds and the projected 500 new exempt reporting advisers making their initial filing will report approximately 1,000 funds, resulting in a total annual burden of 10,896 hours.
In addition to the burdens associated with initial completion and filing of the portion of the form that exempt reporting advisers are required to prepare, we estimate that, based on IARD data, each exempt reporting adviser would amend its form 2 times per year. On average, these consist of one interim updating amendment (at an estimated 0.5 hours per amendment)
The revised total annual collection of information burden for SEC registered advisers to file and complete the revised Form ADV (Parts 1 and 2), including the initial burden for both existing and anticipated new registrants, private fund reporting, plus the burden associated with amendments to the form, preparing brochure supplements and delivering codes of ethics to clients, is estimated to be approximately 319,137 hours per year, for a monetized total of $79,784,000.
The revised total annual collection of information burden for exempt reporting advisers to file and complete the required Items of Part 1A of Form ADV, including the burdens associated with private fund reporting, amendments to the form and final filings, would be approximately 10,299 hours per year, for a monetized total of $2,574,500.
We estimate that if the proposed amendments to Form ADV are adopted, the total annual hour burden for the form would be 329,436 hours and a monetized total of $82,358,500.
Registered investment advisers are also expected to incur an annual cost burden of $8,528,875, an increase of $4,928,875 from the current approved cost burden estimate of $3,600,000. The increase in annual cost burden is attributable to the currently approved burden not considering the cost to advisers to fair value private fund assets.
Rule 204–2 (OMB Control No. 3235–0278) requires investment advisers registered, or required to be registered under section 203 of the Act, to keep certain books and records relating to their advisory business. The collection of information under rule 204–2 is necessary for the Commission staff to use in its examination and oversight program, and the information is generally kept confidential.
The proposed amendments to rule 204–2 would require investment advisers to make and keep the following records: (i) Documentation necessary to demonstrate the calculation of the performance the adviser distributes to any person, and (ii) all written communications received or sent relating to the adviser's performance.
The currently approved total annual burden for rule 204–2 is based on an estimate of 10,946 registered advisers subject to rule 204–2 and an estimated average burden of 181.45 burden hours each year per adviser, for a total of 1,986,152 hours. Based upon updated IARD data, the current approximate number of investment advisers is 11,600. As a result in the increase in the number of advisers registered with the Commission since the current total annual burden estimate was approved, the total burden estimate has increased by 118,668 hours.
Advisers would likely use a combination of compliance clerks and general clerks to make and keep the information and records required under the rule. The currently approved total cost burden is $108,708,557.10. We estimate the hourly wage for compliance clerks to be $64 per hour, including benefits, and the hourly wage for general clerks to be $53 per hour, including benefits.
We request comment on whether our estimates for the change in burden hours and associated costs described above are reasonable. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments in order to: (i) Evaluate whether the proposed collections of information are necessary
The agency has submitted the proposed collection of information to OMB for approval. Persons wishing to submit comments on the collection of information requirements of the proposed amendments should direct them to the Office of Management and Budget, Attention Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should send a copy to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090, with reference to File No. S7–09–15. As OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7–09–15, and be submitted to the Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549–2736.
The Commission has prepared the following Initial Regulatory Flexibility Analysis (“IRFA”) in accordance with section 3(a) of the Regulatory Flexibility Act
The proposed amendments to Form ADV are designed to provide the Commission with additional information about registered investment advisers, including information about separately managed accounts, provide for umbrella registration for multiple investment advisers operating as a single advisory business, and provide technical, clarifying and other amendments to certain Form ADV provisions. The proposed amendments to Form ADV would improve the information provided by investment advisers to the Commission and the public.
We are also proposing amendments to the Advisers Act books and records rule that would require advisers to make and keep supporting documentation that demonstrates performance calculations or rates of return in any written communications that the adviser circulates or distributes, directly or indirectly, to any person. We believe that the proposed amendments to the books and records rule would improve investor protections by providing useful information in examining and evaluating advisers' performance claims.
Finally, we are proposing technical amendments to certain rules under the Advisers Act to remove transition provisions where the transition process is complete.
The proposed amendments to Form ADV would address certain data gaps and enhance current reporting provided by investment advisers, particularly about separately managed accounts, in order to increase our ability to effectively oversee and monitor their activities, and to incorporate umbrella registration for private fund advisers that operate as a single advisory business. The proposed amendments to the Advisers Act books and records rule would require advisers to make and keep supporting documentation that demonstrates performance calculations or rates of return in any written communications that the adviser circulates or distributes, directly and indirectly, to any persons.
The Commission is proposing amendments to Form ADV under section 19(a) of the Securities Act of 1933 [15 U.S.C. 77s(a)], sections 23(a) and 28(e)(2) of the Securities Exchange Act of 1934 [15 U.S.C. 78w(a) and 78bb(e)(2)], section 319(a) of the Trust Indenture Act of 1939 [15 U.S.C. 7sss(a)], section 38(a) of the Investment Company Act of 1940 [15 U.S.C. 80a–37(a)], and sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b–3(c)(1), 80b–4, and 80b–11(a)]. The Commission is proposing to amend rule 204–2 pursuant to the authority set forth in sections 204 and 211 of the Advisers Act [15 U.S.C. 80b–4 and 80b–11]. The Commission is proposing to amend rule 202(a)(11)(G)–1 pursuant to authority in sections 202(a)(11)(G) and 206A of the Advisers Act [15 U.S.C. 80b–2(a)(11)(G) and 80b–6A]. The Commission is proposing to amend rule 203–1 pursuant to authority in section 206A of the Advisers Act [15 U.S.C. 80b–6A]. The Commission is proposing to rescind rule 203A–5 and amend rule 204–1 pursuant to authority in sections 204 and 211(a) of the Advisers Act [15 U.S.C. 80b–4 and 80b–11(a)].
In developing these proposals, we have considered their potential impact on small entities that would be subject to the proposed amendments. The proposed amendments would affect all advisers registered with the Commission and exempt reporting advisers, including small entities. Under Commission rules, for the purposes of the Advisers Act and the Regulatory Flexibility Act, an investment adviser generally is a small entity if it: (1) Has assets under management having a total value of less than $25 million; (2) did not have total assets of $5 million or more on the last day of the most recent fiscal year; and (3) does not control, is not controlled by, and is not under common control with another investment adviser that has assets under management of $25 million or more, or any person (other than a natural person) that had total assets of $5 million or more on the last day of its most recent fiscal year.
Our proposed rule and Form ADV amendments would not affect most advisers that are small entities (“small advisers”) because they are generally registered with one or more state securities authorities and not with us. Under section 203A of the Advisers Act, most small advisers are prohibited from registering with the Commission and are regulated by state regulators. Based on IARD data, we estimate that as of April 1, 2015, approximately 489 advisers that are small entities are registered with the Commission.
The only small entity exempt reporting advisers that would be subject to the proposed amendments would be exempt reporting advisers that maintain their principal office and place of
The proposed amendments to Form ADV and rule 204–2 would impose certain reporting, recordkeeping, and compliance requirements on all Commission-registered advisers, including small advisers. All Commission-registered small advisers would be required to file Form ADV, including the proposed amendments, and all Commission-registered small advisers would be subject to the proposed amended recordkeeping requirements. We do not believe that our proposed technical amendments to other Advisers Act rules would impose different reporting, recordkeeping, or other compliance requirements on small advisers.
The proposed amendments to Form ADV would require registered investment advisers to report different or additional information than what is currently required. Approximately 489 small advisers currently registered with us would be subject to these requirements. We expect these 489 small advisers to spend, on average, 3 hours to respond to the proposed new and amended questions, not including items relating to private fund reporting.
In addition, of these 489 small advisers, we estimate that 4 small advisers currently rely on the 2012 ABA Letter to act as filing advisers for their relying advisers.
We do not estimate any increase or decrease in burden related to our proposed amendments for private fund advisers, other than the hours related to proposed Schedule R or for exempt reporting advisers. The total estimated labor costs associated with our amendments that we expect will be borne by small advisers is $367,500.
Our proposed amendments to rule 204–2's performance information recordkeeping provisions are meant to require investment advisers to make and keep the following records: (i) Documentation necessary to demonstrate the calculation of the performance the adviser distributes to any person, and (ii) all written communications received or sent relating to the adviser's performance. These amendments would create reporting, recordkeeping, and other compliance requirements for small advisers. As discussed in the Paperwork Reduction Act Analysis in section IV. above, the proposed amendments to rule 204–2 would increase the burden by approximately 0.5 hours per adviser. We expect the aggregate cost to small advisers associated with our proposed amendments would be $13,415.
We believe there are no federal rules that duplicate, overlap, or conflict with the proposed rule and form amendments.
The Regulatory Flexibility Act directs the Commission to consider significant alternatives that would accomplish the stated objective, while minimizing any significant adverse impact on small entities. In connection with the proposed Form ADV and rule amendments, the Commission considered the following alternatives: (i) The establishment of differing compliance or reporting requirements that take into account the resources available to small entities; (ii) the clarification, consolidation, or simplification of compliance and reporting requirements under the proposed Form ADV and rule amendments for such small entities; (iii) the use of performance rather than design standards; and (iv) an exemption from coverage of the proposed Form ADV and rule amendments, or any part thereof, for such small entities.
Regarding the first and second alternatives, for certain proposed reporting requirements regarding separately managed accounts on Form ADV, we propose to require semi-annual information filed annually for
Regarding the first and fourth alternatives for the other proposed amendments to Form ADV and Advisers Act rules, we do not believe that different compliance or reporting requirements or an exemption from coverage of the Form ADV and rule amendments, or any part thereof, for small entities, would be appropriate. Because the protections of the Advisers Act are intended to apply equally to clients of both large and small advisers, it would be inconsistent with the purposes of the Act to specify differences for small entities under the proposed amendments.
Regarding the second alternative for the other proposed amendments to Form ADV and the Advisers Act rules, we will continue to consider whether further clarification, consolidation, or simplification of the compliance requirements is feasible or necessary, but we believe that the current proposal is clear. The remaining Form ADV amendments do not change that all SEC-registered advisers use a single form, Form ADV, and an existing filing system, IARD, for reporting and registration purposes, and this would not change for small entities. With respect to the rule 204–2 amendments, we believe that the same requirements should apply to all advisers to permit our staff to more effectively examine them.
Regarding the third alternative, we consider using performance rather than design standards with respect to the proposed amendments to Form ADV and rule 204–2 to be inconsistent with our statutory mandate to protect investors, as advisers must provide certain registration information and maintain books and records in a uniform and quantifiable manner so that it is useful to our regulatory and examination program.
We encourage written comments on matters discussed in this IRFA. We solicit comment on the number of small entities subject to the proposed Form ADV and rule amendments; and whether the proposed Form ADV and rule amendments discussed in this release could have an effect on small entities that has not been considered. We request that commenters describe the nature of any impact on small entities and provide empirical data to support the extent of such impact.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, or “SBREFA,”
We request comment on the potential impact of the proposed amendments on the economy on an annual basis. Commenters are requested to provide empirical data and other factual support for their views to the extent possible.
The Commission is proposing amendments to Form ADV under section 19(a) of the Securities Act of 1933 [15 U.S.C. 77s(a)], sections 23(a) and 28(e)(2) of the Securities Exchange Act of 1934 [15 U.S.C. 78w(a) and 78bb(e)(2)], section 319(a) of the Trust Indenture Act of 1939 [15 U.S.C. 7sss(a)], section 38(a) of the Investment Company Act of 1940 [15 U.S.C. 80a–37(a)], and sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b–3(c)(1), 80b–4, and 80b–11(a)]. The Commission is proposing to amend rule 204–2 pursuant to the authority set forth in sections 204 and 211 of the Advisers Act [15 U.S.C. 80b–4 and 80b–11]. The Commission is proposing to amend rule 202(a)(11)(G)–1 pursuant to authority in sections 202(a)(11)(G) and 206A of the Advisers Act [15 U.S.C. 80b–2(a)(11)(G) and 80b–6A]. The Commission is proposing to amend rule 203–1 pursuant to authority in section 206A of the Advisers Act [15 U.S.C. 80b–6A]. The Commission is proposing to rescind rule 203A–5 and amend rule 204–1 pursuant to authority in sections 204 and 211(a) of the Advisers Act [15 U.S.C. 80b–4 and 80b–11(a)].
Reporting and recordkeeping requirements; Securities.
For the reasons set forth in the preamble, title 17, chapter II of the Code of Federal Regulations is proposed to be amended as follows.
15 U.S.C. 80b–2(a)(11)(G), 80b–2(a)(11)(H), 80b–2(a)(17), 80b–3, 80b–4, 80b–4a, 80b–6(4), 80b–6a, and 80b–11, unless otherwise noted.
The revision reads as follows:
(a) * * *
(a) * * *
(7) Originals of all written communications received and copies of all written communications sent by such investment adviser relating to:
(i) Any recommendation made or proposed to be made and any advice given or proposed to be given;
(ii) Any receipt, disbursement or delivery of funds or securities;
(iii) The placing or execution of any order to purchase or sell any security:
(A) That the investment adviser shall not be required to keep any unsolicited market letters and other similar communications of general public distribution not prepared by or for the investment adviser; and
(B) That if the investment adviser sends any notice, circular or other advertisement offering any report, analysis, publication or other investment advisory service to more than 10 persons, the investment adviser shall not be required to keep a record of the names and addresses of the persons to whom it was sent; except that if such notice, circular or advertisement is distributed to persons named on any list, the investment adviser shall retain with the copy of such notice, circular or advertisement a memorandum describing the list and the source thereof; or
(iv) The performance or rate of return of any or all managed accounts or securities recommendations.
The Investment Advisers Act of 1940, 15 U.S.C. 80b–1,
The text of Form ADV does not and the amendments will not appear in the Code of Federal Regulations.
By the Commission.
Environmental Protection Agency (EPA).
Final action.
The Environmental Protection Agency (EPA) is taking final action on a petition for rulemaking filed by the Sierra Club (Petitioner) that concerns how provisions in EPA-approved state implementation plans (SIPs) treat excess emissions during periods of startup, shutdown or malfunction (SSM). Further, the EPA is clarifying, restating and revising its guidance concerning its interpretation of the Clean Air Act (CAA or Act) requirements with respect to treatment in SIPs of excess emissions that occur during periods of SSM. The EPA evaluated existing SIP provisions in a number of states for consistency with the EPA's interpretation of the CAA and in light of recent court decisions addressing this issue. The EPA is issuing a finding that certain SIP provisions in 36 states (applicable in 45 statewide and local jurisdictions) are substantially inadequate to meet CAA requirements and thus is issuing a “SIP call” for each of those 36 states. Further, the EPA is establishing a due date for states subject to this SIP call action to submit corrective SIP revisions. Finally, this final action embodies the EPA's updated SSM Policy as it applies to SIP provisions. The SSM Policy provides guidance to states for compliance with CAA requirements for SIP provisions applicable to excess emissions during SSM events.
This final action shall become applicable on May 22, 2015. The deadline for each affected state to submit its corrective SIP revision is November 22, 2016.
The EPA has established a docket for this rulemaking under Docket ID No. EPA–HQ–OAR–2012–0322. All documents in the docket are listed in the
Ms. Lisa Sutton, U.S. EPA, Office of Air Quality Planning and Standards, State and Local Programs Group (C539–01), Research Triangle Park, NC 27711, telephone number (919) 541–3450, email address:
For information related to a specific SIP, please contact the appropriate EPA Regional Office:
Entities potentially affected by this action include states, U.S. territories, local authorities and eligible tribes that are currently administering, or may in the future administer, EPA-approved implementation plans (“air agencies”).
In addition to being available in the docket, an electronic copy of this document will also be available on the World Wide Web. Following signature by the EPA Administrator, a copy of this document will be posted on the EPA's Web site, under “State Implementation Plans to Address Emissions During Startup, Shutdown and Malfunction,” at
The information presented in this preamble is organized as follows:
For the purpose of this document, the following definitions apply unless the context indicates otherwise:
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The EPA is in this document taking final action on a petition for rulemaking that the Sierra Club filed with the EPA Administrator on June 30, 2011. The Petition concerns how air agency rules in EPA-approved SIPs treat excess emissions during periods of SSM of industrial source process or emission control equipment. Many of these rules were added to SIPs and approved by the EPA in the years shortly after the 1970 amendments to the CAA, which for the first time provided for the system of clean air plans that were to be prepared by air agencies and approved by the EPA. At that time, it was widely believed that emission limitations set at levels representing good control of emissions during periods of so-called “normal” operation (which, until no later than 1982, was meant by the EPA to refer to periods of operation other than during startup, shutdown, maintenance or malfunction) could in some cases not be met with the same emission control strategies during periods of startup, shutdown, maintenance or malfunction.
Excess emission provisions for startup, shutdown, maintenance and malfunctions were often included as part of the original SIPs that the EPA approved in 1971 and 1972. In the early 1970s, because the EPA was inundated with proposed SIPs and had limited experience in processing them, not enough attention was given to the adequacy, enforceability and consistency of these provisions. Consequently, many SIPs were approved with broad and loosely defined provisions to control excess emissions. Starting in 1977, however, the EPA discerned and articulated to air agencies that exemptions for excess emissions during such periods were inconsistent with certain requirements of the CAA.
The EPA emphasizes that there are other approaches that would be consistent with CAA requirements for SIP provisions that states can use to address emissions during SSM events. While automatic exemptions and director's discretion exemptions from otherwise applicable emission limitations are not consistent with the CAA, SIPs may include criteria and procedures for the use of enforcement discretion by air agency personnel. Similarly, SIPs may, rather than exempt emissions during SSM events, include emission limitations that subject those emissions to alternative numerical limitations or other technological control requirements or work practice requirements during startup and shutdown events, so long as those components of the emission limitations meet applicable CAA requirements. In this action, the EPA is again articulating its interpretation of the CAA in the SSM Policy that reflects these principles and is applying this interpretation to issue a SIP call for specific existing provisions in the SIPs of 36 states. In some cases, the EPA's review involved a close reading of the provision in the SIP and its context to discern whether it was in fact an exemption, a statement regarding exercise of enforcement discretion by the air agency or an affirmative defense. Each state will ultimately decide how to address the SIP inadequacies identified by the EPA in this final action. The EPA acknowledges that for some states, this rulemaking entailed the EPA's evaluation of SIP provisions that may date back several decades. Aware of that fact, the EPA is committed to working closely with each of the affected states to develop approvable SIP submissions consistent with the guidance articulated in the updated SSM Policy in this final action. Section IX of this document presents the EPA's analysis of each specific SIP provision at issue in this action. The EPA's review also involved interpretation of several relevant sections of the CAA. While the EPA has already developed and has been implementing the SSM Policy that is based on its interpretation of the CAA for SIP provisions, this action provides the EPA an opportunity to update the SSM Policy and its basis in the CAA through notice and comment. To that end, section XI of this document contains a restatement of the EPA's SSM Policy for SIP provisions as revised and updated for 2015. Also, supplementary to the February 2013 proposal, the EPA provided a background memorandum to summarize the legal and administrative context for this action which is available in the docket for this rulemaking.
In summary, the EPA is agreeing with the Petitioner that many of the identified SIP provisions are not permissible under the CAA. However, in some cases the EPA is instead concluding that an identified SIP provision is actually consistent with CAA requirements. In addition, the EPA notes, this final action does not include a final finding of substantial inadequacy and SIP call for specific SIP provisions included in the February 2013 proposal for several air agencies, because of SIP revisions made subsequent to that proposal. The state of Kentucky has already submitted, and the EPA has approved, SIP revisions that corrected the problematic provisions applicable in the Jefferson County (Louisville, Kentucky) area.
Of the 41 states for which SIP provisions were identified by the Petition or identified independently by the Agency in the SNPR, the EPA is issuing a SIP call for 36 states. The EPA is aware of other SSM-related SIP provisions that were not identified in the Petition but that may be inconsistent with the EPA's interpretation of the CAA. For SIP provisions that have potential defects other than an impermissible affirmative defense, the EPA elected to focus on the provisions specifically raised in the Petition. The EPA may address these other provisions later in a separate notice-and-comment action. States are encouraged to consider the updated SSM Policy laid out in this final action in reviewing their own SIP provisions. With respect to affirmative defense provisions, however, the EPA elected to identify some additional provisions not included in the Petition. This is necessary to minimize potential confusion relating to other recent rulemakings and court decisions that pertain generally to affirmative defense provisions. Therefore, in order to give updated and comprehensive guidance with respect to affirmative defense provisions, the EPA has also addressed additional affirmative defense provisions in 17 states in the SNPR and in this final action. See section V.D.3 of this document for further explanation as to which SSM-related SIP provisions the
The Petition includes three interrelated requests concerning the treatment in SIPs of excess emissions by sources during periods of SSM.
First, the Petitioner argued that SIP provisions providing an affirmative defense for monetary penalties for excess emissions in judicial proceedings are contrary to the CAA. Thus, the Petitioner advocated that the EPA should rescind its interpretation of the CAA expressed in the SSM Policy that allows appropriately drawn affirmative defense provisions in SIPs. The Petitioner made no distinction between affirmative defenses for excess emissions related to malfunction and those related to startup or shutdown. Further, the Petitioner requested that the EPA issue a SIP call requiring states to eliminate all such affirmative defense provisions in existing SIPs. As explained later in this final document, the EPA has decided to fully grant this request. Although the EPA initially proposed to grant in part and to deny in part this request in the February 2013 proposal, a subsequent court decision concerning the legal basis for affirmative defense provisions under the CAA caused the Agency to reexamine this question. As a result, the EPA issued the SNPR to present its revised interpretation of the CAA with respect to this issue and to propose action on the Petition and on specific existing affirmative defense provisions in the SIPs of 17 states consistent with the reasoning of that court decision. In this final action, the EPA is revising its SSM Policy with respect to affirmative defenses for violations of SIP requirements. The EPA believes that SIP provisions that function to alter the jurisdiction of the federal courts under CAA section 113 and section 304 to determine liability and to impose remedies are inconsistent with fundamental legal requirements of the CAA, especially with respect to the enforcement regime explicitly created by statute.
Second, the Petitioner argued that many existing SIPs contain impermissible provisions, including automatic exemptions from applicable emission limitations during SSM events, director's discretion provisions that in particular provide discretionary exemptions from applicable emission limitations during SSM events, enforcement discretion provisions that appear to bar enforcement by the EPA or citizens for such excess emissions and inappropriate affirmative defense provisions that are not consistent with the CAA or with the recommendations in the EPA's SSM Policy. The Petitioner identified specific provisions in SIPs of 39 states that it considered inconsistent with the CAA and explained the basis for its objections to the provisions. As explained later in this final document, the EPA agrees with the Petitioner that some of these existing SIP provisions are legally impermissible and thus finds such provisions “substantially inadequate”
Third, the Petitioner argued that the EPA should not rely on interpretive letters from states to resolve any ambiguity, or perceived ambiguity, in state regulatory provisions in SIP submissions. The Petitioner reasoned that all regulatory provisions should be clear and unambiguous on their face and that any reliance on interpretive letters to alleviate facial ambiguity in SIP provisions can lead to later problems with compliance and enforcement. Extrapolating from several instances in which the basis for the original approval of a SIP provision related to excess emissions during SSM events was arguably not clear, the Petitioner contended that the EPA should never use interpretive letters to resolve such ambiguities. As explained later in this proposal, the EPA acknowledges the concern of the Petitioner that provisions in SIPs should be clear and unambiguous. However, the EPA does not agree with the Petitioner that reliance on interpretive letters in a rulemaking context is never appropriate. Without the ability to rely on a state's interpretive letter that can in a timely way clarify perceived ambiguity in a provision in a SIP submission, however small that ambiguity may be, the EPA may have no recourse other than to disapprove the state's SIP submission. Thus, the EPA is denying the request that actions on SIP submissions never rely on interpretive letters. Instead, the EPA explains how proper documentation of reliance on interpretive letters in notice-and-comment rulemaking nevertheless addresses the practical concerns of the Petitioner.
In general, the final action may be of interest to all air agencies because the EPA is clarifying, restating and revising its longstanding SSM Policy with respect to what the CAA requires concerning SIP provisions relevant to excess emissions during periods of SSM. For example, the EPA is granting the Petitioner's request that the EPA rescind its prior interpretation of the CAA that, as stated in prior guidance in the SSM Policy, allowed appropriately drawn affirmative defense provisions applicable to malfunctions. The EPA is also reiterating, clarifying or revising its prior guidance with respect to several other issues related to SIP provisions applicable to SSM events in order to ensure that future SIP submissions, not limited to those that affected states make in response to this action, are fully consistent with the CAA. For example, the EPA is reiterating and clarifying its prior guidance concerning how states may elect to replace existing exemptions for excess emissions during SSM events with properly developed alternative emission limitations that apply to the affected sources during startup, shutdown or other normal modes of source operation (
In addition, this final action is directly relevant to the states with SIP provisions relevant to excess emissions that the EPA has determined are inconsistent with CAA requirements or with the EPA's interpretation of those requirements in the SSM Policy. In this final action, the EPA is either granting or denying the Petition with respect to the specific existing SIP provisions in each of 39 states identified by the Petitioner as allegedly inconsistent with the CAA. The 39 states (for which the Petitioner identified SIP provisions applicable in 46 statewide and local jurisdictions and no tribal areas)
For each state for which the final action on the Petition is either “Grant” or “Partially grant, partially deny,” the EPA finds that certain specific provisions in each state's SIP are substantially inadequate to meet CAA requirements for the reason that these provisions are inconsistent with the CAA with regard to how the state treats excess emissions from sources during periods of SSM. With respect to the affirmative defense provisions identified in the Petition, the EPA finds that they improperly impinge upon the statutory jurisdiction of the courts to determine liability and impose remedies for violations of SIP emission limitations. The EPA believes that certain specific provisions in these SIPs fail to meet fundamental statutory requirements intended to attain and maintain the
For each state for which the final action on the Petition is either “Grant” or “Partially grant, partially deny,” the EPA is also in this final action calling for a SIP revision as necessary to correct the identified deficient provisions. The SIP revisions that the states are directed to make will rectify a number of different types of defects in existing SIPs, including automatic exemptions from emission limitations, impermissible director's discretion provisions, enforcement discretion provisions that have the effect of barring enforcement by the EPA or through a citizen suit and affirmative defense provisions that are inconsistent with CAA requirements. A corrective SIP revision addressing automatic or impermissible discretionary exemptions will ensure that excess emissions during periods of SSM are treated in accordance with CAA requirements. Similarly, a corrective SIP revision addressing ambiguity in who may enforce against violations of these emission limitations will also ensure that CAA requirements to provide for enforcement are met. A SIP revision to remove affirmative defense provisions will assure that the SIP provision does not purport to alter or eliminate the jurisdiction of federal courts to assess liability or to impose remedies consistent with the statutory authority provided in CAA section 113 and section 304. The particular provisions for which the EPA is requiring SIP revisions are summarized in section IX of this document. Many of these provisions were added to the respective SIPs many years ago and have not been the subject of action by the state or the EPA since.
For each of the states for which the EPA is denying or is partially denying the Petition, the EPA finds that the particular provisions identified by the Petitioner are not substantially inadequate to meet the requirements pursuant to CAA section 110(k)(5), because the provisions: (i) Are, as they were described in the Petition and as they appear in the existing SIP, consistent with the requirements of the CAA; or (ii) are, as they appear in the existing SIP after having been revised subsequent to the date of the Petition, consistent with the requirements of the CAA; or (iii) have, subsequent to the date of the Petition, been removed from the SIP. Thus, in this final action, the EPA is taking no action to issue a SIP call with respect to those states for those particular SIP provisions.
In addition to evaluating specific SIP provisions identified in the Petition, the EPA has independently evaluated additional affirmative defense provisions in the SIPs of six states (applicable in nine statewide and local jurisdictions).
In this final action, the EPA is issuing a SIP call to each of 36 states (for provisions applicable in 45 statewide and local jurisdictions) with respect to these provisions. The 36 states are listed in table 2, “List of All States With SIP Provisions Subject to SIP Call.” The EPA emphasizes that this SIP call action pertains to the specific SIP provisions identified and discussed in section IX of this document. The actions required of individual states in response to this SIP call action are discussed in more detail in section IX of this action.
The EPA is finalizing a finding of substantial inadequacy and issuing a SIP call for the states listed in table 2 (
The issuance of a SIP call requires an affected state to take action to revise its SIP. That action by the state may, in turn, affect sources as described later in this document. The states that are receiving a SIP call in this final action will in general have options as to exactly how to revise their SIPs. In response to a SIP call, a state retains broad discretion concerning how to revise its SIP, so long as that revision is consistent with the requirements of the CAA. Some provisions that are affected by this SIP call, for example an automatic exemption provision, have to be removed entirely and an affected source could no longer depend on the exemption to avoid all liability for excess emissions during SSM events. Some other provisions, for example a problematic enforcement discretion provision, could either be removed entirely from the SIP or retained if revised appropriately to apply only to state enforcement personnel, in accordance with the EPA's interpretation of the CAA as described in the EPA's SSM Policy. The EPA notes that if a state removes a SIP provision that pertains to the state's exercise of enforcement discretion, this removal would not affect the ability of the state to apply its traditional enforcement discretion in its enforcement program. It would merely make the exercise of such discretion case-by-case in nature, as is the normal form of such discretion.
In addition, affected states may choose to consider reassessing particular emission limitations, for example to determine whether those emission limitations can be revised such that well-managed emissions during planned operations such as startup and shutdown would not exceed the revised emission limitation, while still protecting air quality and meeting other applicable CAA requirements. Such a revision of an emission limitation will need to be submitted as a SIP revision for the EPA's approval if the existing limitation to be changed is already included in the SIP or if the existing SIP relies on the particular existing emission limitation to meet a CAA requirement. In such instances, the EPA would review the SIP revision for consistency with all applicable CAA requirements. A state that chooses to revise particular emission limitations, in addition to removing or revising the aspect of the existing SIP provision that is inconsistent with CAA requirements, could include those revisions in the same SIP submission that addresses the SSM provisions identified in the SIP call, or it could submit them separately.
The implications for a regulated source in a given state, in terms of
The EPA Regional Offices will work with states to help them understand their options and the potential consequences for sources as the states prepare their SIP revisions in response to this SIP call.
If, in the future, the EPA finds that a state that is subject to this SIP call action has failed to submit a complete SIP revision as required, or the EPA disapproves such a SIP revision, then the finding or disapproval would trigger an obligation for the EPA to impose a federal implementation plan (FIP) within 24 months after that date. That FIP obligation would be discharged without promulgation of a FIP only if the state makes and the EPA approves the called-for SIP submission. In addition, if a state fails to make the required SIP revision, or if the EPA disapproves the required SIP revision, then either event can also trigger mandatory 18-month and 24-month sanctions clocks under CAA section 179. The two sanctions that apply under CAA section 179(b) are the 2-to-1 emission offset requirement for all new and modified major sources subject to the nonattainment new source review (NSR) program and restrictions on highway funding. More details concerning the timing and process of the SIP call, and potential consequences of the SIP call, are provided in section VIII of this document.
When the EPA issues a final SIP call to a state, that action alone does not cause any automatic change in the legal status of the existing affected provision(s) in the SIP. During the time that the state takes to develop a SIP revision in response to the SIP call and the time that the EPA takes to evaluate and act upon the resulting SIP submission from the state pursuant to CAA section 110(k), the existing affected SIP provision(s) will remain in place. The EPA notes, however, that the state regulatory revisions that the state has adopted and submitted for SIP approval will most likely be already in effect at the state level during the pendency of the EPA's evaluation of and action upon the new SIP submission.
The EPA recognizes that in the interim period, there may continue to be instances of excess emissions that adversely affect attainment and maintenance of the NAAQS, interfere with PSD increments, interfere with visibility and cause other adverse consequences as a result of the impermissible provisions. The EPA is particularly concerned about the potential for serious adverse consequences for public health in this interim period during which states, the EPA and sources make necessary adjustments to rectify deficient SIP provisions and take steps to improve source compliance. However, given the need to resolve these longstanding SIP deficiencies in a careful and comprehensive fashion, the EPA believes that providing sufficient time consistent with statutory constraints for these corrections to occur will ultimately be the best course to meet the ultimate goal of eliminating the inappropriate SIP provisions and replacing them with provisions consistent with CAA requirements.
The Petition raised issues related to excess emissions from sources during periods of SSM and the correct treatment of these excess emissions in SIPs. In this context, “excess emissions” are air emissions that exceed the otherwise applicable emission limitations in a SIP,
Several key statutory provisions of the CAA are relevant to the EPA's evaluation of the Petition. These provisions relate generally to the basic legal requirements for the content of SIPs, the authority and responsibility of air agencies to develop such SIPs and the EPA's authority and responsibility to review and approve SIP submissions in the first instance, as well as the EPA's authority to require improvements to a previously approved SIP if the EPA later determines that to be necessary for a SIP to meet CAA requirements. In addition, the Petition raised issues that pertain to enforcement of provisions in a SIP. The enforcement issues relate generally to what constitutes a violation of an emission limitation in a SIP, who may seek to enforce against a source for that violation, and whether the violator should be subject to monetary penalties as well as other forms of judicial relief for that violation.
The EPA has a longstanding interpretation of the CAA with respect to the treatment of excess emissions during periods of SSM in SIPs. This statutory interpretation has been expressed, reiterated and elaborated upon in a series of guidance documents issued in 1982, 1983, 1999 and 2001. In addition, the EPA has applied this interpretation in individual rulemaking actions in which the EPA: (i) Approved SIP submissions that were consistent with the EPA's interpretation;
The EPA's SSM Policy is a policy statement and thus constitutes guidance. As guidance, the SSM Policy does not bind states, the EPA or other parties, but it does reflect the EPA's interpretation of the statutory requirements of the CAA. The EPA's evaluation of any SIP provision, whether prospectively in the case of a new provision in a SIP submission or retrospectively in the case of a previously approved SIP submission, must be conducted through a notice-and-comment rulemaking in which the EPA will determine whether a given SIP provision is consistent with the requirements of the CAA and applicable regulations.
The Petition raised issues related to excess emissions from sources during periods of SSM, and the consequences of failing to address these emissions correctly in SIPs. In broad terms, the Petitioner expressed concerns that the exemptions for excess emissions and the other types of alleged deficiencies in existing SIP provisions “undermine the emission limits in SIPs and threaten states' abilities to achieve and maintain the NAAQS, thereby threatening public health and public welfare, which includes agriculture, historic properties and natural areas.”
The EPA notes that the types of SIP deficiencies identified in the Petition are not legal technicalities. Compliance with the applicable requirements is intended to achieve the air quality protection and improvement purposes and objectives of the CAA. The EPA believes that the results of automatic and discretionary exemptions in SIP provisions, and of other provisions that interfere with effective enforcement of SIPs, are real-world consequences that adversely affect public health. Commenters on the February 2013 proposal provided illustrative examples of impacts that these types of SIP provisions have on the communities located near sources that rely on automatic or discretionary exemptions for excess emissions during SSM events, rather than by designing, operating and maintaining their sources to meet the applicable emission limitations.
The EPA's memorandum providing a detailed discussion of the statutory, regulatory and policy background for this action can be found in the docket for this rulemaking.
The Petitioner's first request was for the EPA to rescind its SSM Policy element interpreting the CAA to allow affirmative defense provisions in SIPs for excess emissions during SSM events.
The Petitioner requested that the EPA rescind its SSM Policy element interpreting the CAA to allow SIPs to include affirmative defenses for violations due to excess emissions during any type of SSM events because the Petitioner contended there is no legal basis for the Agency's interpretation. Specifically, the Petitioner cited to two statutory grounds, CAA sections 113(b) and 113(e), related to the type of judicial relief available in an enforcement proceeding and to the factors relevant to the scope and availability of such relief, that the Petitioner claimed would bar the approval of any type of affirmative defense provision in SIPs. The Petitioner drew no distinction between affirmative defense provisions for malfunctions versus affirmative defense provisions for startup and shutdown or other normal modes of operation; in the Petitioner's view all are equally inconsistent with CAA requirements.
In the Petitioner's view, the CAA “unambiguously grants jurisdiction to the district courts to determine penalties that should be assessed in an enforcement action involving the violation of an emissions limit.”
Second, in reliance on CAA section 113(e)(1), the Petitioner argued that in a judicial enforcement action in a district court, the statute explicitly specifies a list of factors that the court is to consider in assessing penalties.
In the February 2013 proposal, consistent with its interpretation of the Act at that time, the EPA proposed to deny in part and to grant in part the Petition with respect to this overarching issue. As a revision to the SSM Policy as embodied in the 1999 SSM Guidance, the EPA proposed a distinction between affirmative defenses for unplanned events such as malfunctions and planned events such as startup and shutdown. The EPA explained the basis for its initial proposed action in detail, including why the Agency then believed that there was a statutory basis for narrowly drawn affirmative defense provisions that met certain criteria applicable to malfunction events but no such statutory basis for affirmative defense provisions applicable to startup and shutdown events. In the February 2013 proposal, the EPA also proposed to deny in part and to grant in part the Petition with respect to specific affirmative defense provisions in the SIPs of various states identified in the Petition consistent with that interpretation. With respect to these specific existing SIP provisions, the EPA distinguished between those provisions that were consistent with the Agency's interpretation of the CAA as set forth in 1999 SSM Guidance and were limited to malfunction events and other affirmative defense provisions that were not limited to malfunctions or otherwise not consistent with the Agency's interpretation of the CAA and included one or more deficiencies.
Subsequent to the February 2013 proposal, however, a judicial decision by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in
The EPA is taking final action to grant the Petition on the request to rescind its SSM Policy element that interpreted the CAA to allow states to elect to create affirmative defense provisions in SIPs. The EPA is also taking final action to grant the Petition on the request to make a finding of substantial inadequacy and to issue SIP calls for specific existing SIP provisions that include an affirmative defense as identified in the SNPR. The specific SIP provisions at issue are discussed in section IX of this document. These existing affirmative defense provisions include some provisions that the EPA had previously determined were consistent with the CAA as interpreted in the 1999 SSM Guidance and other provisions that were not consistent even with that interpretation of the CAA. As explained in the SNPR, the EPA has now concluded that the enforcement structure of the CAA, embodied in section 113 and section 304, precludes any affirmative defense provisions that would operate to limit a court's jurisdiction or discretion to determine the appropriate remedy in an enforcement action. These provisions are not appropriate under the CAA, no matter what type of event they apply to, what criteria they contain or what forms of remedy they purport to limit or eliminate.
The EPA is revising its interpretation of the CAA with respect to affirmative defenses based upon a reevaluation of the statutory provisions that pertain to enforcement of SIP provisions in light of recent court opinions. Section 113(b) provides courts with explicit jurisdiction to determine liability and to impose remedies of various kinds, including injunctive relief, compliance orders and monetary penalties, in judicial enforcement proceedings. This grant of jurisdiction comes directly from Congress, and the EPA is not authorized to alter or eliminate this jurisdiction under the CAA or any other law. With respect to monetary penalties, CAA section 113(e) explicitly includes the factors that courts and the EPA are required to consider in the event of judicial or administrative enforcement for violations of CAA requirements, including SIP provisions. Because Congress has already given federal courts the jurisdiction to determine
States have great discretion in how to devise SIP provisions, but they do not have discretion to create provisions that contradict fundamental legal requirements of the CAA. The jurisdiction of federal courts to determine liability and to impose statutory remedies for violations of SIP emission limitations is one such fundamental requirement. The court in the recent
Couching an affirmative defense provision in terms of merely defining whether the emission limitation applies and thus whether there is a “violation,” as suggested by some commenters, is also problematic. If there is no “violation” when certain criteria or conditions for an “affirmative defense” are met, then there is in effect no emission limitation that applies when the criteria or conditions are met; the affirmative defense thus operates to create an exemption from the emission limitation. As explained in the February 2013 proposal, the CAA requires that emission limitations must apply continuously and cannot contain exemptions, conditional or otherwise. This interpretation is consistent with the decision in
The EPA recognizes that the original policy objectives behind states' affirmative defense provisions were likely well-intentioned,
Similarly, the absence of an affirmative defense provision in a SIP does not alter the legal rights of sources under the CAA. In the event of an enforcement action for an exceedance of a SIP emission limit, a source can elect to assert any common law or statutory defenses that it determines is supported, based upon the facts and circumstances surrounding the alleged violation. Under section 113(b), courts have explicit authority to impose injunctive relief, issue compliance orders, assess monetary penalties or fees and impose any other appropriate relief. Under section 113(e), courts are required to consider the enumerated statutory factors when assessing monetary penalties, including “such other factors as justice may require.” For example, if the exceedance of the SIP emission limitation occurs due to a malfunction, that exceedance is a violation of the applicable emission limitation, but the source retains the ability to defend itself in an enforcement action and to oppose the imposition of particular remedies or to seek the reduction or elimination of monetary penalties, based on the specific facts and circumstances of the event. Thus, elimination of a SIP affirmative defense provision that purported to take away the statutory jurisdiction of the court to exercise its authority to impose remedies does not disarm sources in potential enforcement actions. Sources retain all of the equitable arguments they could previously have made under an affirmative defense provision; they must simply make such arguments to the reviewing court as envisioned by Congress in section 113(b) and section 113(e). Congress vested the courts with the authority to judge how best to weigh the evidence in an enforcement action and determine appropriate remedies.
Removal of such impermissible SIP affirmative defense provisions is necessary to preserve the enforcement structure of the CAA, to preserve the jurisdiction of courts to adjudicate questions of liability and remedies in judicial enforcement actions and to preserve the potential for enforcement by states, the EPA and other parties under the citizen suit provision as an effective deterrent to violations. In turn, this deterrent encourages sources to be properly designed, maintained and operated and, in the event of violation of SIP emission limitations, to take appropriate action to mitigate the impacts of the violation. In this way, as intended by the existing enforcement structure of the CAA, sources can mitigate the potential for enforcement actions against them and the remedies
The EPA received numerous comments concerning the portion of the Agency's proposed response to the Petition in the February 2013 proposal that addressed the question of whether affirmative defense provisions are consistent with CAA requirements for SIPs. As explained in the SNPR, those particular comments submitted on the original February 2013 proposal are no longer germane, given that the EPA has substantially revised its initial proposed action on the Petition and its basis, both with respect to the overarching issue of whether such provisions are valid in SIPs under the CAA and with respect to specific affirmative defense provisions in existing SIPs of particular states. Accordingly, as the EPA indicated in the SNPR, it considers those particular comments on the February 2013 proposal no longer relevant and has determined that it is not necessary to respond to them. Concerning affirmative defense provisions, the appropriate focus of this rulemaking is on the comments that addressed the EPA's revised proposal in the SNPR.
With respect to the revised proposal concerning affirmative defense provisions in the SNPR, the EPA received numerous comments, some supportive and some critical of the Agency's proposed action on the Petition as revised in the SNPR. Many of these comments raised conceptual issues and arguments concerning the EPA's revised interpretation of the CAA with respect to affirmative defense provisions in SIPs in light of the
1. Comments that the EPA is misapplying the decision of the D.C. Circuit in
One commenter noted that the EPA, in the SNPR, stated that the
One commenter also noted that the EPA is not bound to apply D.C. Circuit law to actions reviewable in other circuits.
The EPA agrees with the commenters' statement that the
As acknowledged by a commenter, the EPA explained in the SNPR that the
The affirmative defense provision in the Portland Cement NESHAP required the source to prove, by a preponderance of the evidence in an enforcement proceeding, that the source met specific criteria concerning the nature of the event. These specific criteria required to establish the affirmative defense in the Portland Cement NESHAP are functionally the same as the criteria that the EPA previously recommended to states for SIP provisions in the 1999 SSM Guidance and that the EPA repeated in the February 2013 proposal document. Accordingly, the EPA believes that the opinion of the court in
The EPA also disagrees with commenters who suggested that a decision of the D.C. Circuit should have no bearing on actions that affect states in other circuit courts. The CAA vests authority with the D.C. Circuit to review nationally applicable regulations and any action of nationwide scope or effect. Accordingly, any decision of the D.C. Circuit in conducting such review is binding nationwide with respect to the action under review, and the D.C. Circuit's reasoning is also binding with respect to review of future EPA actions raising the same issues that will be subject to review within that Circuit. Given that the EPA has determined that this action has nationwide scope and effect, it is subject to exclusive review in the D.C. Circuit, so the EPA believes it is appropriate to apply the reasoning
2. Comments that the EPA is misapplying the decision of the D.C. Circuit in
3. Comment that the EPA is inappropriately relying on the
4. Comments that the court's reasoning in the
First, the EPA does not agree that all affirmative defense provisions in the SIPs at issue in this action are constructed in this way. Some, including those that the EPA previously approved as consistent with the Agency's 1999 SSM Guidance, explicitly provide that the excess emissions that occur are still violations, but a source could be excused from monetary penalties if the source met the criteria for the affirmative defense. Under the EPA's prior interpretation of the CAA, the legal basis for any affirmative defense started with the fact that the excess emissions still constituted a violation and injunctive relief would still be available as appropriate. As explained in the SNPR and this document, the EPA no longer interprets the CAA to allow even narrowly drawn affirmative defense provisions in SIPs, let alone those advocated by the commenters that would provide a complete bar to any type of judicial remedy provided for in section 113(b).
Second, even if a specific affirmative defense provision were worded in the way that the commenters' claim, then that provision would be deficient for other reasons. Under the commenters' premise, if certain criteria are met then there is no “violation” for excess emissions during SSM events. The EPA's view is that this formulation of an affirmative defense in effect means that there is no emission limitation that applies when the criteria are met,
Finally, the EPA believes that the commenters' premise that an affirmative defense provision merely defines what a violation is also runs afoul of other fundamental requirements for SIP provisions. To the extent any such provision would allow state personnel to decide, unilaterally, whether excess emissions during an SSM event constitute a violation (
5. Comments that the
The EPA also disagrees with the commenters' arguments that “emission limitations” under section 112 and section 110 are not comparable with respect to meeting fundamental CAA requirements. As an initial matter, both section 112 MACT standards and section 110 SIP emission limitations can be composed of various elements that include, among other things, numerical emission limitations, work practice standards and monitoring and recordkeeping requirements. However, whether there are other components that are part of the emission limitation to make it apply continuously is not relevant for purposes of determining whether an affirmative defense provision that provides relief from penalties for a violation of either a MACT standard under section 112 or a SIP provision under section 110 is consistent with the CAA.
As explained in the SNPR, the EPA has revised its interpretation of the CAA with respect to affirmative defense provisions in SIPs, based upon the logic of the court in the
6. Comments that the
The EPA of course agrees that states can exercise their own enforcement discretion and elect not to bring an enforcement action or seek certain remedies, using criteria analogous to an affirmative defense. It does not follow, however, that states can impose this enforcement discretion on other parties by adopting SIP provisions that would apply in federal judicial enforcement, or in enforcement brought by the EPA or other parties. To the extent that the state developed an “enforcement discretion” type provision that applied only in its own administrative enforcement actions or only with respect to enforcement actions brought by the state in state courts, such a provision may be appropriate. This authority is not unlimited because the state could not create affirmative defense provision that in effect undermines its legal authority
7. Comments that the EPA's proposal is inappropriate because it runs counter to previous court decisions, including the decision of the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) in
Some commenters also pointed out that the D.C. Circuit, in the recent
Several commenters also argued that, because the Fifth Circuit previously determined in
Some commenters alleged that the EPA is bound by its own prior representations before the Fifth Circuit, in which it asserted and defended its approval of the affirmative defense provision for malfunctions in the Texas SIP, under the doctrine of judicial estoppel.
Some commenters also cited to other circuit court decisions that have upheld the EPA's approvals of affirmative defense provisions for malfunctions.
Some commenters allege that the Fifth Circuit considered and rejected the legal arguments articulated by the EPA in the SNPR to support the Agency's new interpretation that affirmative defenses in SIP provisions are inconsistent with the Act. The EPA disagrees with commenters' assertions. As explained above, in the
In the SNPR, the EPA also addressed the discussion in the
The EPA acknowledges that other circuit courts have also upheld affirmative defense provisions promulgated by the Agency in FIPs.
The EPA also disagrees with commenters' allegations that this final SIP call action violates the mandate rule. The mandate rule generally governs how a lower court handles a higher court's decision on remand. The Agency believes that the mandate rule is inapplicable here. Similarly, the Agency believes that the principles of
8. Comments that affirmative defense provisions are needed or appropriate because sources cannot control malfunctions or the excess emissions that occur during them.
Furthermore, the EPA disagrees with the commenters' premise that states have authority to create affirmative defense provisions in SIPs because some sources may otherwise be subject to enforcement actions for emissions during malfunctions. As explained in the SNPR in detail, the EPA has concluded that there is no legal basis for affirmative defenses in SIP provisions, including affirmative defenses applicable to malfunction events. Because such affirmative defense provisions purport to alter or eliminate the statutory jurisdiction of courts to determine liability and to assess appropriate remedies for violations of SIP requirements, these provisions are not permissible.
9. Comments that there will not be any reduction in overall emissions from the EPA's SIP call action because states will need to revise emission limitations to allow more emissions if affirmative defense provisions are removed from the SIPs.
Several commenters also disagreed with the EPA's belief that removal of affirmative defense provisions would reduce emissions. One commenter noted that some affirmative defense provisions require a source to evaluate impacts on NAAQS compliance as part of asserting the affirmative defense; the commenter contended that forgoing these provisions would thus reduce the incentive for owners and operators to minimize emissions during malfunctions so that they could qualify for the affirmative defense. Several commenters noted that many sources immediately investigate excess emissions events and implement measures intended to prevent recurrence. Nevertheless, those commenters asserted that because malfunction events are uncontrollable by definition, removing an affirmative defense applicable to malfunctions will not reduce emissions. Commenters also argued that an assumption that elimination of the affirmative defense provisions will reduce emissions is flawed because, given the stringent applicability criteria for a “narrowly drawn” affirmative defense, a facility has no assurance that an affirmative defense will apply to any particular malfunction event and that even if the affirmative defense was available, it would not shield the facility from compliance orders or other injunctive relief (or from criminal prosecution).
As explained in the SNPR, however, the EPA has determined that affirmative defenses are impermissible in SIP provisions because they operate to alter or eliminate the statutory jurisdiction of the courts. The EPA has reached this conclusion in light of the court's decision in
The EPA agrees that in response to this SIP call directing the removal of affirmative defense provisions, the affected states may elect to revise affected SIP emission limitation. In so doing, the states may determine that it is appropriate to revise the emission limitations in other respects, so long as they do so consistent with CAA requirements. For example, affected states may elect to create alternative emission limitations that apply to sources during startup and shutdown. The EPA's guidance for this approach is discussed in detail in VII.B.2 of this document. Alternatively, states may elect to overhaul an affected SIP emission limitation entirely to account for the removal of the affirmative defense in some other way. However, states will need to comply with the applicable substantive requirements for the type of SIP provision at issue and the EPA will review those SIP revisions in accordance with the requirements of the CAA, including sections 110(k)(3), 110(l) and 193.
10. Comments that the elimination of affirmative defense provisions will result in sources' facing inconsistent treatment by courts or states when excess emissions are emitted during malfunction events.
Commenters further argued that without the consistent regulatory framework provided by an affirmative defense provision, each court is likely to evaluate SSM events differently in the context of enforcement actions. The commenters suggested that allowing each court to consider the facts and circumstances of the emission event in its penalty evaluation without a governing framework could lead to inconsistent enforcement throughout the country.
As to the concern that different courts might evaluate liability for violations during SSM events differently in the absence of affirmative defense provisions, the EPA notes that this is not the relevant question. The potential for inconsistent treatment by the courts is not a basis for allowing states to retain SIP provisions that are inconsistent with the legal requirements of the CAA. In any event, the EPA disagrees that elimination of affirmative defenses in SIP provisions make it more likely that there would be “inconsistent enforcement” because of a lack of a “regulatory framework.” The enforcement structure of the CAA embodied in section 113 and section 304 already provides a structure for enforcement of CAA requirements in federal courts. For example, the CAA already provides uniform criteria for courts to apply, based upon the facts and circumstances of individual enforcement actions. Similar to an affirmative defense provision, section 113(e) already enumerates the factors that courts are required to consider in determining appropriate penalties for violations and thus there is a consistent statutory framework. In essence the commenters object to the fact that in any judicial enforcement case, the court will determine liability and remedies based on the facts and circumstances of the case. However, this is an inherent feature of the enforcement structure of the CAA, regardless of whether there is an affirmative defense provision at issue.
11. Comments that the EPA should have acted in a single, comprehensive rulemaking rather than issuing the supplemental notice of proposed rulemaking.
As to the commenters' concern that the EPA should take action in a single comprehensive rulemaking, the Agency is doing so. This SIP call action addresses all aspects of the Petition and it is based upon both the February 2013 proposal and the SNPR. As advocated by the commenters, the EPA's objective in this SIP call action is to provide states with comprehensive and up-to-date guidance concerning the correct treatment of emissions during SSM events in SIP provisions, consistent with CAA requirements as interpreted by recent court decisions. The EPA agrees with the commenters that providing states comprehensive guidance in this rulemaking is important to assist states in revising their SIP provisions consistent with CAA requirements. Any necessary changes to permits to reflect the removal of affirmative defense provisions from the underlying SIP will occur later, after the SIP provisions have been revised.
12. Comments that the EPA has not proven that the existence of affirmative defense provisions in SIPs is resulting in specific environmental impacts or interference with attainment and maintenance of the NAAQS.
The commenters alleged that without providing specific record-based evidence of the impacts caused by affirmative defense provisions, it is unreasonable for the EPA to determine that existing provisions are substantially inadequate or otherwise not in compliance with the CAA. Some commenters further alleged that the EPA has no authority to issue a SIP call without “find[ing] that the applicable implementation plan . . . is substantially inadequate to attain or maintain the relevant [NAAQS].”
13. Comments that the EPA is violating the principles of cooperative federalism through this action.
14. Comments that the EPA failed to account adequately for the amount of time and resources that will be required to revise state SIPs.
Commenters also indicated that in conjunction with removal of affirmative defenses, states will also have to reevaluate the emission limitations currently contained in their SIPs to determine if those limitations are still are consistent with federal and state law (
The EPA acknowledges that some states, in conjunction with removal of affirmative defense provisions, may elect to undertake a more comprehensive revision of affected SIP emission limitations. In so doing, the states may need to undertake a more resource intensive approach than those states that merely elect to eliminate the affirmative defense provisions. In addition, the EPA also recognizes that states may eventually need to revise permits to reflect the elimination of affirmative defense provisions from underlying SIP provisions that may have been reflected in permits. The EPA discussed these issues in the both the February 2013 proposal and in the SNPR. A summary of comments concerning revisions to operating permits to reflect the revised SIP provisions appears, with the EPA's response to comments, in section VIII.D.28 of this document.
Despite the potential burden on states, as the EPA explained in the February 2013 proposal and the SNPR, the Agency believes that it is obligated and authorized to issue this SIP call action to affected states to require the removal of affirmative defense provisions. The EPA is not in this action evaluating or determining whether SIP emission limitations should or should not be revised in light of the removal of affirmative defenses and is not required to do so. The states have discretion to determine how best to revise the deficient SIP provisions identified in this action, so long as they do so consistent with the CAA requirements.
Further, the EPA does not agree that enforcement discretion cannot substitute for an affirmative defense for malfunctions. For example, the EPA has taken the position that the CAA does not require malfunction emissions to be factored into development of section 112 or section 111 standards and that case-by-case enforcement discretion provides sufficient flexibility.
With respect to the potential need to amend permits, as explained in the February 2013 proposal, “the EPA does not intend its action on the Petition to affect existing permit terms or conditions regarding excess emissions during SSM events that reflect previously approved SIP provisions. . . . [A]ny needed revisions to existing permits will be accomplished in the ordinary course as the state issues new permits or reviews and revises existing permits. The EPA does not intend the issuance of a SIP call to have automatic impacts on the terms of any existing permit.”
Finally, the EPA notes, the burdens associated with SIP revisions and permit revisions are burdens imposed by the CAA. The states have both the authority and the responsibility under the CAA to have SIPs and permit programs that meet CAA requirements. It is inherent in the structure of the CAA that states thus have the burden to revise their SIPs and permits when that is necessary, whether because of changes in the CAA, changes in judicial interpretations of the CAA, changes in the NAAQS, or a host of other potential events that necessitate such revisions. Among those is the obligation to respond to a SIP call that identifies legal deficiencies in specific provisions in a state's SIP.
15. Comments that the EPA is being inconsistent because rules promulgated by the EPA provide affirmative defense provisions for malfunction events.
Other commenters alleged that the EPA is being inconsistent because it has not adequately explained the reversal of its “decades-old” policy interpreting the CAA to allow affirmative defenses in SIP provision. The commenters cited to SIP provisions that the EPA previously approved in eight states between 2001 and 2010 that they believed would be affected by this SIP call. The commenters claimed that these prior actions were consistent with the EPA's SSM policy memoranda. Additionally, the commenters cited to federal regulations that the EPA has previously promulgated that include affirmative defense provisions. The commenters claimed that these prior actions are “inconsistent with EPA's proposed disallowance of affirmative defenses.”
The EPA has also acknowledged that it has in the past taken a similar approach regarding affirmative defense provisions in federal regulations addressing hazardous air pollution and in new source performance standards. Indeed, the EPA's inclusion of an affirmative defense provision in a federal regulation resulted in the court decision in
As to the claim that the EPA has not adequately explained the basis for changing its interpretation of the CAA regarding affirmative defenses in SIP provisions, the Agency disagrees. The SNPR set forth in detail the basis for the EPA's revised interpretation of the CAA, in light of the court's decision in
16. Comments that existing affirmative defense provisions do not preclude parties from filing enforcement actions or hinder parties from seeking injunctive relief for violations of SIP requirements.
By contrast, an environmental group commenter cited a citizen suit enforcement case in Texas in which the commenter claimed that the affirmative defense provision in that state's SIP operated as a
The EPA also agrees that some agencies or courts may not apply the affirmative defense provisions in the manner intended at the time the EPA approved them into the SIP. Incorrect application of SIP affirmative defense provisions by sources, regulators or courts is a matter of concern. However, even perfect implementation of a SIP affirmative defense provision does not cure the underlying and now evident absence of a legal basis for such provisions. Again, the fact that a given affirmative defense provision is being implemented correctly or incorrectly is no longer a deciding factor for purposes of this SIP call action.
These issues are not pertinent to the EPA's decision in this action to require states to remove the affirmative defense provisions from the previously approved SIPs. Rather, as explained in
17. Comments that the EPA is changing its policy on affirmative defenses, and this change is arbitrary and capricious and thus an impermissible basis for a SIP call.
18. Comments that emissions during malfunction periods are not “excess” or “violations” but rather are part of the established SIP emission limitations.
Other commenters claimed that the EPA takes the position that affirmative defenses in SIP provisions conflict with the court's jurisdiction over enforcement actions and stated that this position is flawed because enforcement is limited to violations as defined in the context of the SIP. The commenters asserted that section 304 does not apply when there is no SIP requirement being violated and that the state has the authority to define what constitutes such a violation. Similarly, commenters argued that an affirmative defense provision may provide that emissions will not be “violations” if criteria are met and that it therefore does not interfere with a court's ability to determine appropriate penalty amounts under section 113. The commenters contended that, because the state has the authority to define what constitutes a violation, SIP provisions that include an affirmative defense do not infringe on a court's authority to penalize a source because the CAA does not provide a court with jurisdiction to impose remedies in the absence of liability.
The EPA agrees that in some cases, affirmative defense provisions at issue in this SIP call action are structured as a complete defense to any liability, not merely a defense to monetary penalties. The EPA has also determined that affirmative defense provisions of this type are substantially inadequate to meet CAA requirements. Although such affirmative defenses may not present the same concerns as affirmative defenses applicable only to penalties, such affirmative defenses may create a different concern because they in effect provide a conditional exemption from otherwise applicable emission limitations. If there is no “violation” when the criteria of such an “affirmative defense” are met and no legitimate alternative emission limitation applies during that event, then such an affirmative defense in effect operates to create a conditional exemption from applicable emission limitations. This form of “affirmative defense” provision therefore runs afoul of different CAA requirements for SIP provisions. Under section 302(k) of the CAA, emissions standards or limitations must be continuous and cannot include SSM exemptions, automatic or otherwise. Regardless of whether the commenters believe that this form of “affirmative defense” should be allowed, the EPA believes that provisions of this form are inconsistent with the decision of the court in
19. Comments that the definition of “emission limitation” in CAA section 302(k) does not support this SIP call action.
Several commenters questioned why, even if the challenged affirmative defense provisions do not qualify as “emission limitations” or “emissions standards” under the first part of the definition, they are not approvable as “design, equipment, work practice or operational standards” promulgated under the second part of the definition. Some commenters argued that, to the extent that affirmative defense provisions in SIPs do not satisfy the definition of “emission limitation,” they would still be approvable elements of a SIP as “other control measures, means, or techniques” allowed under CAA section 110(a)(2). Further, some commenters believe that the legislative history cited in the SNPR does not support the EPA's position but rather is only intended to preclude the use of dispersion techniques, such as intermittent controls.
One commenter stated that the Portland Cement NESHAP, at issue in the
As to commenters' argument that affirmative defense provisions can be appropriately considered to be “design, equipment, work practice or operational standards” under CAA section 302(k), the critical aspect of an emission limitation in general is that it be a “requirement . . . which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis . . . .” These provisions operate to
The EPA notes that the definition of “emission limitation” in section 302(k) is relevant, however, with respect to those affirmative defense provisions that commenters claim are merely a means to define what constitutes a “violation” of an applicable SIP emission limitation. As previously explained, the EPA believes that an “affirmative defense” structured in such a fashion is deficient because it in effect creates a conditional exemption from the SIP emission limitations. By creating such exemptions, conditional or otherwise, an affirmative defense of this type would render the emission limitations less than continuous.
The EPA disagrees with commenters' remaining points because the EPA's position on what appropriately qualifies as an emission limitation is consistent with the CAA, relevant legislative history and case law. These issues are addressed in more detail in sections VII.A.3.i through 3.j of this document.
20. Comments that the EPA has failed to show that state SIPs are substantially inadequate, as is required to promulgate a SIP call.
Some commenters also argued that the EPA has failed in its SNPR to define or interpret “substantially inadequate” or provide any standards for assessing the adequacy of a SIP with respect to affirmative defense provisions. The commenters also alleged that, if the EPA is required to rely on data and evidence in evaluating SIP revisions, it follows that the EPA should produce at least the same level of data and evidence, if not more, to support a SIP call that is based on the more stringent substantial inadequacy standard of section 110(k)(5).
21. Comments that this action is not national in scope, and therefore the D.C. Circuit is not the sole venue for review of this action.
The commenters acknowledged that the EPA cited
One commenter alleged that the EPA has waived its challenge to venue for those circuits that have already weighed in regarding individual state SIP provisions at issue in this action, including Texas's affirmative defense provisions. Another commenter claimed that the discussion over appropriate venue in the February 2013 proposal and SNPR presupposes that the EPA's issuance of a revised SSM Policy is a “final agency action” subject to judicial review under section 307(b)(1) but argued that the EPA has failed to determine that its issuance of the SSM Policy, in and of itself, constitutes “final agency action.”
The EPA also disagrees with the argument that the Agency has waived venue regarding challenges to this SIP call action concerning the affirmative defense provisions in the Texas SIP. Evidently, the commenter believes that because a prior challenge to another EPA rulemaking concerning the affirmative defense provisions occurred in the Fifth Circuit, it necessarily follows that any other rulemaking related to such provisions can only occur in the Fifth Circuit. The EPA believes that this interpretation of its authority under section 307(b)(1) is simply incorrect. Under section 307(b)(1), the EPA is explicitly authorized to make a determination that a specific rulemaking action is of “nationwide scope and effect.” The statute does not specify the considerations that the EPA is to take into account when making such a determination, let alone provide that the Agency cannot invoke this because some aspect of the rulemaking at issue might previously have been addressed in one or more other circuit courts. To the contrary, the EPA believes that section 307(b)(1) explicitly provides authority for the Agency to determine that a given rulemaking should be reviewed in the D.C. Circuit in situations such as those presented in this action that affects important questions of statutory interpretation that affect states nationwide.
The EPA likewise disagrees with the argument that its action is not a final agency action. Within this action, the EPA is taking final agency action to respond to the Petition, updating its interpretations of the CAA in the SSM Policy and applying its interpretations of the CAA in the SSM Policy to specific SIP provisions in the SIPs of many states. The EPA is conducting this action through notice-and-comment rulemaking to assure full consideration of the issues. As stated elsewhere in this document, the revised SSM Policy is a nonbinding policy statement that does not, in and of itself, constitute “final” action. However, the EPA is taking “final” action by responding to the Petition and issuing the resulting SIP call action. To the extent that interpretations expressed in the revised SSM Policy are also relied on to support this “final” action, then the EPA's interpretations of the CAA requirements for SIP provisions applicable to emissions during SSM events are part of the final agency action and are subject to judicial review. To the extent the commenters are otherwise arguing that the issuance of the updated SSM Policy in and of itself is not final agency action subject to judicial review under the CAA, the EPA agrees with this assertion. The EPA notes that the commenters are at liberty to adopt this position and waive their opportunity to challenge the SSM Policy because they do not consider it final agency action.
22. Comments that the EPA should clarify that SIPs can include work practice standards or general-duty clauses to apply during malfunction periods in place of affirmative defense provisions.
Regarding the more general concern of the commenters, that states be allowed to establish an alternative emission limitation in the form of a work practice standard that applies during malfunctions, the EPA notes two points. First, the CAA does not preclude that emissions during malfunctions could be addressed by an alternative emission limitation. The EPA's general position in the context of standards under sections 111, 112 and 129 is that: (i) The applicable emission limitation applies at all times including during malfunctions; (ii) the CAA does not require the EPA to take into account emissions that occur during periods of malfunction when setting such standards; and (iii) accounting for malfunctions would be difficult, if not impossible, given the myriad types of malfunctions that can occur across all sources in a source category and given the difficulties associated with predicting or accounting for the frequency, degree and duration of various malfunctions that might occur. Although the EPA has not, to date, found it practicable to develop emission standards that apply during periods of malfunction in place of an otherwise applicable emission limitation, this does not preclude the possibility that a state may determine that it can do so for all or some set of malfunctions. Second, states are not bound to establish any specific definition of “malfunction” in their SIPs. Thus, it is difficult to judge at this time whether any particular alternative emission limitation in a SIP for malfunctions, including any specific work practice requirements in place of an otherwise applicable emission limitation, would be approvable.
With regard to the specific comment that the affirmative defense criteria could be converted into a work practice requirement to apply during malfunctions in place of an otherwise applicable emission limitation, the EPA is unsure at this time whether the criteria previously recommended for an affirmative defense provision would serve to meet the obligation to develop an appropriate alternative emission limitation. Existing affirmative defense criteria (which include, among other things, making repairs expeditiously, taking all possible steps to minimize emissions and operating in a manner consistent with good practices for minimizing emissions) were developed in the context of helping to determine whether a source should be excused from monetary penalties for violations of CAA requirements and were not developed in the context of establishing an enforceable alternative emission limitation under the Act. The EPA would need to consider this approach in the context of a specific SIP regulation for a specific type of source and emission control system.
Finally, the EPA notes that any emission limitation, including an alternative emission limitation, that applies during a malfunction must meet the applicable stringency requirements for that type of SIP provision (
23. Comments that the EPA has failed to account adequately for the cost of this SIP call action and is therefore in violation of the Regulatory Flexibility Act, the Unfunded Mandates Reform Act and Administration policy.
24. Comments that states should not be required to eliminate affirmative defense provisions but rather should be allowed to revise them to be appropriate under CAA requirements.
The EPA agrees that states may elect to revise their existing deficient affirmative defense provisions to make them “enforcement discretion”-type provisions that apply only in the context of administrative enforcement by the state. Such revised provisions would need to be unequivocally clear that they do not provide an affirmative defense that sources can raise in a judicial enforcement context or against any party other than the state. Moreover, such provisions would have to make clear that the assertion of an affirmative defense by the source in a state administrative enforcement context has no bearing on the additional remedies that the EPA or other parties may seek for the same violation in federal administrative enforcement proceedings or judicial proceedings.
In this action, the EPA is not determining whether any such revisions would meet applicable CAA requirements. The EPA would need to consider the precise wording of any such revised provisions in evaluating whether the state has adequate enforcement authority to meet the requirements of section 110(a)(2)(C) and also whether application of such a provision in a state administrative proceeding could interfere with the ability of a citizen or the EPA to bring a federal enforcement action.
25. Comments that states' ability to use enforcement discretion is not an adequate replacement for affirmative defense provisions.
The commenters contended that, although it is reasonable for a state to exercise enforcement discretion under circumstances when an emission limitation cannot be met, it is not reasonable to adopt SIP provisions with emission limitations that put some sources in the position of “repeated noncompliance.”
The EPA also disagrees that affirmative defense provisions would have been appropriate to address the “repeated noncompliance” concerns of the commenters. The EPA's prior interpretation of the CAA was that states could create narrowly tailored affirmative defense provisions applicable to malfunctions. However, to the extent that there are malfunctions that put a source in the position of “repeated noncompliance,” the form of affirmative defense that the EPA previously believed was consistent with the CAA would not have provided relief because several of the criteria could not be met. Specifically, the EPA believes repeated noncompliance is typically a result of inadequate design, is part of a “recurring pattern,” and thus likely could have been “foreseen and avoided.” In short, an affirmative defense would not have been appropriate for such a source.
26. Comments that the EPA should establish specific rules to govern how states set alternative limitations that apply in lieu of affirmative defense provisions.
Commenters also argued that any such alternative emission limitation should “sunset” each time the EPA promulgates a new NAAQS and that the Agency should require the state to demonstrate again that an alternative emission limitation applicable during startup and/or shutdown does not interfere with attainment or other applicable requirements of the CAA for the revised NAAQS. In support of their arguments that the EPA should impose specific requirements of this type, the commenters indicated that a state has issued permits for sources that establish particulate matter (PM) emission limitations less stringent than existing
In addition, some commenters stated that if the EPA allows states to set “new, higher, or alternate limits” applicable during startup and shutdown, the EPA should set clear parameters. According to commenters, the EPA at a minimum should require, for emissions that have not previously been authorized or considered part of a source's potential to emit, that: (i) Limitations must meet BACT/LAER; (ii) there should be clear, enforceable rules for when alternate limitations apply; (iii) there should be a demonstration that worst-case emissions will not cause or contribute to a violation of the NAAQS or PSD increments; and (iv) proposed limitations should be subject to public notice and comment and judicial review. The commenter pointed to a letter from the EPA to Texas in which, the commenter claims, the Agency indicated that these parameters must be met.
A commenter stated that the EPA should unequivocally state in this final action that: (i) All potential to emit emissions, including quantifiable emissions associated with startup and shutdown, must be included in federal applicability determinations and air quality permit reviews; (ii) authorization of these emissions must include technology reviews and impacts analyses; and (iii) the above requirements must be included in the permit that authorizes routine emissions from the applicable units and must be subject to public notice, comment and judicial review.
A commenter recognized that there may be a variety of ways in which states can authorize different limits to apply during startup and shutdown but argued that, no matter the method chosen, the emissions need to be fully accounted for by the state in the relevant SIP, including a demonstration that the additional emissions authorized during startup and shutdown will not violate any NAAQS.
The EPA agrees with the concerns raised by the commenters regarding instances where a state has issued source permits that impose less stringent emission limitations than otherwise established in the SIP. Using a permitting process to create exemptions from emission limitations in SIP emission limitations applicable to the source is tantamount to revising the SIP without meeting the procedural and substantive requirements for a SIP revision. The Agency's views on this issue are described in more detail in section VII.C.3.e of this document.
The EPA does not agree with the comment that suggests “worst-case modeling” would always be needed to show that a SIP revision establishing alternative emission limitations for startup and shutdown would not interfere with attainment or reasonable further progress. The nature of the technical demonstration needed under section 110(l) to support approval of a SIP revision depends on the facts and circumstances of the SIP revision at issue. The EPA will evaluate SIP submissions that create alternative emission limitations applicable to certain modes of operation such as startup and shutdown carefully and will work with the states to assure that any such limitations are consistent with applicable CAA requirements. Under certain circumstances, there may be alternative emission limitations that necessitate a modeling of worst-case scenarios, but those will be determined on a case-by-case basis.
The EPA also does not agree that existing SIP provisions with alternative emission limitations should automatically “sunset” upon promulgation of a new or revised NAAQS. Such a process could result in gaps in the state's regulatory structure that could lead to backsliding. When the EPA promulgates new or revised NAAQS, it has historically issued rules or guidance to states concerning how to address the transition to the new NAAQS. In this process, the EPA typically addresses how states should reexamine existing SIP emission limitations to determine whether they should be revised. With respect to technology-based rules, the EPA has typically taken the position that states need not adopt new SIP emission limitations for sources where the state can demonstrate that existing SIP provisions still meet the relevant statutory obligations. For example, the EPA believes that states can establish that existing SIP provisions still represent RACT for a specific source or source category for a revised NAAQS. In making this determination, states would need to review the entire emission limitation, including any alternative numerical limitations, control technologies or work practices that apply during modes of operation such as startup and shutdown, and ensure that all components of the SIP emission limitation meet all applicable CAA requirements.
27. Comments that the EPA should closely monitor states' SIP revisions in response to this SIP call.
To the extent that the commenters are concerned about whether the SIP revisions meet applicable requirements, they will have the opportunity to participate in the development of those revisions. States must submit SIP revisions following an opportunity for comment at the state level. Additionally, the EPA acts on SIP submissions through its own notice-and-comment process. As part of these administrative processes, both the state and the EPA will need to evaluate whether the proposed revision to the SIP meets applicable CAA requirements. In the context of those future rulemaking actions, the public will have a chance to review the substance of the specific SIP revisions in response to this SIP call, as well as the state's and the EPA's analysis of the SIP submissions for compliance with the CAA.
28. Comments that the EPA does not have authority to take this action without Congressional authorization.
29. Comments that affirmative defense provisions are needed to ensure sources' Constitutional right to due process in the event of violations.
To the extent that the commenters are raising an “as applied” claim of unconstitutionality, any such claim can be raised in the future in the context of a specific application of the statute in an enforcement action. Such was the case in the
30. Comments that the EPA's action eliminating affirmative defense provisions from SIPs violates the Eighth Amendment of the Constitution.
One commenter stated that an affirmative defense is the “minimum protection EPA or the state must provide to avoid infringing constitutional rights.” The commenter also argued that the EPA itself has relied on the existence of an affirmative defense to defend against a challenge to the achievability of an emission limitation in a FIP. To support this argument, the commenter quoted from the court's opinion in
The EPA acknowledges that is has previously relied on affirmative defense provisions as a mechanism to mitigate penalties where a violation was beyond the control of the owner or operator. These actions, however, predated the court's decision in
31. Comments that the EPA should impose a deadline of 12 months for states to respond to this SIP call with respect to affirmative defense provisions.
32. Comments that the EPA should encourage states to add reporting and notification provisions into their SIPs.
33. Comments that this SIP call action concerning affirmative defense provisions is being taken pursuant to sue-and-settle tactics.
34. Comments that affirmative defense provisions do not alter or eliminate federal court jurisdiction and therefore do not violate CAA sections 113 or 304.
35. Comments that this action may increase the chance of catastrophic failure at facilities.
Moreover, as explained in detail in the SNPR and this document, the court's decision in
36. Comments that the SNPR did not meet the procedural requirements of section 307(d) because the EPA failed to provide its legal interpretations or explain the data relied upon in this rulemaking.
In particular, the commenters argued that the EPA did not provide required information with regard to its proposed SIP call concerning the affirmative defense provisions in the Texas SIP. Commenters claimed that the SNPR is deficient because it does not address: (i) Why the Fifth Circuit decision in
37. Comments that the EPA has recently approved affirmative defense provisions through various SIP actions and, therefore, these provisions are proper under the EPA's interpretation of the CAA.
38. Comments that affirmative defense provisions function as structured state “enforcement discretion” and are an important tool for states to prioritize enforcement activities.
However, as explained in the SNPR, the EPA's view is that SIPs cannot include affirmative defense provisions that alter the jurisdiction of the federal court to assess penalties in judicial enforcement proceeding for violation of CAA requirements. The EPA has determined that the specific affirmative
39. Comments that requiring states to adopt emissions standards that are not achievable at all times and then expecting courts to render those standards lawful by employing discretion in the assessment of penalties is contradictory to CAA section 307(b)(2), which mandates pre-enforcement review.
Commenters further asserted that reliance on the discretion of judges to decide whether and to what extent penalties are appropriate is also not lawful. The commenters claimed that if a state establishes an emission limitation on the basis that it is achievable, then the standard must be achievable under all circumstances to which it applies. The commenters argued that if a state adopts an emission limitation that is not achievable under all conditions, then the state must explain how the standard can be reasonably enforced. The commenters concluded that a numerical emission limitation that cannot be achieved by sources at all times is not enforceable because no amount of penalty can deter the violating conduct. The commenters recognized that it is reasonable for states to exercise enforcement discretion under circumstances when an emission limitation cannot be met but argued that it is not reasonable to adopt a SIP that puts sources in a state of repeated noncompliance.
Commenters further claimed that the decision in
The EPA also disagrees with the comments that the holding in
40. Comments that the EPA should announce that it no longer recognizes existing affirmative defense provisions, effective immediately.
41. Comments that instead of acting through a nationwide SIP call action, the EPA should have worked individually with states to correct any deficient SIP provisions.
The EPA, largely through its Regional Offices, has individually reviewed each state provision subject to the SIP call. The EPA will work closely with each state, during future rulemaking actions taken by states to adopt SIP revisions and then subsequent actions by the EPA, to determine whether these adopted SIP revisions meet the mandate of the SIP call and are consistent with CAA requirements. As part of these actions, each individual state will work closely with the EPA to address the SIP deficiencies identified in this action.
42. Comments that the EPA should not consider those comments on the February 2013 proposal that concern affirmative defense provisions in SIPs to no longer be relevant.
The Petitioner's second request was for the EPA to find as a general matter that SIPs “containing an SSM exemption or a provision that could be interpreted to affect EPA or citizen enforcement are substantially inadequate to comply with the requirements of the Clean Air Act.”
The Petitioner argued that many SIPs currently contain provisions that are inconsistent with the requirements of the CAA. According to the Petitioner, these provisions fall into two general categories: (1) Exemptions for excess emissions by which such emissions are not treated as violations; and (2) enforcement discretion provisions that may be worded in such a way that a decision by the state not to enforce against a violation could be construed by a federal court to bar enforcement by the EPA under CAA section 113, or by citizens under CAA section 304.
First, the Petitioner expressed concern that many SIPs have either automatic or discretionary exemptions for excess emissions that occur during periods of SSM. Automatic exemptions are those that, on the face of the SIP provision, provide that any excess emissions during such events are not violations even though the source exceeds the otherwise applicable emission limitations. These provisions preclude enforcement by the state, the EPA or citizens, because by definition these excess emissions are defined as not violations. Discretionary exemptions or, more correctly, exemptions that may arise as a result of the exercise of “director's discretion” by state officials, are exemptions from an otherwise applicable emission limitation that a state may grant on a case-by-case basis with or without any public process or approval by the EPA, but that do have the effect of barring enforcement by the EPA or citizens. The Petitioner argued that “[e]xemptions that may be granted by the state do not comply with the enforcement scheme of title I of the Act because they undermine enforcement by the EPA under section 113 of the Act or by citizens under section 304.”
The Petitioner explained that all such exemptions are fundamentally at odds with the requirements of the CAA and with the EPA's longstanding interpretation of the CAA with respect to excess emissions in SIPs. SIPs are required to include emission limitations designed to provide for the attainment and maintenance of the NAAQS and for protection of PSD increments. The Petitioner emphasized that the CAA requires that such emission limitations be “continuous” and that they be established at levels that achieve sufficient emissions control to meet the required CAA objectives when adhered
Second, the Petitioner expressed concern that many SIPs have provisions that may have been intended to govern only the exercise of enforcement discretion by the state's own personnel but are worded in a way that could be construed to preclude enforcement by the EPA or citizens if the state elects not to enforce against the violation. The Petitioner contended that “any SIP provision that purports to vest the determination of whether or not a violation of the SIP has occurred with the state enforcement authority is inconsistent with the enforcement provisions of the Act.”
After articulating these overarching concerns with existing SIP provisions, the Petitioner requested that the EPA evaluate specific SIP provisions identified in the separate section of the Petition titled, “Analysis of Individual States' SSM Provisions.”
In its February 2013 proposal, the EPA proposed to deny in part and to grant in part the Petition with respect to this two-part request. The EPA explained its longstanding interpretations of the CAA with respect to SIP provisions that apply to excess emissions during SSM events. The EPA also agreed that automatic exemptions, discretionary exemptions via director's discretion, ambiguous enforcement discretion provisions that may be read to preclude EPA or citizen enforcement and affirmative defense provisions can interfere with the overarching objectives of the CAA, such as attaining and maintaining the NAAQS, protecting PSD increments and improving visibility. Such provisions in SIPs can interfere with effective enforcement by air agencies, the EPA and the public to assure that sources comply with CAA requirements, and such interference is contrary to the fundamental enforcement structure provided in CAA sections 113 and 304.
Accordingly, the EPA evaluated each of the specific SIP provisions that the Petitioner identified to determine whether it is consistent with CAA requirements for SIP provisions. The EPA conducted this evaluation in light of its interpretations of the CAA reflected in the SSM Policy and recent court decisions pertaining to relevant issues. In section IX of the February 2013 proposal, the EPA provided its proposed view with respect to each of these SIP provisions. The EPA solicited comment on its proposed grant or denial of the Petition for each of the specific SIP provisions and its rationale for the proposed action. Through consideration of the overarching issues raised by the Petition, and informed by the evaluation of the specific SIP provisions identified in the Petition as a group, the EPA also determined that it was necessary to reiterate, clarify and amend its SSM Policy. The EPA thus took comment on its interpretations of the CAA set forth in the SSM Policy in order to assure that it provides comprehensive and up-to-date guidance to states concerning SIP provisions applicable to emissions from sources during SSM events.
The EPA is taking final action to deny in part and to grant in part the Petition with respect to the request to find specific SIP provisions inconsistent with the CAA as interpreted by the Agency in the SSM Policy. The EPA is also taking final action to grant the Petition on the request to make a finding of substantial inadequacy and to issue a SIP call for specific existing SIP provisions. The basis for the SIP call is that these provisions include an automatic exemption, a discretionary exemption, an inappropriate enforcement discretion provision, an affirmative defense provision, or other form of provision that is inconsistent with CAA requirements for SIP provisions. For those SIP provisions that the EPA has determined to be consistent with CAA requirements, however, the Agency is taking final action to deny the Petition and taking no further action with respect to those provisions. The specific SIP provisions at issue are discussed in detail in section IX of this document.
As a result of its review of the issues raised by the Petition, the EPA is also through this action clarifying, reiterating and updating its SSM Policy to make certain that it provides comprehensive and up-to-date guidance to air agencies concerning SIP provisions to address emissions during SSM events, consistent with CAA requirements. With respect to automatic exemptions from emission limitations in SIPs, the EPA's longstanding interpretation of the CAA is that such exemptions are impermissible because they are inconsistent with the fundamental requirements of the CAA. The EPA has reiterated this point in numerous guidance documents and rulemaking actions and is reaffirming that interpretation in this final action. By exempting emissions that would otherwise constitute violations of the applicable emission limitations, such exemptions interfere with the primary air quality objectives of the CAA (
The court's decision in
With respect to discretionary exemptions from emission limitations in SIPs, the EPA also has a longstanding interpretation of the CAA that prohibits “director's discretion” provisions in SIPs if they provide unbounded discretion to allow what would amount to a case-specific revision of the SIP
With respect to enforcement discretion provisions in SIPs, the EPA also has a longstanding interpretation of the CAA that SIPs may contain such provisions concerning the exercise of discretion by the air agency's own personnel, but such provisions cannot bar enforcement by the EPA or by other parties through a citizen suit.
The EPA has evaluated the concerns expressed by the Petitioner with respect to each of the identified SIP provisions and has considered the specific remedy sought by the Petitioner. Through evaluation of comments on the February 2013 proposal and the SNPR, the EPA has taken into account the perspective of other stakeholders concerning the proper application of the CAA and the Agency's preliminary evaluation of the specific SIP provisions identified in the Petition. In many instances, the EPA has concluded that the Petitioner's analysis is correct and that the provision in question is inconsistent with CAA requirements for SIPs. For those SIP provisions, the EPA is granting the Petition and is simultaneously making a finding of substantial inadequacy and issuing a SIP call to the affected state to rectify the specific SIP inadequacy. In other instances, however, the EPA disagrees with the Petitioner's analysis of the provision, in some instances because the analysis applied to provisions that have since been corrected in the SIP. For those provisions, the EPA is therefore denying the Petition and taking no further action. In summary, the EPA is granting the Petition in part, and denying the Petition in part, with respect to all of the specific existing SIP provisions for which the Petitioner requested a remedy. The EPA's evaluation of each of the provisions identified in the Petition and the basis for the final action with respect to each provision is explained in detail in section IX of this document.
The EPA received numerous comments, both supportive and adverse, concerning the Agency's decision to propose action on the Petition with respect to the overarching issues raised by the Petitioner. A number of these comments also raised important issues concerning the rights of citizens to petition their government, the process by which the EPA evaluated the issues raised in the Petition and the relative authorities and responsibilities of states and the EPA under the CAA. Many commenters raised the same conceptual issues and arguments. For clarity and ease of discussion, the EPA is responding to these overarching comments, grouped by topic, in this section of this document. The responses to more specific substantive issues raised by commenters on the EPA's interpretation of the CAA in the SSM Policy appear in other sections of this document that focus on particular aspects of this action.
1. Comments that the EPA should not have responded to the petition for rulemaking or that the EPA was wrong to do so.
Some commenters expressed concern that the EPA's proposed action was made in response to a settlement agreement, through a process that, the commenters alleged, did not permit any opportunity for participation by affected parties. Other commenters, believing that the EPA's proposed action was taken to fulfill a consent decree obligation, argued that consent decree deadlines “often do not allow EPA enough time to write quality regulations” or would not allow “opportunity to properly research and investigate the effect of State SSM provisions or the State's ability to meet the NAAQS, or to determine whether the SSM provisions are somehow inconsistent with the CAA.” The commenters alleged that the process “bypasses the traditional rulemaking concepts of transparency and effective public participation” and “sidesteps the proper rulemaking channels and undercuts meaningful opportunities for those affected by the proposed rule to develop and present evidence that would support a competing and fully informed viewpoint on the substantive issues during the rulemaking process.”
Some of these commenters expressed concern that the EPA's action on the Petition was the result of the Agency's obligations under a consent decree or settlement agreement and that this fact in some way invalidates the substantive action. First, the EPA notes that the action was undertaken not in response to a consent decree but rather in
The EPA does not enter into settlement agreements lightly, nor does the EPA enter into settlement agreements without following the full public process required by CAA section 113(g), which the Agency followed in this case.
In acting on the Petition the EPA has followed all steps of a notice-and-comment rulemaking, as governed by applicable statutes, regulations and executive orders, including a robust process for public participation. When the EPA initially proposed to take action on the Petition, in February 2013, it simultaneously solicited public comment on all aspects of its proposed response to the issues in the Petition and in particular on its proposed action with respect to each of the specific existing SIP provisions identified by the Petitioner as inconsistent with the requirements of the CAA. In response to requests, the EPA extended the public comment period for this proposal to May 13, 2013, which is 80 days from the date the proposed rulemaking was published in the
Similarly, when the EPA ascertained that it was necessary to revise its proposed action on the Petition with respect to affirmative defenses in SIP provisions, the Agency issued the SNPR. In that supplemental proposal, in September 2014, the EPA fully explained the issues and took comment on the questions related to whether affirmative defense provisions are consistent with CAA requirements concerning the jurisdiction of courts in enforcement actions, and thus whether such provisions are consistent with fundamental CAA requirements for SIP provisions. The EPA provided a public comment period ending November 6, 2014, which is 50 days from the date the SNPR was published in the
2. Comments that EPA's action on the Petition violates “cooperative federalism.”
These commenters described the relationship between states and the EPA with respect to SIPs in general. The commenters stated that Congress designed the CAA as a regulatory partnership between the EPA and the states,
To support this view, many commenters cited to the “
In CAA section 110(a)(1), Congress imposed the duty upon all states to have a SIP that provides for “the implementation, maintenance, and enforcement” of the NAAQS. In section 110(a)(2), Congress clearly set forth the basic SIP requirements that “[e]ach such plan
In particular, this SIP call action concerns whether SIP provisions satisfy section 110(a)(2)(A), which requires that each SIP “[shall] include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of this chapter.”
As explained in the February 2013 proposal, the automatic and discretionary exemptions for emissions from sources during SSM events at issue in this action fail to meet this most basic SIP requirement and are also inconsistent with the enforcement requirements of the CAA. Similarly, the enforcement discretion provisions at issue in this action that have the effect of barring enforcement by EPA or citizens fail to meet this requirement for enforceable emission limitations by interfering with the enforcement structure of the CAA as established by Congress. The affirmative defense provisions at issue are similarly inconsistent with the requirement that SIPs provide for enforcement of the NAAQS and also contravene the statutory jurisdiction of courts to determine liability and to impose remedies for violations of SIP requirements. Each of these types of deficient SIP provisions is thus inconsistent with legal requirements of the CAA for SIP provisions. Contrary to the claims of many commenters, the EPA has authority and responsibility to assure that a state's SIP provisions in fact comply with fundamental legal requirements of the CAA as part of the obligation to ensure that SIPs protect the NAAQS.
The
The Agency is plainly charged by the Act with the responsibility for setting the national ambient air standards. Just as plainly, however, it is relegated by the Act to a secondary role in the process of determining and enforcing the specific, source-by-source emission limitations which are necessary if the national standards it has set are to be met. Under § 110(a)(2), the Agency is required to approve a state plan which provides for the timely attainment and subsequent maintenance of ambient air standards,
When read in its entirety, without omitting the portions italicized above,
After
The U.S. Supreme Court reversed the
The touchstone of the cooperative-federalism concept outlined in the
This view of what cooperative federalism prohibits is consistent with
Given the
Clearly, in this SIP call the EPA is leaving the states the freedom to correct the inappropriate provisions in any manner they wish as long as they comply with the constraints of section 110(a)(2).
Finally, this view is consistent with
As explained in the February 2013 proposal, in this action the EPA is not requiring states to adopt any particular emission limitation or to impose a specific control measure in a SIP provision; the EPA is merely directing the states to address the fundamental statutory requirements that all SIP provisions must meet.
The EPA emphasizes that this action also allows states “real choice” concerning their SIP provisions, so long as the provisions are consistent with applicable requirements. For example, this SIP call does not establish any specific, source-by-source limitations. To the contrary, as described in section VII.A of this document, emission limitations meeting the requirements of section 110(a)(2)(A) may take a variety of forms. Under section 110(a)(2)(A), states are free to include in their SIPs whatever emission limitations they wish, provided the states comply with applicable legal requirements. Among those requirements are that an emission limitation in a SIP must be an “emission limitation” as defined in section 302(k) and that all controls—emission limitations and otherwise—must be sufficiently “enforceable” to ensure compliance with applicable CAA requirements. The SSM provisions at issue in this SIP call subvert both of these legal requirements.
3. Comments that the EPA should expand the rulemaking to include additional SIP provisions that the commenters consider deficient with respect to SSM issues.
One commenter argued that “[i]t would substantially ease the administrative burden on EPA as well on public commenters” and “ensure that companies in all states are treated equally” if the EPA were to include “all SIPs with faulty SSM provisions in [a] consolidated SIP call.” Another commenter noted that “the interests of regulatory efficiency will be served” by adding additional SIP provisions to the SIP call because “all changes required by the policy underlying this rulemaking” to state SIPs would then be made at once.
With respect to the specific additional SIP provisions identified by the commenters on the February 2013 proposal, the EPA also notes that it cannot take final action on any additional SSM-related SIP provisions without first providing an opportunity for public notice and comment with respect to those additional SIP provisions. The EPA agrees that an important objective of its action on the Petition is to provide complete, comprehensive and up-to-date guidance to all air agencies concerning SIP provisions that apply to emissions during SSM events. The EPA is endeavoring to do this by responding to the Petition fully and by updating its interpretation of the CAA in the SSM Policy to reflect the relevant statutory requirements and recent court decisions. All states should feel free to apply this revised guidance in reviewing their own SIP provisions and revising them as appropriate. The EPA may address other SSM-related provisions that may be inconsistent with EPA's SSM Policy and the CAA in a later separate notice-and-comment action(s). The EPA has authority to address those provisions separately.
The EPA notes that with respect to the issue of affirmative defenses in SIP provisions, the Agency determined that it was necessary to amend its February 2013 proposal to take into consideration a subsequent court decision concerning the legal basis for such provisions. As explained in the SNPR and also in section IV of this document, the DC Circuit in the
The SIP call promulgated by the EPA in this action applies only to the particular SIP provisions identified in this document, and the scope of the SIP call for each state is limited to those provisions. However, if states of their own accord wish to revise SIP provisions, beyond those identified in this SIP call, that they believe are inconsistent with the SSM Policy and the CAA, the EPA will review and act on those SIP revisions in accordance with CAA sections 110(k), 110(l) and 193.
4. Comments that the EPA should create regulatory text in 40 CFR part 51 to forbid SSM exemptions in SIP provisions if the CAA precludes them.
First, the CAA does not impose a general obligation upon the Agency to promulgate regulations applicable to all SIP requirements. Although the EPA has elected to promulgate regulations to address a broad variety of issues relevant to SIPs,
Second, the EPA has historically elected to address the key issues relevant to this SIP call action in guidance. Through a series of guidance documents, issued in 1982, 1983, 1999 and 2001, the EPA has previously explained its interpretations of the CAA with respect to SIP provisions that contain automatic SSM exemptions, discretionary SSM exemptions, the exercise of enforcement discretion for SSM events and affirmative defenses for SSM events. Starting in the 1982 SSM Guidance, the EPA explicitly acknowledged that it had previously approved some SIP provisions related to emissions during SSM events that it should not have, because the provisions were inconsistent with requirements for SIPs. In addition, the EPA has in rulemakings applied its interpretation of the CAA with respect to issues such as exemptions for emissions during SSM events, and these actions have been approved by courts.
Finally, the EPA's authority under section 110(k)(5) is not limited, expressly or otherwise, solely to inadequacies related to regulatory requirements. To the contrary, section 110(k)(5) refers broadly to attainment and maintenance of the NAAQS, adequate mitigation of interstate transport and compliance with “any requirement of” the CAA. In addition, section 110(k)(5) specifically contemplates situations such as this one, “whenever” the EPA finds previously approved SIP provisions to be deficient. Nothing in the CAA requires the EPA to conduct a separate rulemaking clarifying its interpretation of the CAA prior to issuance of this SIP call. For the types of deficiencies at issue in this action, the EPA believes that the statutory requirements of the CAA itself and recent court decisions concerning those statutory provisions provide sufficient basis for this SIP call.
For the foregoing reasons, the EPA disagrees that before requiring states to revise SIPs that contain provisions with SSM exemptions, the EPA first must promulgate regulations explicitly stating that such exemptions are impermissible under the CAA. In addition, the EPA notes that although it is not promulgating generally applicable regulations in this action, it is nonetheless revising its guidance in the SSM Policy through rulemaking and has thereby provided states and other parties the opportunity to comment on the Agency's interpretation of the CAA with respect to this issue.
5. Comments that the EPA did not provide a sufficiently long comment period on the proposal in general or as contemplated in Executive Order 13563.
Similarly, when the EPA ascertained that it was necessary to revise its proposed action on the Petition with respect to affirmative defenses in SIP provisions, the Agency issued the SNPR. In that supplemental proposal, in September 2014, the EPA fully explained the issues and took comment on the questions related to whether affirmative defense provisions are consistent with CAA requirements concerning the jurisdiction of courts in enforcement actions, and thus whether such provisions are consistent with fundamental CAA requirements for SIP provisions. The EPA provided a public comment period ending November 6, 2014, which is 50 days from the date the SNPR was published in the
Executive Order 13563 provides that each agency should “afford the public a meaningful opportunity to comment through the Internet on any proposed regulation, with a comment period that should generally be
When considering whether an agency has provided for adequate public input, reviewing courts are generally most concerned with the overall adequacy of the opportunity to comment. This, in turn, typically depends on steps the agency took to notify the public of information that is important to this action. Comment period length is only one factor that courts consider in this analysis, and courts have regularly found that comment periods of significantly shorter length than the 80 days provided here on the February 2013 proposal were reasonable in various circumstances.
The EPA also disagrees with respect to the claims of commenters that the comment period was insufficient because the EPA should provide time for commenters to evaluate and analyze fully the possible ultimate impacts of the SIP call upon particular sources, to determine what type of SIP revision by a state is appropriate in response to a SIP call, or to ascertain what specific new emission limitation or control measure requirement states should impose upon sources in such a future SIP revision. The EPA's action on the Petition concerning specific existing SIP provisions is focused upon whether those existing provisions meet fundamental legal requirements of the CAA for SIP provisions. The EPA is not required to provide a comment period for this action that allows states actually to determine which of the potential forms of SIP revision they may wish to undertake, or to complete those SIP revisions, as part of this rulemaking. The subsequent state and EPA rulemaking processes on the SIP revisions in response to this SIP call action will provide time for further evaluation of the issues raised by commenters.
As explained in the February 2013 proposal, the EPA does not interpret section 110(k)(5) to require it to “prove causation” concerning what precise impacts illegal SIP provisions are having on CAA requirements, such as attainment and maintenance of the NAAQS and enforcement of SIP requirements.
The questions posed by the commenters about what specific emission limitations should apply during startup and shutdown events, what control measures will meet applicable CAA legal requirements, what control measures will be effective and cost-effective to meet applicable legal standards and other similar questions are exactly the sorts of issues that states will evaluate in the process of revising affected SIP provisions. Moreover, these are the same sorts of questions that the EPA will be evaluating when it reviews state SIP submissions made in response to the SIP call. The EPA is not required, by Executive Order 13563 or otherwise, to provide a comment period that would allow for all future actions in response to the SIP call to occur before issuing the SIP call. The EPA anticipates that the commenters will be able to participate actively in the actions that will happen in due course in response to this SIP call.
Finally, the EPA disagrees that it did not adequately seek the views of potentially affected entities prior to issuance of the February 2013 proposal. The EPA alerted the public to the existence of the Petition by soliciting comment on the settlement agreement that obligated the Agency to act upon it, in accordance with CAA section 113(g). Subsequently, EPA personnel communicated about the Petition and the issues it raised in various standing
6. Comments that this action is not “nationally applicable” for purposes of judicial review.
7. Comments that the EPA was obligated to address and justify the potential costs of the action and failed to do so correctly.
Commenters also alleged that the EPA has failed to comply with Executive Order 12291, Executive Order 12866, Executive Order 13211, the Regulatory Flexibility Act and the Unfunded Mandates Reform Act.
One commenter supported the EPA's approach with respect to cost.
The commenters also incorrectly claim that the EPA failed to comply with Executive Order 12291. That Executive Order was explicitly revoked by Executive Order 12866, which was signed by President Clinton on September 30, 1993.
The commenters are likewise incorrect that the EPA did not comply with Executive Order 12866. This action was not deemed “significant” on a basis of the cost it will impose as the commenters claimed. The EPA has already concluded that this action will not result in a rule that may have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, of state, local or tribal governments or communities. The EPA instead determined that, as noted in both the February 2013 proposal (section X.A) and the SNPR (section VIII.A), this action is a “significant regulatory action” as that term is defined in Executive Order 12866 because it raises novel legal or policy issues. Accordingly, it was on that basis that the EPA submitted the February 2013 proposal, the SNPR and the final action to the Office of Management and Budget (OMB) for review. Changes made
As stated in the February 2013 proposal, the EPA does not believe this is a “significant energy action” as defined in Executive Order 13211, because it is not likely to have a significant adverse effect on the supply, distribution or use of energy. As described earlier, this action merely requires that states revise their SIPs to comply with existing requirements of the CAA. States have the choice of how to revise the deficient SIP provisions that are the subject of this action; there are a variety of different ways that states may treat the issue of excess emissions during SSM events consistent with CAA requirements for SIPs. This action merely prescribes the EPA's action for states regarding their obligations for SIPs under the CAA, and therefore it is not a “significant energy action” under Executive Order 13211.
With respect to the Regulatory Flexibility Act (RFA), as the EPA explained in the February 2013 proposal, courts have interpreted the RFA to require a regulatory flexibility analysis only when small entities will be subject to the requirements of the rule.
As the EPA explained in the February 2013 proposal, this action is not subject to the requirements of the Unfunded Mandates Reform Act (UMRA) because it does not contain a federal mandate that may result in expenditures of $100 million or more for state, local and tribal governments, in the aggregate, or the private sector in any one year. With respect to the impacts on sources, the EPA's action in this rulemaking is not directly imposing costs on any sources. The EPA's action is merely directing states to revise their SIPs in order to bring them into compliance with the legal requirements of the CAA for SIP provisions. In response to the SIP call, the states will determine how best to revise their deficient SIP provisions in order to meet CAA requirements. It is thus the states that will make the decisions concerning how best to revise their SIP provisions and will determine what impacts will ultimately apply to sources as a result of those revisions.
8. Comments that the EPA's action violates procedural requirements of the CAA or the APA, because the EPA is acting on the Petition, updating its SSM Policy and applying its interpretation of the CAA to specific SIP provisions in one action.
The Petitioner's third request was that when the EPA evaluates SIP revisions submitted by a state, the EPA should require “all terms, conditions, limitations and interpretations of the various SSM provisions to be reflected in the unambiguous language of the SIPs themselves.”
In the February 2013 proposal, the EPA proposed to deny the Petition with respect to this issue. The EPA explained the basis for this proposed disapproval in detail, including a discussion of the statutory provisions that the Agency interprets to permit this approach, an explanation of why this approach makes sense from both a practical and an efficiency perspective under some circumstances, and a careful explanation of the process by which EPA intends to rely on interpretive letters in order to assure that the concerns of the Petitioner with respect to potential future disputes about the meaning of SIP provisions should be alleviated.
The EPA is taking final action to deny the Petition on this request. The EPA believes that it has statutory authority to rely on interpretive letters to resolve ambiguity in a SIP submission under appropriate circumstances and so long as the state and the EPA follow an appropriate process to assure that the rulemaking record properly reflects this reliance. To avoid any misunderstanding about the reasons for this denial or any misunderstandings about the circumstances under which, or the proper process by which, the EPA intends to rely interpretive letters, the Agency is repeating its views in this final action in detail.
As stated in the February 2013 proposal, the EPA agrees with the core principle advocated by the Petitioner,
However, the EPA believes that the use of interpretive letters to clarify ambiguity or perceived ambiguity in the provisions in a SIP submission is a permissible, and sometimes necessary, approach under the CAA. Used correctly, and with adequate documentation in the
In addition, reliance on interpretive letters to address concerns about perceived ambiguity can often be the most efficient and timely way to resolve concerns about the correct meaning of regulatory provisions. Both air agencies and the EPA are required to follow time- and resource-intensive administrative processes in order to develop and evaluate SIP submissions. It is reasonable for the EPA to exercise its discretion to use interpretive letters to clarify concerns about the meaning of regulatory provisions, rather than to require air agencies to reinitiate a complete administrative process merely to resolve perceived ambiguity in a provision in a SIP submission.
There are multiple reasons why the EPA does not agree with the Petitioner with respect to the alleged inadequacy of using interpretive letters to clarify specific ambiguities in a SIP submission and the SIP provisions that may ultimately result from approval of such a submission, provided this process is done correctly. First, under section 107(a), the CAA gives air agencies both the authority and the primary responsibility to develop SIPs that meet applicable statutory and regulatory requirements. However, the CAA generally does not specify exactly how air agencies are to meet the requirements substantively, nor does the CAA specify that air agencies must use specific regulatory terminology, phraseology, or format, in provisions submitted in a SIP submission. Air agencies each have their own requirements and practices with respect to rulemaking, making flexibility respecting terminology on the EPA's part appropriate, so long as CAA requirements are met.
As a prime example relevant to the SSM issue, CAA section 110(a)(2)(A) requires that a state's SIP shall include “enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights) as well as schedules and
Even this most basic requirement of SIPs, the inclusion of enforceable “emission limitations,” allows air agencies discretion in how to structure or word the emission limitations, so long as the provisions meet fundamental legal requirements of the CAA.
Second, under CAA section 110(k), the EPA has both the authority and the responsibility to assess whether a SIP submission meets applicable CAA and regulatory requirements. Given that air agencies have authority and discretion to structure or word SIP provisions as they think most appropriate, so long as the SIP provisions meet CAA and regulatory requirements, the EPA's role is to evaluate whether those provisions in fact meet those legal requirements.
Third, careful review of regulatory provisions in a SIP submission can reveal areas of potential ambiguity. It is essential, however, that regulations are sufficiently clear that regulated entities, regulators and the public can all understand the SIP requirements. Where the EPA perceives ambiguity in draft SIP submissions, it endeavors to resolve those ambiguities through interactions with the relevant air agency even in advance of the SIP submission. On occasion, however, there may still remain areas of regulatory ambiguity in a SIP submission's provisions that the EPA identifies, either independently or as a result of public comments on a proposed action, for which resolution is both appropriate and necessary as part of the rulemaking action.
In such circumstances, the ambiguity may be so significant as to require the air agency to revise the regulatory text in its SIP submission in order to resolve the concern. At other times, however, the EPA may determine that with adequate explanation from the state, the provision is sufficiently clear and complies with applicable CAA and associated regulatory requirements. In some instances, the air agency may supply the explanation necessary to resolve any potential ambiguity in a SIP submission by sending an official letter from the appropriate authority. When the EPA bases its approval of a SIP submission in reliance on the air agency's official interpretation of the provision, that reading is explicitly incorporated into the EPA's action and is memorialized as the proper intended reading of the provision. In other words, the state and the EPA will have a shared understanding of the proper interpretation of the provision, and that interpretation will provide the basis for the approval of that provision into the SIP. The interpretation will also be clearly identified and presented for the public and regulated entities in the
For example, in the Knoxville redesignation action that the Petitioner noted in the Petition, the EPA took careful steps to ensure that the perceived ambiguity raised by commenters was substantively resolved and fully reflected in the rulemaking record,
Finally, the EPA notes that while it is possible to reflect interpretive letters in the Code of Federal Regulations (CFR) or incorporate them into the regulatory text of the CFR in appropriate circumstances, there is no requirement to do so in all actions, and there are other ways for the public to have a clear understanding of the content of the SIP. First, for each SIP, the CFR contains a list or table of actions that reflects the various components of the approved SIP, including information concerning the submission of, and the EPA's action approving, each component. With this information, interested parties can readily locate the actual
The EPA notes that the existence of, or content of, an interpretive letter that is part of the basis for the EPA's approval of a SIP submission is in reality analogous to many other things related to that approval. Not everything that may be part of the basis for the SIP approval in the docket—including the proposal or final preambles, the technical support documents, responses to comments, technical analyses, modeling results, or docket memoranda—will be restated
With regard to the Petitioner's concern that either actual or alleged ambiguity in a SIP provision could impede an effective enforcement action, the EPA believes that its current process for evaluating SIP submissions and resolving potential ambiguities, including the reliance on interpretive letters in appropriate circumstances with correct documentation in the rulemaking action, minimizes the possibility for any such ambiguity in the first instance. To the extent that there remains any perceived ambiguity, the EPA concludes that regulated entities, regulators, the public, and ultimately the courts, have recourse to use the administrative record to shed light on and resolve any such ambiguity as explained earlier in this document.
The EPA emphasizes that it is already the Agency's practice to assure that any interpretive letters are correctly and adequately reflected in the
The EPA received relatively few comments, both supportive and adverse, concerning the Agency's overarching decision to deny the Petition with respect to this issue. For clarity and ease of discussion, the EPA is responding to these comments, grouped by whether they were supportive or adverse, in this section of this document.
1. Comments that supported the EPA's interpretation of the CAA to allow reliance on interpretive letters to clarify ambiguities in state SIP submissions.
2. Comments that opposed the EPA's interpretation of the CAA to allow reliance on interpretive letters to clarify ambiguities in state SIP submissions.
The same commenter also questioned whether “courts can or will give any
In addition, as explained earlier in this document, once the EPA approves a SIP revision, it becomes part of the state's SIP identified in the CFR and thus becomes a federally enforceable regulation. In cases where the substance of the interpretive letter is provided in the CFR itself, either by copying the interpretation
Finally, a commenter stated its view that reliance on interpretive letters may be appropriate, but only when affected parties have the right to comment on the letter and the EPA's reliance on it during the rulemaking in which the letter is relied upon. The EPA has explained earlier in this document the proper circumstances under which such reliance may be appropriate and the proper process to be followed when reliance upon such letters is appropriate, but the EPA also notes that the process does not require that the letters always be made available for public comment. As explained earlier in this document, the EPA makes every attempt to identify ambiguities in state-submitted SIPs and requests states to submit interpretive letters to explain any ambiguities, before putting the proposed action on the SIP submission out for public notice and comment. On occasion, however, ambiguous provisions may inadvertently remain and are not identified until the notice-and-comment period has begun. As explained earlier in this document, sometimes these ambiguities are so significant that the EPA requires the state to resubmit its SIP submission altogether, which would entail another notice-and-comment period. When the EPA does not deem the ambiguity to be so significant as to warrant a revision to the state's regulatory text in the SIP submission, the Agency believes that resolution of the ambiguity through the submission of an interpretive letter, which then is incorporated into the EPA's action, reflected in the administrative record and memorialized as the proper intended reading of the provision, is appropriate.
This approach comports with well-established principles applicable to notice-and-comment rulemaking generally. One purpose of giving interested parties the opportunity to comment is to provide these parties the opportunity to bring areas of potential ambiguity in the proposal to an agency's attention so that the concerns may be addressed before the agency takes final action. If the APA did not allow the agency to consider comments and provide clarification when issuing its final action as necessary, this purpose would be defeated. Courts have held that so long as a final rule is a “logical outgrowth” of the proposed rule, adequate notice has been provided.
In the February 2013 proposal, the EPA reiterated its longstanding interpretation of the CAA that SIP provisions cannot include exemptions from emission limitations for excess emissions during SSM events. This has been the EPA's explicitly stated interpretation of the CAA with respect to SIP provisions since the 1982 SSM Guidance, and the Agency has reiterated this important point in the 1983 SSM Guidance, the 1999 SSM Guidance and the 2001 SSM Guidance. In accordance with CAA section 302(k), SIPs must contain emission limitations that “limit the quantity, rate, or concentration of emissions of air pollutants on a continuous basis.” Court decisions confirm that this requirement for continuous compliance prohibits exemptions for excess emissions during SSM events.
For the reasons explained in the February 2013 proposal, in the background memorandum supporting that proposal and in the EPA's responses to comments in this document, the EPA interprets the CAA to prohibit exemptions for excess emissions during SSM events in SIP provisions. This interpretation has long been reflected in the SSM Policy. The EPA acknowledges, however, that both states and the Agency have failed to adhere to the CAA consistently with respect to this issue in some instances in the past, and thus the need for this SIP call action to correct the existing deficiencies in SIPs. In order to be clear about this important point on a going-forward basis, the EPA is reiterating that emission limitations in SIP provisions cannot contain exemptions for emissions during SSM events.
Many commenters wrongly asserted that the EPA declared in the February 2013 proposal that all emission limitations in SIPs must be established as numerical limitations, or must be set at the same numerical level at all times. The EPA did not take this position. In the case of section 110(a)(2)(A), the statute does not include an explicit requirement that all SIP emission limitations must be expressed numerically. In practice, it may be that numerical emission limitations are the most appropriate from a regulatory perspective (
The EPA notes that some provisions of the CAA that govern standard-setting limit the EPA's own ability to set non-numerical standards.
Regardless of the reason for the commenters' apparent misunderstanding on this point, many of the commenters used this incorrect premise as a basis to argue that “continuous” SIP emission limitations may contain total exemptions for all emissions during SSM events. Therefore, in this final action the EPA wishes to be very clear on this important point, which is that SIP emission limitations: (i) Do not need to be numerical in format; (ii) do not have to apply the same limitation (
Another apparent common misconception of commenters was that SIP provisions may contain exemptions for emissions during SSM events, so long as there is some other generic regulatory requirement of some kind somewhere else in the SIP that coincidentally applies during those exempt periods. The other generic regulatory requirements most frequently referred to by commenters are “general duty” type requirements, such as a general duty to minimize emissions at all times, a general duty to use good engineering judgment at all times, or a
In accordance with the definition of section 302(k), SIP emission limitations must be continuous and apply at all times. SIP provisions may be composed of a combination of numerical limitations, specific technological control requirements and/or work practice requirements, but those must be components of a continuously applicable SIP emission limitation. In addition, the SIP emission limitation must meet applicable stringency requirements during all modes of source operation (
The EPA received a substantial number of comments, both supportive and adverse, concerning the issue of exemptions in SIP provisions for excess emissions during SSM events. Many of these comments raised the same core issues, albeit using slight variations on the arguments or variations on the combination and sequence of arguments. For clarity and ease of discussion, the EPA is responding to these comments, grouped by issue, in this section of this document.
a. Comments that the EPA's proposed action on the Petition is incorrect because some of the Agency's own regulations contain exemptions for emissions during SSM events.
Consequently, since the
The fact that the EPA has not completed the process of updating its own regulations to bring them into compliance with respect to CAA requirements concerning proper treatment of emissions during SSM events does not render this SIP call action arbitrary or capricious. The existence of a deficiency in an existing EPA regulation that has not yet been corrected does not alter the legal requirements imposed by the CAA upon states with respect to SIP provisions. Thus, for example, the EPA does not agree with commenters that the continued existence of SSM exemptions
The EPA acknowledges that correction of longstanding regulatory deficiencies by proper rulemaking procedures requires time and resources, not only for the EPA but also for states and affected sources. Hence, the EPA has elected to proceed via its authority under section 110(k)(5) and to provide states with the full 18 months allowed by statute for compliance with this action. This SIP call is intended to help assure that state SIP provisions are brought into line with CAA requirements for emission limitations, just as the EPA is undertaking a process to update its own regulations.
The EPA also specifically disagrees with the commenters' implication that 40 CFR 60.11(d) completely excuses noncompliance during periods of startup and shutdown. Rather, that provision imposes a separate affirmative obligation to maintain and operate the affected facility, including associated air pollution control equipment, in a manner consistent with good air pollution control practices at all times. The existence of this separate duty to minimize emissions, however, does not justify or excuse the existence of an exemption for emissions during SSM events from the emission limitations of an EPA NSPS. It is a separate obligation that sources must also meet at all times.
The EPA also disagrees with the commenters who argued that the Agency has recently created new exemptions for PM emissions during startup and shutdown events in the NSPS for Electric Utility Steam Generating Units in 40 CFR part 60, subpart Da. The EPA has not created new exemptions for emissions during startup and shutdown. To the contrary, the EPA has taken steps to assure that these regulations are consistent with the statutory definition of emission limitation and with the logic of the
For such sources, the emission limitation for PM in 40 CFR 60.42Da(a) imposes a numerical level of 0.03 lb/MMBtu that applies at all times except during startup and shutdown and specific work practices that apply during startup and shutdown.
The EPA also notes that the provisions of 40 CFR 60.42Da(b)(1) do not provide an “exemption” from the opacity standard. That section merely provides that the affected sources do not need to meet the opacity standard of the NSPS (at any time), if they have installed a PM continuous emission monitoring system (PM CEMS) to measure PM emissions continuously instead of relying on periodic stack tests to assure compliance with the PM emission limitation. One reason for the imposition of opacity standards on sources is to provide an effective means of monitoring for purposes of assuring source compliance with PM emission limitations and proper operation of PM emission controls on a continuous basis. If a source is subject to a sufficiently stringent PM limitation and has opted to install, calibrate, maintain and operate a PM CEMS to measure PM emissions, then it is reasonable for the EPA to conclude that an opacity emission limitation is not needed for that particular source for those purposes.
Finally, the EPA emphasizes that what is at issue in this action is the question of whether emission limitations in SIP provisions can include exemptions for emissions during SSM events. The EPA is reiterating its longstanding interpretation of the CAA with respect to this question, in the process of responding to the Petition, updating its SSM Policy and applying its current interpretations of the CAA to the specific SIP provisions at issue in this SIP call action. To the extent that commenters intend to point out that the EPA needs to address exemptions for emissions during SSM events in its own existing regulations, the Agency is already aware of that need due to recent judicial decisions and is proceeding to correct those regulations in due course.
b. Comments that the EPA's proposed action on the Petition is incorrect because the Agency has previously allowed the inclusion of exemptions for emissions during SSM events through approval of NSPS or NESHAP requirements into SIPs.
The commenters' argument has brought to the EPA's attention that past guidance on this issue is in fact inconsistent with more recent legal developments. At the time of the 1999 SSM Guidance, the EPA was still of the belief that its own NSPS and NESHAP regulations could legitimately include exemptions for emissions during SSM events. In that light, recommending to states that they could rely on an EPA NSPS or NESHAP as an emission limitation in a SIP provision so long as they did not alter the NSPS or NESHAP in any fashion was logical. At that time, the reasoning was that NSPS and NESHAP standards were technology-based standards that, although neither designed nor intended to meet the separate legal requirements for SIP provisions, could be used to provide emission reductions creditable in SIPs. Since the 2008 D.C. Circuit decision in
Accordingly, the EPA concludes that, prospectively, a state should not submit an NSPS or NESHAP for inclusion into its SIP as an emission limitation (whether through incorporation by reference or otherwise), unless that NSPS or NESHAP does not include an exemption for SSM events or unless the state otherwise takes action to exclude the SSM exemption from the standard as part of the SIP submission. Because SIP provisions must apply continuously, including during SSM events, the EPA can no longer approve SIP submissions that include any emission limitations with such exemptions, even if those emission limitations are NSPS or NESHAP regulations that the EPA has not yet revised to make consistent with CAA requirements. Alternatively, states may elect to adopt an existing NSPS or NESHAP as a SIP provision, so long as the state provision excludes the SSM exemption.
c. Comments that the EPA is misinterpreting the
The commenters further contended that in the SIP context, the underlying air quality pollution control requirement for SIPs is to attain NAAQS and no specific level of stringency is required, unlike section 112, and Congress gave states broad discretion in the design of their SIPs. Commenters asserted that the
Commenters also asserted that a general-duty requirement is an appropriate alternative standard for SSM events in the SIP context because CAA sections 302(k) and 110(a)(2)(A) give states broad authority to develop the mix of controls necessary and appropriate to implement the NAAQS. Other commenters contended that the
Commenters also suggested that the decision in
In that litigation, the EPA itself had argued that the exemptions from the otherwise applicable MACT standards during SSM events were consistent with CAA requirements because the MACT standards and the separate “general duty” requirements “together form an uninterrupted,
The EPA has concluded that the reasoning of the
The EPA also disagrees with the argument that the
Finally, the EPA does not agree with the commenters' view of the significance of the reference to the
d. Comments that the EPA's proposed action contradicts a 2009 guidance document concerning the effect of the
Second, the Kushner letter did not explicitly or implicitly address the issue of whether the CAA allows exemptions for emissions during SSM events in SIP provisions. That fact is unsurprising, in that at the time of the Kushner letter the EPA already had guidance in the SSM Policy (issued and reiterated in 1982, 1983, 1999 and 2001) that clearly stated the Agency's view that such exemptions are not permissible in SIP provisions, consistent with CAA requirements. It would also have been unnecessary for the Kushner letter discussing the impact of the
Finally, the EPA disagrees that the Kushner letter could override the applicability of the logic of the
e. Comments that the EPA's proposed action on the Petition is incorrect because the Agency's recent MATS rule and Area Source Boiler rule regulations contain exemptions for emissions during SSM events.
The EPA also disagrees with the assertion that it is holding state SIP provisions to a different standard than its own NSPS and NESHAP regulations. The EPA notes that SIP emission limitations and NSPS and NESHAP emission limitations are, of course, designed for different purposes (
The MATS rule and the Area Source Boiler rule in fact illustrate how the EPA is creating emission limitations that apply continuously, with numerical limitations or combinations of numerical limitations and other specific technological control requirements or work practice requirements applicable during startup and shutdown, depending upon what is appropriate for the source category and the pollutants at issue. For example, in the MATS rule the EPA has promulgated regulations that impose emission limitations on various subcategories of sources to address HAP emissions. To do so, the EPA developed emission limitations to address the relevant pollutants using a combination of numerical emission limitations and work practices. The work practice requirements specifically apply to sources during startup and shutdown and are thus components of the continuously applicable emission limitations.
Similarly, in the Area Source Boiler rule
f. Comments that section 110(a)(2)(A) authorizes states to have SIP provisions with exemptions for emissions during SSM events because they are not “emission limitations” and are not
As an initial matter, the SIP provisions that contain automatic or discretionary exemptions during SSM events at issue in this SIP call excuse compliance with requirements that presumably were submitted to the EPA as emission limitations, were intended to limit emissions on a continuous basis or were otherwise included to ensure that the SIP contained continuous emission limitations. All of the SIP provisions at issue in this action provide automatic or discretionary exemptions from emission limitations that are formulated as restrictions on the “quantity, rate, or concentration” of emissions from affected sources, just as section 302(k) describes the purpose of an emission limitation. Longstanding EPA regulations applicable to SIPs require that states have a control strategy to provide for attainment and maintenance of the NAAQS.
However, even if the EPA were to accept the commenters' premise
First, section 110(a)(2)(A) explicitly requires that SIPs must contain emission limitations as necessary to meet various CAA requirements. Section 302(k) requires that such emission limitations must limit “the quantity, rate, or concentrations of emissions of air pollutants on a
Second, the EPA believes that the commenters' reading of the statute to permit SIP provisions to contain an SSM exemption by virtue of what it is labeled is incorrect if taken to its logical extreme. The commenters' interpretation of section 110(a)(2)(A) would theoretically allow a SIP to contain no emission limitations whatsoever, merely a collection of requirements labeled “control measures” so that sources can be excused from having to limit emissions on a continuous basis. This result is contrary to judicially approved EPA
Finally, the EPA's interpretation of the requirements of section 110(a)(2) does not render the “other control” language in the statute superfluous as claimed by the commenters. In addition to emission limitations, the EPA interprets that section to allow other “control measures, means or techniques” as contemplated by the statute. For example, the EPA's regulations implementing SIP requirements explicitly enumerate nine separate types of measures that states may include in SIPs.
Section 110(a)(2) requires SIPs to include enforceable emission limitations and other controls “as necessary or appropriate to meet the applicable requirements” of the CAA. Regardless of whether commenters' semantic labeling arguments are valid in the abstract, they are not correct with respect to the fundamental CAA requirements for SIPs relating to continuous emission limitations. The automatic or discretionary exemptions for emissions during SSM events in the SIP provisions at issue in this SIP call authorize exemptions from statutorily required emission limitations. To the extent that such a SIP provision would functionally or legally exempt sources from regulation during SSM events, the SIP provision fails to be a continuously applicable enforceable emission limitation as required by the CAA. The fact that a SIP may also contain “other control[s]” as advocated by the commenters does not negate the statutory requirement that emission limitations must apply continuously.
g. Comments that the definition of “emission limitation” in section 302(k) does not require that all forms of emission limitations must apply continuously.
The EPA also disagrees with the commenters who contended that the third clause of section 302(k) authorizes exemptions for emissions during SSM events in emission limitations. The commenters argued that requirements “relating to the operation or maintenance of sources” do not have to be continuous. The EPA believes that this reading of the statute is simply in error, because section 302(k) on its face provides that these requirements must “assure continuous emission reduction.”
h. Comments that exemptions or affirmative defenses are not only not prohibited, but are actually required by the CAA because they are necessary to make an emission limitation “reasonable” or “achievable” for sources that cannot comply during SSM events.
First, many of the commenters erroneously presupposed that an emission limitation must continuously control emissions at the
Second, these commenters pointed to no provision of the CAA requiring or allowing exemptions or affirmative defenses for SSM events. Instead, they contend that D.C. Circuit opinions in
In addition to these more recent legal developments, however, the two earlier D.C. Circuit cases highlighted by commenters simply did not hold what commenters claim that they held. With respect to the
Commenters also cited
As a legal matter, the court in
Furthermore, the EPA notes that the most salient legal holding of
i. Comments that the EPA is requiring that all SIP emission limitations must be “numerical” at all times and set at the same numerical level at all times.
Although some CAA programs may require or impose a presumption that emission limitations be expressed numerically, the text of section 110(a)(2)(A) and section 302(k) does not expressly state a preference for emission limitations that are in all cases numerical in form.
Finally, the EPA does not believe that section 110(a)(2)(A) or section 302(k) mandates that an emission limitation be composed of a single, uniformly applicable numerical emission limitation. As the EPA stated in the February 2013 proposal, “[i]f sources in fact cannot meet the otherwise applicable emission limitations during planned events such as startup and shutdown, then an air agency can develop specific alternative
j. Comments that an emission limitation can be “continuous” even if it has different numerical limitations applicable during some modes of source operation or has a combination of numerical emission limitations and specific control technologies or work practices applicable during other modes of operation.
[W]hile Section 302 requires “emission limits” to be “continuous,” it does not specify . . . that the same “emission limit” must apply at all times. That is, if a state chooses to require sources to comply with a 40% opacity limit during steady-state operations, the Act does not then require the state to apply that 40% limit at all times, including startup, shutdown and malfunction events.
Commenters pointed to a number of sources as justification for this position, including the text of section 302(k), relevant case law, legislative history of the 1977 CAA Amendments, prior EPA interpretations, and practical concerns.
The EPA also agrees that the text of section 302(k) does not require states to impose emission limitations that include a static, inflexible standard. Rather, the term “emission limitation” is merely defined as a “requirement established by the State or the Administrator which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis. . . .” The continuous limits imposed by emission limitations are a fundamental distinction between emission limitations and the other control measures, means or techniques that may also limit emissions.
This interpretation is consistent with prior EPA interpretations of section 302(k), as well as relevant case law. In
Legislative history confirms that Congress was primarily concerned that there be constant or continuous means of reducing emissions—not that the nature of those controls could not be different during different modes of operation.
Although this legislative history demonstrates congressional intent that any “emission limitation” would require limits on emissions at all times, this history does not necessarily indicate that the emission limitation must consist of a single static numerical limitation. Accordingly, this legislative history is consistent with the EPA's view that section 302(k) requires continuous limits on emissions and that variable (albeit still continuous) limits on emissions can qualify as an emission limitation for purposes of section 302(k).
Finally, although the EPA agrees with these commenters' conclusion, the EPA does not agree with these commenters' view that practical concerns
k. Comments that an emission limitation can be “continuous” even if it includes periods of exemptions from the emission limitation.
Second, the EPA disagrees with commenters' interpretation of the D.C. Circuit's opinion in
Finally, the EPA rejects commenters' contention that section 302(k)'s legislative history indicates that use of the word “continuous” in the definition of “emission limitation” was merely intended to prevent the use of intermittent controls or, even more narrowly, only dispersion techniques. While legislative history of the 1977 Amendments discusses at length the concerns associated with these types of controls, section 302(k) was not intended to merely prevent the narrow problem of intermittent controls. To the contrary, the House Report states that under section 302(k)'s definition of emission limitation, “intermittent or supplemental controls
In explaining congressional intent behind adopting a statutory definition of “emission limitation,” the House Report articulated a rationale broader than would apply if Congress had merely intended to prohibit the tall stacks and dispersion techniques that commenters claim were targeted: “Each source's prescribed emission limitation is the fundamental tool for assuring that ambient standards are attained and maintained. Without an enforceable emission limitation which will be
In adopting section 302(k)'s definition of “emission limitation,” Congress did not merely intend to prohibit the use of intermittent controls as final compliance strategies—much less intermittent controls as narrowly defined by commenters to mean only dispersion techniques and certain “tall stacks.” Rather, Congress intended to eliminate the fundamental problems
l. Comments that the “as may be necessary or appropriate” language in section 110(a)(2)(A)
Some commenters further argued that regardless of what the terms “emission limitations” or “other control measures, means, or techniques” mean, section 110(a)(2)(A) only requires states to include such emission controls in SIPs “as may be necessary or appropriate” to meet the NAAQS, or some requirement germane to attainment of the NAAQS, such as various technology-based standards or general principles of enforceability. Commenters also disagreed with the EPA's purported interpretation that the statutory phrase “as may be necessary” only qualifies what “other control[s]” are required, rather than also qualifying what emission limitations are required. According to these commenters, that interpretation is a vestige of the 1970 CAA and was foreclosed by textual changes in the 1977 CAA Amendments or, alternatively, the 1990 CAA Amendments.
Regardless of whether all SIPs must always contain emission limitations, the text of the CAA is clear that the EPA is at a minimum tasked with determining whether SIPs include all emission limitations that are “necessary” (
In every state subject to this SIP call, the EPA has previously concluded in approving the existing SIP provisions that the emission limitations are necessary to comply with legal requirements of the CAA. The states in question would not have developed and submitted them, and the EPA would not have approved them, unless the state and the EPA considered those emission limitations fulfilled a CAA requirement in the first instance. However, the automatic and discretionary exemptions for emissions during SSM events in the SIP provisions at issue in this action render those necessary emission limitations noncontinuous, and thus not meeting the statutory definition of “emission limitations” as defined in section 302(k). Accordingly, regardless of whether all SIPs must always include emission limitations, these specific SIP provisions fail to meet a fundamental requirement of the CAA because they do not impose the continuous emission limitations required by the Act.
The EPA also disagrees with the argument raised by commenters that its denial of the Petition with respect to a South Carolina SIP provision supports the validity of SSM exemptions in SIP emission limitations.
Finally, the EPA does not agree with commenters' allegations that that the EPA's interpretation of section 110(a)(2)(A) eliminates the states' discretion to take local concerns into account when developing their SIP provisions. Rather, for reasons discussed in more detail in the EPA's response in section V.D.2 of this document regarding cooperative federalism, the EPA's interpretation is
m. Comments that a “general duty” provision—or comparable generic provisions that require sources to “exercise good engineering judgment,” to “minimize emissions” or to “not cause a violation of the NAAQS”—inoculate or make up for exemptions in specific emission limitations that apply to the source.
Commenters contended that these general-duty provisions are requirements that—either alone or in combination with other requirements—have the effect of limiting emissions on a continuous basis. In other words, the commenter asserted that these general-duty provisions impose limits on emissions during SSM events, when the otherwise applicable controls no longer apply. According to these commenters, SSM exemptions that excuse noncompliance with typical controls do not interrupt the continuous application of an “emission limitation,” because these general-duty provisions elsewhere in the SIP or in a separate permit are part of the emission limitation and apply even during SSM events.
Some commenters further argued that some SSM exemptions themselves demonstrate that sources remain subject to general-duty provisions during SSM events. These SSM exemptions require sources seeking to qualify for the exemption to demonstrate that,
Finally, as evidence that these general-duty clauses must be permissible under the CAA, some commenters pointed to similar federal requirements established by the EPA under the NSPS and NESHAP programs.
Furthermore, the fact that a SIP provision includes prerequisites to qualifying for an SSM exemption does not mean those prerequisites are themselves an “alternative emission limitation” applicable during SSM events. The text and context of the SIP provisions at issue in this SIP call action make clear that the conditions under which sources qualify for an SSM exemption are not themselves components of an overarching emission limitation—
Reviewing an example of the SIP provisions cited by commenters is illustrative of this point. For example, several commenters pointed to provisions in Alabama's SIP that excuse a source from complying with an otherwise applicable emission limitation only when the permittee “took all reasonable steps to minimize emissions” and the “permitted facility was at the time being properly operated.” According to commenters, the general duties in this provision—to take reasonable steps to minimize emissions, and to properly operate the facility—ensure that even during SSM events, the permittee remains subject to requirements limiting emissions.
However, a review of the provisions themselves in context—not selectively quoted—reveals that these general-duty provisions were included in the SIP not as components of an emission limitation but rather as components of an
The consequences for failing to satisfy the preconditions for an exemption further bolster the conclusion that these preconditions are not themselves part of an emission limitation. Failure to meet the “general duty” preconditions for an SSM exemption means that the source remains subject to the otherwise applicable emission limitation during the SSM event and is thus liable for violating the emission limitation. If those general duties were independent parts of an emission limitation (rather than merely preconditions for an exemption), then one would expect that periods of time could exist when the source was liable for violating those general duties rather than the default emission limitation.
The general-duty provisions that apply as part of the SSM exemption are not alternative emission limitations; they merely define an unlawful exemption to an emission limitation. States have discretion to fix this issue in a number of ways, including by removing the exceptions entirely, by replacing these exceptions with alternative emission limitations including specific control technologies or work practices that do ensure continuous limits on emissions or by reformulating the entire emission limitation.
In addition to the EPA's fundamental disagreement with commenters that these general-duty provisions are actually components of emission limitations, the EPA has additional concerns about whether many of these provisions could operate as stand-alone emission limitations even if they were properly identified as portions of the overall emissions limitations in the SIP.
The NSPS and NESHAP emission standards and limitations that the EPA has issued since
n. Comments that EPA's action on the petition is a “change of policy.”
Other commenters claimed that the EPA is changing its SSM Policy by seeking to revoke “enforcement discretion” exercised on the part of states, which the EPA specifically recognized as an acceptable approach in the 1983 SSM Guidance. A commenter asserted that “fairness principles” mean that the EPA cannot require a state to modify its SIP without substantial justification. The commenter further contended that the EPA's claim that it has a longstanding interpretation of the CAA that automatic exemptions are not allowed in SIP provisions is false; otherwise, the commenter argued, the EPA would not have approved some of the provisions at issue in the SIP call long after 1982. As evidence for this argument, the commenter pointed to the West Virginia regulations that provide an automatic exemption.
Finally, other commenters argued that the EPA's changed interpretation of the CAA requires an acknowledgement that the SSM Policy is being changed and a rational explanation for such change. These commenters noted that the EPA previously argued in a brief for the type of exemption provisions that it is now claiming are deficient, citing
Although the EPA did not expressly rely on the definition of “emission limitation” in section 302(k) as the basis for its SSM Policy in each of these guidance documents, it did rely on the purpose of the NAAQS program and the underlying statutory provisions (including section 110) governing that program. In the 1999 SSM Guidance, however, the EPA indicated that the definition of emission limitation in section 302(k) was part of the basis for its position concerning SIP provisions.
Commenters claimed that by interpreting the CAA to prohibit exemptions for emissions during SSM events the EPA is revoking “enforcement discretion” exercised by the state. This is not true. As part of state programs governing enforcement, states can include regulatory provisions or may adopt policies setting forth criteria for how they plan to exercise their own enforcement authority. Under section 110(a)(2), states must have adequate authority to enforce provisions adopted into the SIP, but states can establish criteria for how they plan to exercise that authority. Such enforcement discretion provisions cannot, however, impinge upon the enforcement authority of the EPA or of others pursuant to the citizen suit provision of the CAA. The EPA notes that the requirement for adequate enforcement authority to enforce CAA requirements is likewise a bar to automatic exemptions from compliance during SSM events.
Commenters confused the EPA's evolution in describing the basis for its longstanding SSM Policy as a change in the SSM Policy itself. The EPA's interpretation of the CAA in the SSM Policy has not changed with respect to exemptions for emissions during SSM events. The EPA's discussion of the basis for its longstanding interpretation has evolved and become more robust over time as the EPA has responded to comments in rulemakings and in response to court decisions. In support of its interpretation of the CAA that exemptions for periods of SSM are not acceptable in SIPs, the EPA has long relied on its view that NAAQS are health-based standards and that exemptions undermine the ability of SIPs to attain and maintain the NAAQS, to protect PSD increments, to improve visibility and to meet other CAA requirements. By contrast, the EPA historically took the position that SSM exemptions were acceptable for certain technology-based standards, such as NSPS and NESHAP standards, and argued that position in the
o. Comments that the EPA's proposed action on the petition is based on a “changed interpretation” of the definition of “emission limitation.”
To the extent that a SIP provision complied with previous EPA interpretations of the CAA that the Agency has since determined are flawed, or to the extent that the EPA erroneously approved a SIP provision that was inconsistent with the terms of the CAA, the EPA disagrees that it is precluded from requiring the state to modify its SIP now so that it is consistent with the Act. In fact, that is precisely the type of situation that the SIP call provision of the CAA is designed to address. Specifically, section 110(k)(5) begins, “[w]henever” the EPA determines that an applicable implementation plan is inadequate to attain or maintain the NAAQS, to mitigate adequately interstate pollutant transport, or “to otherwise comply with
The EPA disagrees that the doctrines of “repose,” “reasonable reliance” and “settled expectations” preclude such an action. The CAA is clear that “whenever” the EPA determines that a SIP provision is inconsistent with the statute, “the Administrator shall” notify the state of the inadequacies and establish a schedule for correction. This language does not provide the Agency with discretion to consider the factors cited by the commenter in deciding whether to call for a SIP revision once it is determined to be flawed. Here, the EPA has determined that the SIP provisions at issue are flawed and thus the Agency was required to notify the states to correct the inadequacies.
p. Comments that the EPA should not encourage states to rely on enforcement discretion because this will inevitably lead to states' creating emission limitations that some sources cannot meet.
It is unclear precisely what the commenters are advocating when they suggest that sources should not be subject to litigating a remedy for violations they cannot avoid. The likely interpretation is that the commenters believe that excess emissions during unavoidable events should be automatically exempted (
With respect to a commenter's concerns about criminal enforcement, the EPA disagrees that sources will be unable to start operations because they will automatically be subject to criminal prosecution if an emission limitation is exceeded during a malfunction. Under CAA section 113(c), criminal enforcement for violation of a SIP can occur when a person knowingly violates a requirement or prohibition of an implementation plan “during any period of federally assumed enforcement or more than 30 days after having been notified” under the provisions governing notification that the person is violating that specific requirement of the SIP. The EPA is unaware of any jurisdictions where federally assumed enforcement is in force, and the EPA does not anticipate that this situation would arise often. Thus, in almost every case, criminal enforcement would not occur in the absence of a pending notification of a civil enforcement case and could then apply only for repeated violation of the activity at issue in that civil action. Moreover, the concern raised by the commenter is one that would exist if there is any requirement that applies during a period of malfunction beyond the owner's control. The commenter's preferred way to address this concern would be to exempt these periods from compliance with any requirements, an approach rejected by the
Finally, to the extent that the commenter was advocating that the EPA should require states to develop SIP provisions that impose alternative emission limitations during certain modes of source operation such as startup and shutdown to replace SSM exemptions, the EPA notes that to require states to do so would not be consistent with the principles of cooperative federalism and could be misconstrued as the Agency's imposing a specific control requirement in contravention of the
q. Comments that the EPA's action on the Petition is inconsistent with the Credible Evidence Rule.
The EPA's general statements in the February 2013 proposal, the SNPR and this final action about treatment of SSM emissions as a violation pertain to another basic principle,
The EPA also disagrees with commenters who claimed that statements by the Agency in the Credible Evidence Rule final rule preamble support the inclusion of exemptions for SSM events in SIP provisions. The commenter is correct that at that time, the EPA held the view that emission limitations in its own NSPS could be considered “continuous,” notwithstanding the fact that they contained “specifically excused periods of noncompliance” (
First, the EPA notes that these prior statements related to the Credible Evidence Rule specifically addressed not SIP provisions but rather the provisions of the Agency's own technologically based NSPS. The statements in the document make no reference to SIP provisions, which is unsurprising given that EPA's SSM Policy at the time indicated that no such SSM exemptions are appropriate in SIP provisions. Second, the EPA's justification for exemptions from emission limitations during SSM events in NSPS was made prior to the 2008
For clarity, the EPA emphasizes that it is in no way reopening, revising or otherwise amending the Credible Evidence Rule in this action. The EPA is merely responding to commenters who characterized the relationship between Agency statements in that rulemaking action and this SIP call action. The EPA also emphasizes that no changes to the Credible Evidence Rule should be necessary as a result of this rulemaking.
r. Comments that exemptions in opacity standards should be permissible because opacity is not a NAAQS pollutant.
First, although the EPA agrees that opacity itself is not a criteria pollutant and that there is thus no NAAQS for opacity, this does not mean that SIP opacity limitations are not “emission limitations” subject to the requirements of section 110(a)(2)(A) and do not need to be continuous. As the commenters often conceded, opacity is a surrogate for PM emissions for which there are NAAQS, and opacity has served this purpose since the beginning of the SIP program in the 1970s. SIP provisions that impose opacity emission limitations often date back to the earliest phases of the SIP program. From the outset, such opacity limitations have provided an important regulatory tool for implementing the PM NAAQS and for limiting PM emissions from sources. To this day, states continue to use opacity limitations in SIP provisions and the EPA continues to use opacity limitations in its own NSPS and NESHAP regulations, as necessary, for specific source categories.
Second, although the EPA agrees that SIP opacity limitations also provide an important means of monitoring control device performance and thus indirectly provide a means to monitor compliance with PM emission limitations as well, this does not mean that opacity limits do not need to meet the statutory requirements for SIP emission limitations. Historically, opacity limits have been an important tool for implementation of the PM NAAQS, and in particular for the implementation and enforcement of PM mass limitations on sources to help attain and maintain the PM NAAQS. The EPA agrees that opacity is a useful tool to indicate overall operation and maintenance of a source and its emission control devices, such as electrostatic precipitators or baghouses. SIP opacity limitations provided this tool even before modern instruments that measure PM emissions on a direct, continuous basis existed. At a minimum, elevated opacity indicates potential problems with source design, operation or maintenance, or potential problems with incorrect operation of pollution control devices, especially at the elevated levels of many existing opacity standards. Well-run sources should be in compliance with typical SIP opacity limits. Opacity exceeding the applicable limitations can be indicative of problems that justify further investigation by sources and regulators, such as conducting a stack test to determine compliance with PM mass emission limitations. Not all sources have or will have PM CEMS, or have PM CEMS at all emission points, to monitor PM emissions directly, nor do PM CEMS necessarily obviate the need for opacity standards to regulate condensables, and thus there is a continued need for opacity emission limitations in SIPs. The continued need for SIP opacity limitations for this and other purposes contradicts the commenters' arguments concerning the validity of SSM exemptions.
Third, the EPA agrees that the precise correlation between opacity and PM mass emissions is not always known for a specific source under all operating conditions, unless there is parallel testing and measurement of the opacity and the PM emissions to determine the correlation at that particular source. Similarly, parametric monitoring can be used to establish such a correlation. Nevertheless, there is commonly a positive correlation between PM and opacity and thus elevated opacity is often indicative of additional PM
Fourth, the EPA agrees with commenters that for some sources some PM controls cannot operate, or operate at full effectiveness and ideal efficiency, during startup and shutdown. Accordingly, as the commenters implicitly recognized, the resulting increases in PM emissions can result in elevated opacity and thus exceedances of the applicable SIP opacity emission limitations. In those situations where it is true that no additional emissions controls are available or would function more effectively to reduce PM emissions, and hence to reduce opacity, it may be appropriate for states to consider imposing an alternative opacity emission limitation applicable during startup and shutdown. As discussed in section VII.B.2 of this document, the EPA provides recommendations to states concerning how to develop such alternative emission limitations. To the extent that sources believe that a SIP provision with a higher opacity level for startup and shutdown may be justified, they may seek these alternative limitations from the state and they can presumably advocate for opacity standards that are tailored to reflect the correlation between PM mass and opacity at a specific source. Significantly, however, even if it is appropriate to impose a somewhat higher opacity limitation for some sources during specifically defined modes of operation such as startup and shutdown, that does not justify the total exemptions from SIP opacity emission limitations during SSM events that the commenters advocated. To provide total exemptions from SIP opacity emission limitations during SSM events does not provide any incentive for sources to be better designed, operated, maintained and controlled to reduce emissions, nor does it comply with the most basic requirement that SIP emission limitations be continuous in accordance with section 302(k). As explained in section X.B of this document, the SIP revisions in response to this SIP call action will need to be consistent with the requirements of sections 110(k)(3), 110(l) and 193 as well as any other applicable requirements.
Fifth, the EPA notes that few commenters seriously argued that SIP provisions for opacity do not fit within the plain language of section 110(a)(2)(A) or the definition of “emission limitation” in section 302(k) or in EPA regulations applicable to SIP provisions. Section 110(a)(2)(A) requires SIPs to contain such enforceable emission limitations “as may be necessary and appropriate to meet the applicable requirements of” the CAA. Opacity limitations in SIP provisions are necessary and appropriate for a variety of reasons already described, including as a means to reduce PM emissions, as a means to monitor source compliance and to provide for more effective enforcement. Opacity limitations in SIP provisions also easily fit within the concept of a limit on the “quantity, rate or concentration of air pollutants” that relates to the “operation or maintenance of a source to assure continuous emission reduction and any design, equipment, work practice or operational standard” under the CAA, as provided in section 302(k). The term “air pollutant” is defined broadly in section 302(g) to mean “any air pollution agent or combination of such agents, including any physical, chemical, biological, radioactive . . . substance or matter which is emitted into or otherwise enters the ambient air.” Even if opacity is not itself an air pollutant, it is clearly a means of monitoring and limiting emissions of PM from sources and is thus encompassed within the definition of “emission limitation” in section 302(k).
Finally, the EPA does not agree with commenters who argued that because SIP opacity limitations were often originally imposed when the PM NAAQS was for TSP, it is legally acceptable to have exemptions for emissions during SSM events now that the PM NAAQS use PM
s. Comments that exemptions from SIP opacity limitations for excess emissions during SSM events should be allowed because such emissions are difficult to monitor or to control.
A number of commenters also argued that because emission controls for PM do not function, or do not function as effectively or efficiently, during certain
Commenters also characterized the EPA's February 2013 proposal as “particularly unreasonable” with respect to SSM exemptions in SIP opacity limitations, because those limitations should be allowed to exclude elevated opacity during periods when PM emissions controls devices are “not expected to operate correctly.” According to commenters, treating the higher opacity during SSM events “as a violation simply because it is indicating something that is expected is ridiculous.” As an example, the commenters specifically mentioned occurrences such as when a source's electrostatic precipitator (ESP) is not functioning or is not functioning properly as periods during which there should be an exemption from SIP opacity emission limitations.
First, the EPA does not agree with the argument that there is no “compliance methodology” available for purposes of verifying compliance with SIP opacity limitations. Since the earliest phases of the SIP program, Reference Method 9 has been available as a means of verifying a source's compliance with applicable SIP opacity emission limitations. Whatever concerns the commenters may have with this test method, it is a valid method and it continues to be used as a means of verifying source compliance with opacity limitations and a source of evidence for determining whether there are violations of such emission limitations.
Second, the EPA does not agree that the fact that its regulations concerning performance tests in 40 CFR 63.7(e) for NESHAP and in 40 CFR 60.8(c) for NSPS exclude SSM emissions for purposes of evaluation of emissions under normal operating conditions provides a justification for SSM exemptions from opacity emission limitations in SIP provisions. The D.C. Circuit decision in
Third, the EPA does not agree with the premise that because certain forms or types of emission controls do not work, or do not work as effectively or efficiently, during certain modes of operation at some sources, it necessarily follows that sources should be totally exempt from emission limitations during such periods. The EPA interprets the CAA to require that SIP emission limitations be continuous. As explained in section VII.A of this document, emission limitations do not necessarily need to be expressed numerically, can have higher numerical levels during certain modes of operation, and may be composed of a combination of numerical limitations, specific technological control requirements and/or work practice requirements during certain modes of operation, so long as these emission limitations meet applicable CAA stringency requirements and are legally and practically enforceable. If it is factually accurate that a given source category requires a higher opacity limit during periods such as startup and shutdown, then the state may elect to develop one consistent with other CAA requirements. The EPA has provided guidance to states with criteria to consider in revising their SIP provisions to replace exemptions with an appropriate alternative emission limitation for such purposes. The EPA emphasizes that even if it is the case that existing control measures cannot operate, or cannot operate as effectively or efficiently, during startup and shutdown at a particular source, this does not legally justify a complete exemption from SIP emission limitations and may merely indicate that additional emission controls or work practices are necessary when the existing control measures are insufficient to meet the applicable SIP emission limitation. The EPA is taking this approach with its own recent NSPS and NESHAP regulations, when appropriate, in order to ensure that its own emission limitations are consistent with CAA requirements.
Finally, the EPA also disagrees with the logic of commenters that argued in favor of exemptions from SIP opacity limitations during periods when a source is most likely to violate them,
t. Comments that exemptions in SIP opacity limitations should be permissible for “maintenance,” “soot-blowing” or other normal modes of source operation.
With respect to maintenance, the EPA does not agree with commenters that total exemptions from opacity emission limitations during such activities are consistent with CAA requirements for SIP provisions. As the EPA has stated repeatedly in its interpretation of the CAA in the SSM Policy, maintenance activities are predictable and planned activities during which sources should be expected to comply with applicable emission limitations.
With respect to soot-blowing, the EPA likewise does not agree that total exemptions from opacity limitations during such periods are consistent with CAA requirements. As with maintenance in general, soot-blowing is an intentional, predictable event within the control of the source. The commenters' implication is that nothing whatsoever could be done to limit opacity during such activities, and the EPA believes that this is both inaccurate and not a justification for sources' being subject to no standards whatsoever during soot-blowing. In addition, the EPA disagrees with the commenters' claim that exemptions from opacity emission limitations during soot-blowing are legally permissible because this allegedly shows that the control devices for opacity and PM are in fact performing correctly. This argument incorrectly presupposes that the sole reason for SIP opacity emission limitations is as a means of better evaluating control measure performance. This is but one reason for SIP opacity limitations. Moreover, the EPA notes, excusing opacity during soot-blowing has the diametrically opposite effect of the actual purpose of the control devices and can result in much higher emissions as opposed to encouraging limiting these emission with other forms of controls.
Finally, the EPA notes, the commenters' argument that whether opacity limitations should apply during soot-blowing depends upon whether the emissions were or were not accounted for in the applicable PM emissions is also based upon an incorrect premise. Even if the PM emission limitation applicable to a source was developed to include the emissions during soot-blowing specifically, it does not follow that sources should be completely exempted from opacity limitations during such periods. As the commenters themselves frequently acknowledged, when compared to other enforcement tools, SIP opacity provisions often provide a much more effective and continuous means of determining source compliance with SIP PM limitations and control measure performance. A typical SIP opacity provision imposes an emission limitation such as 20 percent opacity at all times, except for 6 minutes per hour when those emissions may rise to 40 percent opacity. Well-maintained and
u. Comments that elimination of exemptions from SIP opacity emission limitations during SSM events will compel states to alter the averaging period of opacity limitations so as to allow sources to have elevated emissions during SSM events.
In any event, the EPA is not in this final action deciding how states must revise SIP opacity emission limitations but is merely issuing a SIP call directing the affected states to eliminate existing automatic and discretionary exemptions for excess emissions during SSM events. The affected states will elect how best to respond to this SIP call, whether by simply removing the exemptions, by replacing the exemptions with appropriate alternative emission limitations applicable to startup and shutdown or other normal modes of operation or by a complete overhaul of the SIP provision in question. In particular, where the affected sources are located in designated nonattainment areas, there may be a need to evaluate additional controls that are needed for attainment planning purposes that were not necessary when the emission limitation was first adopted. Whichever approach a state determines to be most appropriate, the resulting SIP submission to revise the existing deficient provisions will be subject to review by the EPA pursuant to sections 110(k)(3), 110(l) and 193. Considerations relevant to this issue are discussed in section X.B of this document.
In the February 2013 proposal, the EPA reiterated its longstanding interpretation of the CAA that SIP provisions cannot include exemptions from emission limitations for emissions during SSM events but may include different requirements that apply to affected sources during startup and shutdown. Since the 1982 SSM Guidance, the EPA has clearly stated that startup and shutdown are part of the normal operation of a source and should be accounted for in the design and operation of the source. Thus, the EPA has long concluded that sources should be required to meet the applicable SIP emission limitations during normal modes of operation including startup and shutdown.
In the February 2013 proposal, the EPA also repeated its guidance concerning establishment of alternative emission limitations that apply to sources during startup and shutdown, in those situations where the sources cannot meet the otherwise applicable SIP emission limitations. As explained in section VII.A of the February 2013 proposal, the EPA interprets the CAA to require that SIP emission limitations must be continuous and thus to prohibit exemptions for emissions during startup and shutdown. This does not, however, mean that every SIP emission limitation must be expressed as a numerical limitation or that it must impose the same limitations during all modes of source operation. The EPA's interpretation of the CAA with respect to SIP provisions is that SIP emission limitations: (i) Do not need to be numerical in format; (ii) do not have to apply the same limitation (
The EPA is reiterating its interpretation of the CAA to allow SIP emission limitations to include components that apply during specific modes of source operation, such as startup and shutdown, so long as those components together create a continuously applicable emission limitation that meets the relevant substantive requirements and requisite level of stringency for the type of SIP provision at issue and is legally and practically enforceable. In addition, the EPA is updating the specific recommendations to states for developing such alternative emission limitations described in the February 2013 proposal, by providing in this document some additional explanation and revisions to the text of its recommended criteria regarding alternative emission limitations.
The EPA's longstanding position is that the CAA does not allow SIP provisions that include exemptions from emission limitations for excess emissions that occur during startup and shutdown. The EPA reiterates that exemptions from SIP emission limitations are also not permissible for excess emissions that occur during other periods of normal source operation. A number of SIP provisions identified in the Petition create automatic or discretionary exemptions from otherwise applicable emission limitations during periods such as “maintenance,” “load change,” “soot-blowing,” “on-line operating changes” or other similar normal modes of operation. Like startup and shutdown, the EPA considers all of these to be modes of normal operation at a source, for which the source can be designed, operated and maintained in order to meet the applicable emission limitations and during which the source should be expected to control and minimize emissions. Accordingly, exemptions for emissions during these periods of normal source operation are not consistent with CAA requirements. Excess emissions that occur during planned and predicted periods should be treated as violations of any applicable emission limitations.
However, the EPA interprets the CAA to allow SIPs to include alternative emission limitations for modes of operation during which an otherwise applicable emission limitation cannot be met, such as may be the case during startup or shutdown. The alternative emission limitation, whether a numerical limitation, technological control requirement or work practice requirement, would apply during a specific mode of operation as a component of the continuously applicable emission limitation. For example, an air agency might elect to create an emission limitation with different levels of control applicable during specifically defined periods of startup and shutdown than during other normal modes of operation. All components of the resulting emission limitation must meet the substantive requirements applicable to the type of SIP provision at issue, must meet the applicable level of stringency for that type of emission limitation and must be legally and practically enforceable. The EPA will evaluate a SIP submission that establishes a SIP emission limitation that includes alternative emission limitations applicable to sources during startup and shutdown consistent with its authority and responsibility pursuant to sections 110(k)(3), 110(l) and 193 and any other CAA provision substantively germane to the SIP revision. Absent a properly established alternative emission limitation for these modes of operation, a source should be required to comply with the otherwise applicable emission limitation.
In addition, the EPA is providing in this document some additional explanation and clarifications to its recommended criteria for developing alternative emission limitations applicable during startup and shutdown. The EPA continues to recommend that, in order to be approvable (
Comments received on the February 2013 proposal suggested that the purpose of the recommended criteria may have been misunderstood by some commenters. The criteria were phrased in such a way that commenters may have misinterpreted them to be criteria to be applied by a state retrospectively (
The EPA seeks to make clear in this document that the recommended criteria are intended as guidance to states developing SIP provisions that include emission limitations with alternative emission limitations applicable to specifically defined modes of source operation such as startup and shutdown. A state may choose to consider these criteria in developing such a SIP provision. The EPA will use these criteria when evaluating whether a particular alternative emission limitation component of an emission limitation meets CAA requirements for SIP provisions. Any SIP revision establishing an alternative emission limitation that applies during startup and shutdown would be subject to the same procedural and substantive review requirements as any other SIP submission.
Based on comment on the February 2013 proposal, the EPA is updating the criteria to make clear that they are recommendations relevant for development of appropriate alternative emission limitations in SIP provisions. Thus, in this document, the EPA is providing a restatement of its recommended criteria that reflects clarifying but not substantive changes to the text of those criteria. One clarifying change is removal of the word “must” from the criteria, to better convey that these are recommendations to states concerning how to develop an approvable SIP provision with alternative requirements applicable to
The clarified criteria for developing and evaluating alternative emission limitations applicable during startup and shutdown are as follows:
(1) The revision is limited to specific, narrowly defined source categories using specific control strategies (
(2) Use of the control strategy for this source category is technically infeasible during startup or shutdown periods;
(3) The alternative emission limitation requires that the frequency and duration of operation in startup or shutdown mode are minimized to the greatest extent practicable;
(4) As part of its justification of the SIP revision, the state analyzes the potential worst-case emissions that could occur during startup and shutdown based on the applicable alternative emission limitation;
(5) The alternative emission limitation requires that all possible steps are taken to minimize the impact of emissions during startup and shutdown on ambient air quality;
(6) The alternative emission limitation requires that, at all times, the facility is operated in a manner consistent with good practice for minimizing emissions and the source uses best efforts regarding planning, design, and operating procedures; and
(7) The alternative emission limitation requires that the owner or operator's actions during startup and shutdown periods are documented by properly signed, contemporaneous operating logs or other relevant evidence.
It may be appropriate for an air agency to establish alternative emission limitations that apply during modes of source operation other than during startup and shutdown, but any such alternative emission limitations should be developed using the same criteria that the EPA recommends for those applicable during startup and shutdown.
The EPA received a number of comments, both supportive and adverse, concerning the issue of how air agencies may replace existing exemptions for emissions during SSM events with alternative emission limitations that apply during startup, shutdown or other normal modes of source operation. The majority of these comments were critical of the EPA's position but did not base this criticism on an interpretation of specific CAA provisions. For clarity and ease of discussion, the EPA is responding to these comments, grouped by issue, in this section of this document.
a. Comments that as a technical matter sources cannot meet emission limitations (or cannot be accurately monitored) during startup and shutdown.
Commenters raised specific concerns regarding pollution controls for EGUs. The commenters claimed that startup and shutdown events are unavoidable at EGUs even though they may be planned. The commenters also attached appendices providing an explanation of why emissions are higher for startup and shutdown for certain types of EGUs. The commenters claimed that the “EPA's proposal to eliminate the States' SSM provisions, and prohibit them from adopting any provisions for startups and shutdowns, could force sources to comply with emission limitations during periods when they were never meant to apply, thus rendering those emissions limitations unachievable.” The commenters also noted that the permits for their sources all require that the sources minimize the magnitude and duration of emissions during SSM. The implication of this latter comment is that a general duty to minimize emissions is sufficient to justify the exemption of all emissions during SSM events in the underlying SIP provisions.
In its 1999 SSM Guidance, the EPA expressly recognized that an appropriate way for a state to address such technological limitations is to set alternative emission limitations that apply during periods of startup and shutdown as part of the SIP emission
The EPA recognizes that a malfunction may cause a source to shut down in a manner different than in a planned shutdown, and in that case, such a shutdown would typically be considered part of the malfunction event. However, as part of the normal operation of a facility, sources typically will also have periodic or otherwise scheduled startup and shutdown of equipment, and steps to limit emissions during this type of event are or can be planned for. The EPA disagrees with the suggestion of commenters that because some startup or shutdown events may be unplanned, all startup and shutdown events should be exempt from compliance with any requirements. For those events that are planned, the state should be able to establish requirements to regulate emissions, such as a numerical limitation, technological control measure or work practice standard that will apply as a part of the revised emission limitation. When unplanned startup or shutdown events are part of a malfunction, they should be treated the same as a malfunction; however, as with malfunctions, startup and shutdown events cannot be exempted from compliance with SIP requirements. Questions of liability and remedy for violations that result from malfunctions are to be resolved in the context of an enforcement action, if such an action occurs.
b. Comments that it is impossible, unreasonable or impractical for states to develop emission limitations that apply during startup and shutdown to replace existing exemptions.
A local government commenter stated that to establish limits for startup and shutdown that also demonstrate compliance with the NSR regulations (including protection of the NAAQS and PSD increments and maintenance of BACT or LAER) would be a difficult, time-consuming task that was mostly impractical.
An industry commenter claimed that the EPA is encouraging states to adopt numerical alternative emission limitations in their SIP provisions that would apply during startup and shutdown. The commenter claimed that adequate and accurate emissions data are necessary to do so and that such information is not generally available for existing equipment or, in many cases, for new equipment. Furthermore, the commenter asserted, even if an emission limit could be established for startup and shutdown, there are no current approved test measures to verify compliance during such modes of operation. Even where data are available, the commenter alleged, the data may not be representative of actual conditions because of limitations related to low-load conditions. If a state lacks information to conclude that a limit can be met, the commenter argued, the state should not be required to establish numerical limits but should instead be allowed “to specify that numerical standards do not apply to those conditions or that those conditions are exempt, or should be allowed to establish work practice standards.”
As to the commenter's concern that such alternative emission limitations should not be included in a state's SIP, the EPA disagrees. The SIP needs to reflect the control obligations of sources, and any revision or modification of those obligations should not be occurring through a separate process, such as a permit process, which would not ensure that “alternative” compliance options do not weaken the SIP. The SIP is a combination of state statutes, regulations and other requirements that the EPA approves for demonstrating attainment and maintenance of the NAAQS, protection of PSD increments, improvement of visibility and compliance with other
As to concerns that a SIP revision will be necessary every time a new source comes into existence, an existing source is permanently retired or a new regulation is promulgated, the EPA does not see these as significant concerns. Unless the startup or shutdown process for an individual source is truly unique to that source, then existing SIP provisions for sources within the same industrial category should be able to apply to any new source. Moreover, assuming any new source is subject to permitting obligations, then any applicable startup and shutdown issues should already be resolved in developing the permit for such source. The state could choose to incorporate that permit by reference into the SIP at the time it next modifies its SIP. Further, assuming that there is a source-specific regulation for a source in the SIP (a circumstance that the EPA believes would occur only rarely), the state is not obligated to remove such provision when the source is retired. Rather, the state could leave the provision in its rules or remove such a provision the next time it submits another SIP revision or when it chooses to do a “cleanup” of the SIP, an activity that numerous states have taken from time to time. Finally, whenever a new regulation is promulgated is precisely the time that a state should be considering the appropriate provisions that would apply during startup and shutdown, as that is the time when the state is considering what is necessary to comply with the CAA and what is necessary to meet attainment, maintenance or other requirements of the CAA.
The local government commenter contended that establishing limits for startup and shutdown that also demonstrate compliance with the NSR regulations (including protection of the NAAQS and PSD increments and imposition of BACT- or LAER-level controls) would be a difficult, time-consuming task that was impractical. The commenter did not provide an explanation of how this would be difficult. The implication of the comment is that a SIP provision that provides an exemption or an affirmative defense for emissions during startup and shutdown would be compliant with the statutory requirements and NSR regulations (including attainment of the NAAQS and protecting PSD increments). That is incorrect because the EPA does not interpret the CAA to allow such exemptions or affirmative defenses for purposes of NSR regulations. The suggestion that a SIP provision that does not regulate emissions during startup and shutdown would be more likely to address NAAQS attainment and to protect PSD increments than would a SIP provision that does regulate such emissions is illogical. The EPA further notes that the Agency's interpretation of the CAA, explicitly set forth in a 1993 guidance document, has been that periods of startup and shutdown must be addressed in any new source permit.
c. Comments that the EPA should “authorize” states to replace SSM exemptions with “work practice” standards developed by the EPA in its own recent NESHAP and NSPS rules.
d. Comments that if states remove existing SSM exemptions and replace them with alternative emission limitations that apply during startup and shutdown events, this would automatically be consistent with the requirements of CAA section 193.
In the February 2013 proposal, the EPA stated and explained in detail the reasons for its belief that the CAA prohibits unbounded director's discretion provisions in SIPs, including those provisions that purport to authorize unilateral revisions to, or exemptions from, SIP emission limitations for emissions during SSM events.
The EPA is reiterating its interpretation of the CAA with respect to unbounded director's discretion provisions applicable to emissions during SSM events, which is that SIP provisions cannot contain director's discretion to alter SIP requirements, including those that allow for variances or outright exemptions for emissions during SSM events. This interpretation has been clear with respect to emissions during SSM events in the SSM Policy since at least 1999. In the 1999 SSM Guidance, the EPA stated that it would not approve SIP revisions “that would enable a State director's decision to bar EPA's or citizens' ability to enforce applicable requirements.”
Many commenters on the February 2013 proposal opposed the EPA's interpretation of the CAA with respect to director's discretion provisions simply on the grounds that states are
As explained in detail in the February 2013 proposal and in section VII.C of this document, the EPA interprets the CAA to prohibit SIP provisions that include unlimited director's discretion to alter the SIP emission limitations applicable to sources, including those that operate to allow exemptions for emissions from sources during SSM events. The EPA believes that such provisions that operate to authorize total exemptions from emission limitations on an
There are two ways in which such a provision can be consistent with CAA requirements: (1) When the exercise of director's discretion by the state agency to alter or eliminate the SIP emission limitation can have no effect for purposes of federal law unless and until the EPA ratifies that state action with a SIP revision; or (2) when the director's discretion authority is adequately bounded such that the EPA can ascertain in advance, at the time of approving the SIP provision, how the exercise of that discretion to alter the SIP emission limitations for a source could affect compliance with other CAA requirements. If the provision includes director's discretion that could result in violation of any other CAA requirement for SIPs, then the EPA cannot approve the provision consistent with the requirements of section 110(k)(3) and section 110(l). For example, a director's discretion provision that authorizes state personnel to excuse source compliance with SIP emission limitations during SSM events could not be approved because the provision would run afoul of the requirement that sources be subject to emission limitations that apply continuously, consistent with section 302(k).
The EPA received a number of comments, both supportive and adverse, concerning the issue of director's discretion provisions in SIPs. The majority of these comments were critical of the EPA's position but did not base this criticism on an interpretation of specific CAA provisions. For clarity and ease of discussion, the EPA is responding to these comments, grouped by issue, in this section of this document.
a. Comments that broad state discretion in how to develop SIP provisions includes the authority to create provisions that include director's discretion variances or exemptions for excess emission during SSM events.
As the EPA explained in detail in the February 2013 proposal, SIP provisions that include unbounded director's discretion to alter the otherwise applicable emission limitations are inconsistent with CAA requirements. Such provisions purport to authorize air agency personnel unilaterally to change or to eliminate the applicable SIP emission limitations for a source without meeting the requirements for a SIP revision. Pursuant to the EPA's own responsibilities under sections 110(k)(3), 110(l) and 193 and any other CAA provision substantively germane to the specific SIP provision at issue, it would be inappropriate for the Agency to approve a SIP provision that automatically preauthorized the state unilaterally to revise the SIP emission limitation without meeting the applicable procedural and substantive statutory requirements for a SIP revision. Section 110(i) prohibits modification of SIP requirements for stationary sources by either the state or the EPA, except through specified processes. The EPA's implementing regulations applicable to SIP provisions likewise impose requirements for a specific process for the approval of SIP revisions.
b. Comments that director's discretion provisions are an exercise of “enforcement discretion.”
The commenters' argument was that states may create SIP provisions through which they may unilaterally decide that the emissions from a source during an SSM event should be exempted, such that the emissions cannot be treated as a violation by anyone. A common formulation of such a provision provides only that the source needs to notify the state regulatory agency that an exceedance of the emission limitations occurred and to report that the emissions were the result of an SSM event. If those minimal steps occur, then such provisions commonly authorize state personnel to make an administrative decision that the emissions in question were not a “violation” of the applicable emission limitation. It may be entirely appropriate for the state agency to elect not to bring an enforcement action based on the facts and circumstances of a given SSM event, as a legitimate exercise of its own enforcement discretion. However, by creating a SIP provision that in effect authorizes the state agency to alter or suspend the otherwise applicable SIP emission limitations unilaterally through the granting of exemptions, the state agency would functionally be revising the SIP with respect to the emission limitations on the source. This revision of the applicable emission limitation would have occurred without satisfying the requirements of the CAA for a SIP revision. As a result of this
The commenters also suggested that the director's discretion provisions authorizing exemptions for SSM events are nonsegregable parts of the emission limitations,
c. Comments that the EPA's having previously approved a SIP provision that authorizes the granting of variances or exemptions for SSM events through the exercise of director's discretion renders the provision consistent with CAA requirements.
Second, the EPA disagrees that the fact that a SIP provision underwent public process at the time of its original creation by the state, or at the time of its approval by EPA as part of the SIP, means
Third, the EPA disagrees with the circular logic that because a deficient provision with director's discretion currently exists in a SIP, it means that exercise of the director's discretion to grant variances or outright exemptions to sources for emissions during SSM events is therefore consistent with CAA requirements for SIPs. An unbounded director's discretion provision that authorizes an air agency to alter or eliminate the otherwise applicable SIP emission limitation functionally allows the state to revise the SIP emission
d. Comments that director's discretion provisions in SIPs are not prohibited by the CAA, based on recent judicial decisions.
As the commenters stated, the court in the
The EPA believes that the court's decision in the
Second, the court in the
In the
The EPA believes that the decision of the court in
Second, the
There is, in fact, no independent and authoritative standard in the CAA or its implementing regulations requiring that a state director's discretion be cabined in the way that the EPA suggests. Therefore, the EPA's insistence on some undefined limit on a director's discretion is . . . based on a standard that the CAA does not empower the EPA to enforce.
Third, the
Finally, the
Significantly, the commenters apparently make the same mistake as the EPA did in the rulemakings at issue in the cited court decisions, by not adequately addressing the relevant statutory provisions that apply to SIP provisions in general and apply to revisions of existing EPA-approved SIP provisions in particular. The commenters failed to consider the core problem with unbounded director's discretion provisions (
The EPA notes that the commenters did not acknowledge or address the specific explanation that the Agency provided in the February 2013 proposal, including the EPA's identification of the specific statutory provisions applicable to the revision of SIP provisions. Because these commenters did not address the EPA's explanation of the CAA provisions that it interprets to preclude director's discretion provisions in SIPs, the commenters have not provided substantive comment concerning the EPA's interpretation of the CAA on this issue. The commenters did not dispute the EPA's interpretation of the CAA on this particular point on statutory grounds. Rather, the commenters argued based on their own policy preferences for an approach to director's discretion provisions that would allow sources to receive
e. Comments opposed to the EPA's approach on the premise that there is no “director's discretion” concern if the SIP provision creates a permit program through which state officials grant sources variances or exemptions from otherwise applicable SIP provisions.
The EPA emphasizes that air agencies always retain the ability to regulate sources more stringently than required by the provisions in its SIP. Section 116 explicitly provides, with certain limited exceptions, that states retain the authority to regulate emissions from sources. Unless preempted from controlling a particular source, nothing precludes states from regulating sources more stringently than otherwise required to meet CAA requirements, so long as they meet CAA requirements. However, if there is an applicable
Finally, the EPA notes, if a state elects to use a permitting process as a source-by-source means of imposing more stringent emission limitations or additional requirements on sources, doing so can be an acceptable approach. So long as the underlying SIP provisions are adequate to provide the requisite level of control or requirements to assure enforceability, a state is free to use a permitting program to impose additional requirements above and beyond those provided in the SIP.
In the February 2013 proposal, the EPA explained in detail that it believes that the CAA allows states to adopt SIP provisions that impose reasonable limits upon the exercise of enforcement discretion by air agency personnel, so long as those provisions do not apply to the EPA or other parties. The EPA believes that its interpretation of the CAA with respect to enforcement discretion provisions applicable to emissions during SSM events has been clear in the SSM Policy. In the 1982 SSM Guidance and the 1983 SSM Guidance, the EPA indicated that states could elect to adopt SIP provisions that include criteria that apply to the exercise of enforcement discretion by state personnel. In the 1999 SSM Guidance, the EPA emphasized that it would not approve such provisions if they would operate to impose the state's enforcement discretion decisions upon the EPA or other parties because this would be inconsistent with requirements of title I of the CAA.
In order to be clear about this important point on a going-forward basis, the EPA is reiterating that SIP provisions cannot contain enforcement discretion provisions that would bar enforcement by the EPA or citizens for any violation of SIP requirements if the state elects not to enforce.
The EPA has previously issued a SIP call to a state specifically for purposes of clarifying an existing SIP provision to assure that regulated entities, regulators and courts will not misunderstand the correct interpretation of the provision.
The EPA has explained in previous iterations of its SSM Policy that a fundamental principle of the CAA with respect to SIP provisions is that the provisions must be enforceable not only by the state but also by the EPA and others pursuant to the citizen suit authority of section 304. Accordingly, the EPA has long stated that SIP provisions cannot be structured such that a decision by the state not to enforce may bar enforcement by the EPA or other parties.
The EPA received a small number of comments concerning the issue of ambiguous enforcement discretion provisions in SIPs. For clarity and ease of discussion, the EPA is responding to these comments, grouped by issue, in this section of this document.
a. Comments that supported the clarification of ambiguous enforcement discretion provisions in general but opposed the EPA's views with respect to specific SIP provisions.
b. Comments that opposed the EPA's issuing SIP calls to obtain state agency clarification of ambiguous enforcement discretion provisions in SIPs.
As explained in detail in the SNPR, the EPA believes that the CAA prohibits affirmative defense provisions in SIPs. The EPA acknowledges that since the 1999 SSM Guidance, the Agency had interpreted the CAA to allow narrowly tailored affirmative defense provisions. However, the EPA's interpretation of the statute was based on arguments that have since been rejected by the DC Circuit in the
As the EPA explained in the February 2013 proposal, the SIP provisions identified in the Petition highlighted an area of potential ambiguity or conflict between the SSM Policy applicable to SIP provisions and the EPA's regulations applicable to CAA title V operating permit provisions. The EPA has promulgated regulations in 40 CFR part 70 applicable to state operating permit programs and in 40 CFR part 71 applicable to federal operating permit programs.
The regulatory parameters applicable to such emergency provisions in operating permits are the same for state operating permit program regulations and the federal operating permit program regulations. The definition of emergency is identical in the regulations for each program.
Thus, if there is an emergency event meeting the regulatory definition, then the EPA's regulations for operating permit programs provide for an “affirmative defense” to enforcement for noncompliance with technology-based standards during the emergency event, provided the source can demonstrate through specified forms of evidence that the event and the permittee's actions during and after the event met a number of specific requirements.
The Petitioner did not directly request that the EPA evaluate the existing regulatory provisions applicable to operating permits in 40 CFR part 70 and 40 CFR part 71, and the EPA is not revising those provisions in this action. In its February 2013 proposal, the EPA explained that while it was proposing to allow narrowly drawn affirmative defense provisions for malfunctions in SIPs, SIP provisions that were modeled after the regulations in 40 CFR part 70 and 40 CFR part 71 were still in conflict with the EPA's interpretation of the CAA for SIP provisions and thus could not be allowed.
Additionally, we are not taking action in this rulemaking to alter the emergency provisions found in 40 CFR part 70 and 40 CFR part 71. Those regulations, which are applicable to title V operating permits, may only be changed through appropriate rulemaking to revise parts 70 and 71. Further, any existing permits that contain such emergency provisions may only be changed through established permitting procedures. The EPA is considering whether to make changes to 40 CFR part 70 and 40 CFR part 71, and if so, how best to make those changes. In any such action, EPA would also intend to address the timing of any changes to existing title V operating permits. Until that time, as part of normal permitting process, the EPA encourages permitting authorities to consider the discretionary nature of the emergency provisions when determining whether to continue to include permit terms modeled on those provisions in operating permits that the permitting authorities are issuing in the first instance or renewing.
As in the 2001 SSM Guidance, the EPA is endeavoring to be particularly clear about the intended effect of its final action on the Petition, of its clarifications and revisions to the SSM Policy and of its application of the updated SSM Policy to the specific existing SIP provisions discussed in section IX of this document.
First, the EPA only intends its actions on the larger policy or legal issues raised by the Petitioner to inform the public of the EPA's current views on the requirements of the CAA with respect to SIP provisions related to SSM events. Thus, for example, the EPA's proposed grant of the Petitioner's request that the EPA interpret the CAA to disallow all affirmative defense provisions is intended to convey that the EPA has
Second, the EPA only intends its actions on the specific existing SIP provisions identified in the Petition to be applicable to those provisions. The EPA does not intend its action on those specific provisions to alter the current status of any other existing SIP provisions relating to SSM events. The EPA must take later rulemaking actions, if necessary, in order to evaluate any comparable deficiencies in other existing SIP provisions that may be inconsistent with the requirements of the CAA. Again, however, the EPA's actions on the Petition provide updated guidance on the types of SIP provisions that it believes would be consistent with CAA requirements in future rulemaking actions.
Third, the EPA does not intend its action on the Petition to affect immediately any existing permit terms or conditions regarding excess emissions during SSM events that reflect previously approved SIP provisions. The EPA's finding of substantial inadequacy and a SIP call for a given state provides the state time to revise its SIP in response to the SIP call through the necessary state and federal administrative process. Thereafter, any needed revisions to existing permits will be accomplished in the ordinary course as the state issues new permits or reviews and revises existing permits. The EPA does not intend the issuance of a SIP call to have automatic impacts on the terms of any existing permit.
Fourth, the EPA does not intend its action on the Petition to alter the emergency defense provisions at 40 CFR 70.6(g) and 40 CFR 71.6(g),
Fifth, the EPA does not intend its interpretations of the requirements of the CAA in this action on the Petition to be legally dispositive with respect to any particular current enforcement proceedings in which a violation of SIP emission limitations is alleged to have occurred. The EPA handles enforcement matters by assessing each situation, on a case-by-case basis, to determine the appropriate response and resolution. For purposes of alleged violations of SIP provisions, however, the terms of the applicable SIP provision will continue to govern until that provision is revised following the appropriate process for SIP revisions, as required by the CAA.
Finally, the EPA does intend this final action, developed through notice and comment, to be the statement of its most current SSM Policy, reflecting the EPA's interpretation of CAA requirements applicable to SIP provisions related to excess emissions during SSM events. In this regard, the EPA is adding to and clarifying its prior statements in the 1999 SSM Guidance and making the specific changes to that guidance as discussed in this action. Thus, this final notice for this action will constitute the EPA's SSM Policy on a going-forward basis.
The CAA provides a mechanism for the correction of flawed SIPs, under CAA section 110(k)(5), which provides that “[w]henever the Administrator finds that the applicable implementation plan for any area is substantially inadequate to attain or maintain the relevant national ambient air quality standards, to mitigate adequately the interstate pollutant transport described in section [176A] of this title or section [184] of this title, or to otherwise comply with any requirement of [the Act], the Administrator shall require the State to revise the plan as necessary to correct such inadequacies. The Administrator shall notify the State of the inadequacies and may establish reasonable deadlines (not to exceed 18 months after the date of such notice) for the submission of such plan revisions.”
By its explicit terms, this provision authorizes the EPA to find that a state's existing SIP is “substantially inadequate” to meet CAA requirements and, based on that finding, to “require the State to revise the [SIP] as necessary to correct such inadequacies.” This type of action is commonly referred to as a “SIP call.”
Significantly, CAA section 110(k)(5) explicitly authorizes the EPA to issue a SIP call “whenever” the EPA makes a finding that the existing SIP is substantially inadequate, thus providing authority for the EPA to take action to correct existing inadequate SIP provisions even long after their initial approval, or even if the provisions only become inadequate due to subsequent events.
It is also important to emphasize that CAA section 110(k)(5) expressly directs the EPA to take action if the SIP provision is substantially inadequate, not just for purposes of attainment or maintenance of the NAAQS but also for purposes of “any requirement” of the CAA. The EPA interprets this reference to “any requirement” of the CAA on its face to authorize reevaluation of an existing SIP provision for compliance with those statutory and regulatory requirements that are germane to the SIP provision at issue. Thus, for example, a SIP provision that is intended to be an “emission limitation” for purposes of a nonattainment plan for purposes of the 1997 PM
Use of the term “any requirement” in CAA section 110(k)(5) also reflects the fact that SIP provisions could be substantially inadequate for widely differing reasons. One provision might be substantially inadequate because it fails to prohibit emissions that contribute to violations of the NAAQS in downwind areas many states away. Another provision, or even the same provision, could be substantially inadequate because it also infringes on the legal right of members of the public who live adjacent to the source to enforce the SIP. Thus, the EPA has previously interpreted CAA section 110(k)(5) to authorize a SIP call to rectify SIP inadequacies of various kinds, both broad and narrow in terms of the scope of the SIP revisions required.
An important baseline question is whether a given deficiency renders the SIP provision “substantially inadequate.” The EPA notes that the term “substantially inadequate” is not defined in the CAA. Moreover, CAA section 110(k)(5) does not specify a particular form of analysis or methodology that the EPA must use to evaluate SIP provisions for substantial inadequacy. Thus, under
The EPA does not interpret CAA section 110(k)(5) to require a showing that the effect of a SIP provision that is facially inconsistent with CAA requirements is causally connected to a particular adverse impact. For example, the plain language of CAA section 110(k)(5) does not require direct causal evidence that excess emissions have occurred during a specific malfunction at a specific source and have literally caused a violation of the NAAQS in order to conclude that the SIP provision is substantially inadequate.
Similarly, the EPA does not interpret CAA section 110(k)(5) to require direct causal evidence that a SIP provision that improperly undermines enforceability of the SIP has resulted in a specific failed enforcement attempt by any party. A SIP provision that has the practical effect of barring enforcement by the EPA or through a citizen suit, either because it would bar enforcement if an air agency elects to grant a discretionary exemption or to exercise its own enforcement discretion, is inconsistent with fundamental requirements of the CAA.
The EPA's interpretation of CAA section 110(k)(5) is that the fundamental integrity of the CAA's SIP process and structure are undermined if emission limitations relied upon to meet CAA requirements related to protection of public health and the environment can be violated without potential recourse. For example, the EPA does not believe that it is authorized to issue a SIP call to rectify an impermissible automatic exemption provision only after a violation of the NAAQS has occurred, or only if that NAAQS violation can be directly linked to the excess emissions that resulted from the impermissible automatic exemption by a particular source on a particular day. If the SIP contains a provision that is inconsistent with fundamental requirements of the CAA, that renders the SIP provision substantially inadequate.
The EPA notes that CAA section 110(k)(5) can also be an appropriate tool to address ambiguous SIP provisions that could be read by a court in a way that would violate the requirements of the CAA. For example, if an existing SIP provision concerning the state's exercise of enforcement discretion is sufficiently ambiguous that it could be construed to preclude enforcement by the EPA or through a citizen suit if the state elects to deem a given SSM event not a violation, then that could render the provision substantially inadequate by interfering with the enforcement structure of the CAA.
In this instance, the Petition raised questions concerning the adequacy of existing SIP provisions that pertain to the treatment of excess emissions during SSM events. The SIP provisions identified by the Petitioner generally fall into four major categories: (i) Automatic exemptions; (ii) exemptions as a result of director's discretion; (iii) provisions that appear to bar enforcement by the EPA or through a citizen suit if the state decides not to enforce through exercise of enforcement discretion; and (iv) affirmative defense provisions that purport to limit or eliminate a court's jurisdiction to assess liability and impose remedies for exceedances of SIP emission limitations. The EPA believes that each of these types of SIP deficiency potentially justifies a SIP call pursuant to CAA section 110(k)(5), if the Agency determines that a SIP call is the proper means to rectify an existing deficiency in a SIP.
The EPA believes that SIP provisions that provide an automatic exemption from otherwise applicable emission limitations are substantially inadequate to meet CAA requirements. A typical SIP provision that includes an impermissible automatic exemption would provide that a source has to meet a specific emission limitation, except during startup, shutdown and malfunction, and by definition any excess emissions during such events would not be violations and thus there could be no enforcement based on those excess emissions. The EPA's interpretation of CAA requirements for SIP provisions has been reiterated multiple times through the SSM Policy and actions on SIP submissions that pertain to this issue. The EPA's longstanding view is that SIP provisions that include automatic exemptions for excess emissions during SSM events, such that the excess emissions during those events are not considered violations of the applicable emission limitations, do not meet CAA requirements. Such exemptions undermine the attainment and maintenance of the NAAQS, protection of PSD increments and improvement of visibility, and SIP provisions that include such exemptions fail to meet these and other fundamental requirements of the CAA.
The EPA interprets CAA sections 110(a)(2)(A) and 110(a)(2)(C) to require that SIPs contain “emission limitations” to meet CAA requirements. Pursuant to CAA section 302(k), those emission limitations must be “continuous.” Automatic exemptions from otherwise applicable emission limitations thus render those limits less than continuous as required by CAA sections 302(k), 110(a)(2)(A) and 110(a)(2)(C), thereby inconsistent with a fundamental requirement of the CAA and thus substantially inadequate as contemplated in CAA section 110(k)(5).
This inadequacy has far-reaching impacts. For example, air agencies rely on emission limitations in SIPs in order to provide for attainment and maintenance of the NAAQS. These emission limitations are often used by air agencies to meet various requirements including: (i) In the estimates of emissions for emissions inventories; (ii) in the determination of what level of emissions meets various statutory requirements such as “reasonably available control measures” in nonattainment SIPs or “best available retrofit technology” in regional haze SIPs; and (iii) in critical modeling exercises such as attainment demonstration modeling for nonattainment areas or increment use for PSD permitting purposes.
Because the NAAQS are not directly enforceable against individual sources, air agencies rely on the adoption and enforcement of these generic and specific emission limitations in SIPs in order to provide for attainment and maintenance of the NAAQS, protection of PSD increments and improvement of visibility, and to meet other CAA requirements. Automatic exemption provisions for excess emissions eliminate the possibility of enforcement for what would otherwise be clear violations of the relied-upon emission limitations and thus eliminate any opportunity to obtain injunctive relief that may be needed to protect the NAAQS or meet other CAA requirements. Likewise, the elimination of any possibility for penalties for what would otherwise be clear violations of the emission limitations, regardless of the conduct of the source, eliminates any opportunity for penalties to encourage appropriate design, operation and maintenance of sources and to encourage efforts by source operators to prevent and to minimize excess emissions in order to protect the NAAQS or to meet other CAA requirements. Removal of this monetary incentive to comply with the SIP reduces a source's incentive to design, operate, and maintain its facility to meet emission limitations at all times.
The EPA believes that SIP provisions that allow discretionary exemptions from otherwise applicable emission limitations are substantially inadequate to meet CAA requirements for the same reasons as automatic exemptions, but for additional reasons as well. A typical SIP provision that includes an impermissible “director's discretion” component would purport to authorize air agency personnel to modify existing SIP requirements under certain conditions,
Unless it is possible at the time of the approval of the SIP provision to anticipate and analyze the impacts of the potential exercise of the director's discretion, such provisions functionally could allow
Congress presumably imposed these many explicit requirements in order to assure that there is adequate public process at both the air agency and federal level for any SIP revision and to assure that any SIP revision meets the applicable substantive requirements of the CAA. Although no provision of the CAA explicitly addresses whether a “director's discretion” provision by that term is acceptable, the EPA interprets the statute to prohibit such provisions unless they would be consistent with the statutory and regulatory requirements that apply to SIP revisions.
For this reason, the EPA has long discouraged the creation of new SIP provisions containing an impermissible director's discretion feature and has also taken actions to remove existing SIP provisions that it had previously approved in error.
The EPA's evaluation of the specific SIP provisions of this type identified in the Petition indicates that none of them provides sufficient process or sufficient bounds on the exercise of director's discretion to be permissible. Most on their face would allow potentially limitless exemptions from SIP requirements with potentially dramatic adverse impacts inconsistent with the objectives of the CAA. More importantly, however, each of the identified SIP provisions goes far beyond the limits of what might theoretically be a permissible director's discretion provision, by authorizing state personnel to create case-by-case exemptions from the applicable emission limitations or other requirements of the SIP for excess emissions during SSM events. Given that the EPA interprets the CAA not to allow exemptions from SIP emission limitations for excess emissions during SSM events in the first instance, it follows that providing such exemptions through the
As with automatic exemptions for excess emissions during SSM events, a provision that allows discretionary exemptions would not meet the statutory requirements of CAA sections 110(a)(2)(A) and 110(a)(2)(C) that require SIPs to contain “emission limitations” to meet CAA requirements. Pursuant to CAA section 302(k), those emission limitations must be “continuous.” Discretionary exemptions from otherwise applicable emission limitations render those limits less than continuous, as is required by CAA sections 110(a)(2)(A) and 110(a)(2)(C), and thereby inconsistent with a fundamental requirement of the CAA and thus substantially inadequate as contemplated in section CAA 110(k)(5). Such exemptions undermine the objectives of the CAA such as protection of the NAAQS and PSD increments, and they fail to meet other fundamental requirements of the CAA.
In addition, discretionary exemptions undermine effective enforcement of the SIP by the EPA or through a citizen suit, because often there may have been little or no public process concerning the exercise of director's discretion to grant the exemptions, or easily accessible documentation of those exemptions, and thus even ascertaining the possible existence of such
The EPA believes that SIP provisions that pertain to enforcement discretion but could be construed to bar enforcement by the EPA or through a citizen suit if the air agency declines to enforce are substantially inadequate to meet CAA requirements. A typical SIP provision that includes an impermissible enforcement discretion provision specifies certain parameters for when air agency personnel should pursue enforcement action, but is worded in such a way that the air director's decision defines what constitutes a “violation” of the emission limitation for purposes of the SIP,
The EPA's longstanding view is that SIP provisions cannot enable an air agency's decision concerning whether or not to pursue enforcement to bar the ability of the EPA or the public to enforce applicable requirements.
The EPA believes that SIP provisions that provide an affirmative defense for excess emissions during SSM events are substantially inadequate to meet CAA requirements. A typical SIP provision that includes an impermissible affirmative defense operates to limit or eliminate the jurisdiction of federal courts to assess liability or to impose remedies in an enforcement proceeding for exceedances of SIP emission limitations. Some affirmative defense provisions apply broadly, whereas others are components of specific emission limitations. Some provisions use the explicit term “affirmative defense,” whereas others are structured as such provisions but do not use this specific terminology. All of these provisions, however, share the same legal deficiency in that they purport to alter the statutory jurisdiction of federal courts under section 113 and section 304 to determine liability and to impose remedies for violations of CAA requirements, including SIP emission limitations. Accordingly, an affirmative defense provision that operates to limit or to eliminate the jurisdiction of the federal courts would undermine the enforcement structure of the CAA and would thus be substantially inadequate to meet fundamental requirements in CAA sections 113 and 304. By undermining enforcement, such provisions also are inconsistent with fundamental CAA requirements such as attainment and maintenance of the NAAQS, protection of PSD increments and improvement of visibility.
Section 110(k)(5) of the CAA provides the EPA with authority to determine whether a SIP is substantially inadequate to attain or maintain the NAAQS or otherwise comply with any requirement of the CAA. Where the EPA makes such a determination, the EPA then has a duty to issue a SIP call.
In addition to providing general authority for a SIP call, CAA section 110(k)(5) sets forth the process and timing for such an action. First, the statute requires the EPA to notify the state of the final finding of substantial inadequacy. The EPA typically provides notice to states by a letter from the Assistant Administrator for the Office of Air and Radiation to the appropriate state officials in addition to publication of the final action in the
Second, the statute requires the EPA to establish “reasonable deadlines (not to exceed 18 months after the date of such notice)” for states to submit corrective SIP submissions to eliminate the inadequacy in response to the SIP call. The EPA proposes and takes comment on the schedule for the submission of corrective SIP revisions in order to ascertain the appropriate timeframe, depending on the nature of the SIP inadequacy.
Third, the statute requires that any finding of substantial inadequacy and notice to the state be made public. By undertaking a notice-and-comment rulemaking, the EPA assures that the air agencies, affected sources and members of the public all are adequately
If the state fails to submit the corrective SIP revision by the deadline established in this final notice, CAA section 110(c) authorizes the EPA to “find[ ] that [the] State has failed to make a required submission.”
The finding of failure to submit a revision in response to a SIP call or the EPA's disapproval of that corrective SIP revision can also trigger sanctions under CAA section 179. If a state fails to submit a complete SIP revision that responds to a SIP call, CAA section 179(a) provides for the EPA to issue a finding of state failure. Such a finding starts mandatory 18-month and 24-month sanctions clocks. The two sanctions that apply under CAA section 179(b) are the 2-to-1 emission offset requirement for all new and modified major sources subject to the nonattainment NSR program and restrictions on highway funding. However, section 179 leaves it to the EPA to decide the order in which these sanctions apply. The EPA issued an order of sanctions rule in 1994 but did not specify the order of sanctions where a state fails to submit or submits a deficient SIP revision in response to a SIP call.
Mandatory sanctions under CAA section 179 generally apply only in nonattainment areas. By its definition, the emission offset sanction applies only in areas required to have a part D NSR program,
When the EPA finalizes a finding of substantial inadequacy and a SIP call for any state, CAA section 110(k)(5) requires the EPA to establish a SIP submission deadline by which the state must make a SIP submission to rectify the identified deficiency. Pursuant to CAA section 110(k)(5), the EPA has authority to set a SIP submission deadline that is up to 18 months from the date of the final finding of inadequacy.
The EPA proposed to establish a date 18 months from the date of promulgation of the final finding for the state to respond to the SIP call. After further evaluation of this issue and consideration of comments on the proposed SIP call, the EPA has decided to finalize the proposed schedule. Thus, the SIP submission deadline for each of the states subject to this SIP call will be November 22, 2016. Thereafter, the EPA will review the adequacy of that new SIP submission in accordance with the CAA requirements of sections 110(a), 110(k), 110(l) and 193, including the EPA's interpretation of the CAA reflected in the SSM Policy as clarified and updated through this rulemaking.
The EPA is providing the maximum time permissible under the CAA for a state to respond to a SIP call. The EPA believes that it is appropriate to provide states with the full 18 months authorized under CAA section 110(k)(5) in order to allow states sufficient time to make SIP revisions following their own SIP development process. During this time, the EPA recognizes, an affected state will need to revise its state regulations, provide for public input, process the SIP revision through the state's own procedures and submit the SIP revision to the EPA. Such a schedule will allow for the necessary SIP development process to correct the deficiencies, yet still achieve the necessary SIP improvements as expeditiously as practicable. There may be exceptions, particularly in states that have adopted especially time-consuming procedures for adoption and submission of SIP revisions. The EPA acknowledges that the longstanding existence of many of the provisions at issue, such as automatic exemptions for SSM events, may have resulted in undue reliance on them as a compliance mechanism by some sources. As a result, development of appropriate SIP revisions may entail reexamination of the applicable emission limitations themselves, and this process may require the maximum time allowed by the CAA. For example, if circumstances do not allow the state to develop alternative emission limitations within that time, the state may find it necessary to remove the automatic exemptions in an initial responsive SIP revision and establish alternative emission limitations in a later SIP revision. Nevertheless, the EPA encourages the affected states to make the necessary revisions in as timely a fashion as possible and encourages the states to work with the respective EPA Regional
The EPA notes that the SIP call for affected states finalized in this action is narrow and applies only to the specific SIP provisions determined to be inconsistent with the requirements of the CAA. To the extent that a state is concerned that elimination of a particular aspect of an existing emission limitation, such as an impermissible exemption, will render that emission limitation more stringent than the state originally intended and more stringent than needed to meet the CAA requirements it was intended to address, the EPA anticipates that the state will revise the emission limitation accordingly, but without the impermissible exemption or other feature that necessitated the SIP call. With adequate justification, this SIP revision might,
The EPA emphasizes that its authority under CAA section 110(k)(5) does not extend to requiring a state to adopt a particular control measure in its SIP revision in response to the SIP call. Under principles of cooperative federalism, the CAA vests air agencies with substantial discretion in how to develop SIP provisions, so long as the provisions meet the legal requirements and objectives of the CAA.
Finally, the EPA notes that under section 553 of the Administrative Procedure Act, 5 U.S.C. 553(d), an agency rule should not be “effective” less than 30 days after its publication, unless certain exceptions apply including an exception for “good cause.” In this action, the EPA is simultaneously taking final action on the Petition, issuing its revised SSM Policy guidance to states for SIP provisions applicable to emissions during SSM events and issuing a SIP call to 36 states for specific existing SIP provisions that it has determined to be substantially inadequate to meet CAA requirements. Section 110(k)(5) provides that the EPA must notify states affected by a SIP call and must establish a deadline for SIP submissions by affected states in response to a SIP call not to exceed 18 months after the date of such notification. The EPA is notifying affected states of this final SIP call action on May 22, 2015. Thus, regardless of the effective date of this action, the deadline for submission of SIP revisions to address the specific SIP provisions that the EPA has identified as substantially inadequate will be November 22, 2016. In addition, the EPA concludes that there is good cause for this final action to be effective on May 22, 2015, the day upon which the EPA provided notice to the states, because any delayed effective date would be unnecessary given that CAA section 110(k)(5) explicitly provides that the deadline for submission of the required SIP revisions runs from the date of notification to the affected states, not from some other date, and shall not exceed 18 months.
The EPA received a wide range of comments on the February 2013 proposal and the SNPR questioning the scope of the Agency's authority to issue this SIP call action under section 110(k)(5), the process followed by EPA for this SIP call action, or the timing that the EPA provided for response to this SIP call action. Although there were numerous comments on these general topics, the majority of the comments raised the same questions and made similar arguments (
1. Comments that section 110(k)(5) requires the EPA to “prove causation” to have authority to issue a SIP call.
For example, many industry commenters opposed the EPA's interpretation of section 110(k)(5) on the grounds that the Agency had failed to provide a specific technical analysis “proving” how the SIP provisions failed to provide for attainment or maintenance of the NAAQS. For areas attaining the NAAQS, commenters asserted that there should be a presumption that existing SIP provisions are adequate if they have resulted in attainment of the NAAQS. For areas violating the NAAQS, commenters claimed that the EPA is required to conduct a technical analysis to determine if there is a “nexus between the provisions that are the subject of its SSM SIP Call Proposal and the specific pollutants for which attainment has not been achieved.” Other industry commenters argued that in order to have authority to issue a SIP call, the EPA must prove through a technical analysis that a given SIP provision “is” substantially inadequate, not that it “may be.” These commenters claimed that the EPA has not shown how any of the SIP provisions at issue in this action “threatens the NAAQS, fails to sufficiently mitigate interstate transport, or comply with any other
Many state commenters made similar arguments, based on the specific attainment or nonattainment status of areas in their respective states. For example, one state commenter claimed that the EPA failed to make required technical findings that the specific provisions the Agency identified as legally deficient “are so substantially inadequate that the State cannot attain or maintain the NAAQS or otherwise comply with the CAA.” The commenter claimed that the EPA should have evaluated all of the state's emission limitations, emission inventories and attainment and maintenance demonstrations for the NAAQS, rather than focusing on these individual SIP provisions. In order to demonstrate substantial inadequacy under section 110(k)(5), the state claimed, the EPA “must point to facts” that show “the State cannot attain or maintain the NAAQS or comply with the CAA” if the provisions remain in the SIP. Other states made comparable arguments with respect to the SIP provisions at issue in their SIPs and claimed that the EPA is required to establish how the provisions caused or contributed to a specific violation of a NAAQS in those states.
By contrast, many environmental group commenters and individual commenters took the opposite position concerning what is necessary to support a finding of substantial inadequacy under section 110(k)(5). These commenters argued that that the EPA may issue a SIP call not only where it determines that a SIP is substantially inadequate to attain or maintain a NAAQS with a technical analysis but also where the Agency determines that the SIP is substantially inadequate “to comply with any requirement of the Act.” The commenters noted that the EPA identified specific statutory provisions of the CAA with which the SIP provisions at issue in this action do not comply. For example, these commenters agreed with the EPA's view that SIP provisions with automatic or discretionary exemptions for emissions during SSM events do not meet the fundamental requirements that SIP emission limitations must apply to limit emissions from sources on a continuous basis, in accordance with sections 110(a)(2)(A), 110(a)(2)(C) and 302(k). In addition to arguing that failure to meet legal requirements of the CAA is a sufficient basis for a SIP call, some commenters provided additional support to illustrate how SIP provisions with deficiencies such as automatic or discretionary exemptions for emissions during SSM events result in large amounts of excess emissions that would otherwise be violations of the applicable emission limitations.
On its face, section 110(k)(5) does not impose any explicit requirements with respect to what specific form of factual or analytical basis is necessary for issuance of a SIP call. Because the statute does not prescribe the basis on which the EPA is to make a finding of substantial inadequacy, the Agency interprets section 110(k)(5) to provide discretion concerning what is necessary to support such a finding. The Agency believes that the nature of the factual or analytical basis necessary to make a finding is dependent upon the specific nature of the substantial inadequacy in a given SIP provision.
For example, when the EPA issued the NO
Not all situations, however, require the same type of detailed factual analysis to support the finding of substantial inadequacy. For example, when the EPA issued the PSD GHG SIP call to 13 states for failure to have a PSD permitting program that properly addresses GHG emissions, the Agency did not need to base that SIP call action on a detailed factual analysis of ambient air impacts.
The EPA believes that the most relevant precedent for what is necessary to support a finding of substantial inadequacy in this action is the SIP call that the Agency previously issued to the state of Utah for deficient SIP provisions related to the treatment of excess emissions during SSM events.
For a second provision, the EPA made a finding of substantial inadequacy because the provision interfered with the enforcement structure of the CAA. The EPA explained:
In the Utah SIP call rulemaking, the EPA received similar adverse comments arguing that the Agency has no authority under section 110(k)(5) to issue a SIP call without a factual analysis that proves that the deficient SIP provisions caused a specific environmental harm, such as a NAAQS violation. Commenters in that rulemaking likewise argued that the EPA was required to prove a causal connection between the excess emissions that occurred during a specific exempt malfunction and a specific violation of the NAAQS. In response to those comments, the EPA explained:
[W]e need not show a direct causal link between any specific unavoidable breakdown excess emissions and violations of the NAAQS to conclude that the SIP is substantially inadequate. It is our interpretation that the fundamental integrity of the CAA's SIP process and structure is undermined if emission limits relied on to meet CAA requirements can be exceeded without potential recourse by any entity granted enforcement authority by the CAA. We are not restricted to issuing SIP calls only after a violation of the NAAQS has occurred or only where a specific violation can be linked to a specific excess emissions event.
The EPA's interpretation of section 110(k)(5) in the Utah action was directly challenged in
Certainly, a SIP could be deemed substantially inadequate because air-quality records showed that actions permitted under the SIP resulted in NAAQS violations, but the statute can likewise apply to a situation like this, where the EPA determines that a SIP is no longer consistent with the EPA's understanding of the CAA. In such a case, the CAA permits the EPA to find that a SIP is substantially inadequate to comply with the CAA, which would allow the EPA to issue a SIP call under CAA section 110(k)(5).
Finally, the EPA disagrees with the commenters on this specific point because it is not a logical construction of section 110(k)(5). The implication of the commenters' argument is that if a given area is in attainment, then the question of whether the SIP provisions meet applicable legal requirements is irrelevant. If a given area is not in attainment, then the implication of the commenter's argument is that the EPA must prove that the legally deficient SIP provision factually caused the violation of the NAAQS or else the legal deficiency is irrelevant. In the latter case, the logical extension of the commenter's argument is that no matter how deficient a SIP provision is to meet applicable legal requirements, the EPA is foreclosed from directing the state to correct that deficiency unless and until there is proof of a specific environmental harm caused, or specific enforcement case thwarted, by that deficiency. Such a reading is inconsistent with both the letter and the intent of section 110(k)(5).
2. Comments that the EPA must make specific factual findings to meet the
One commenter argued that the use of the word “finds” should be read in light of the dictionary definition of “find”—“to discover by study or experiment.” The commenter noted that courts commonly hold that agencies must draw a link between the facts and a challenged agency decision. To support this basic principle of administrative law, the commenter cited a litany of cases including:
Another commenter argued that the phrase “on the basis of information available to the Administrator” in section 110(a)(2)(H)(ii) means that the EPA must not only consider the specific terms of the SIP provisions relative to the legal requirements of the statute but must also consider other information that is “available,” including how the provisions have been affecting air quality or enforcement since approval. In support of this proposition, the commenter cited 1970 legislative history for section 110(a)(2)(H):
Whenever the Secretary or his representative finds from new information developed after the plan is approved that the plan is not or will not be adequate to achieve promulgated ambient air quality standards he must notify the appropriate States and give them an opportunity to respond to the new information.
Thus, the commenter concluded that the EPA must not only find that the SIP is facially inconsistent with the legal requirements of the CAA but also find it “substantially inadequate” to achieve the goals of the requirements as a factual matter before issuing a SIP call. The implication of the commenter's argument is that section 110(a)(2)(H)(ii) imposes additional limitations upon the EPA's authority to issue a SIP call.
First, section 110(a)(2)(H)(ii) does not on its face directly address the scope of the EPA's authority, unlike section 110(k)(5). Section 110(a)(2)(H)(ii) appears in section 110(a)(2), which contains a listing of specific structural or program requirements that each state's SIP must include. In the case of section 110(a)(2)(H)(ii), the CAA requires each state to have provisions in its SIP that “provide for revision of such plan” in the event that the EPA issues a SIP call. Given that section 110(k)(5) is the provision that directly addresses the EPA's authority to issue a SIP call, section 110(a)(2)(H)(ii) should not be interpreted in a way that contradicts or curtails the broad authority provided in section 110(k)(5). The EPA does not interpret section 110(k)(5) to require proof that a given SIP provision caused a specific environmental harm or undermined a specific enforcement action in order to find the provision substantially inadequate. If the provision fails to meet fundamental legal requirements of the CAA for SIP provisions, that alone is sufficient.
Second, even if read in isolation, section 110(a)(2)(H)(ii) does not specify what type of finding the EPA is required to make or specify the way in which the Agency should make such a finding. The EPA agrees that this section of the CAA describes findings that the EPA makes “on the basis of information available to the Administrator that the plan is substantially inadequate to attain” the NAAQS. This section does not, however, expressly state that the “information” in question must be a particular form of information, nor does it expressly require any specified form of technical analysis such as modeling that demonstrates that a particular SIP deficiency caused a violation of the NAAQS. Because the term “information” is not limited in this way, the EPA interprets it to mean whatever form of information is relevant to the finding in question. For certain types of deficiencies, the EPA may determine that such a technical analysis is appropriate, but that does not mean that it is required as a basis for all findings of substantial inadequacy.
Third, section 110(a)(2)(H)(ii), like section 110(k)(5), is not limited to findings related exclusively to attainment of the NAAQS. Section 110(a)(2)(H)(ii) also expressly refers to findings by the EPA that a SIP is substantially inadequate “to otherwise comply with any additional requirements established under” the CAA. The EPA interprets this explicit reference to “any additional requirements” to include any legal requirements applicable to SIP provisions, such as the requirement that emission limitations must apply continuously. The commenters misconstrue section 110(a)(2)(H)(ii) to
Fourth, the EPA disagrees with the commenters' arguments that it did not make factual “findings” to support this SIP call. To the contrary, the EPA has made numerous factual determinations with regard to the specific SIP provisions at issue. For example, for those SIP provisions that include automatic exemptions for emissions during SSM events, the EPA has found that the provisions are inconsistent with the definition of “emission limitation” in section 302(k) and that SIP provisions that allow sources to exceed otherwise applicable emission limitations during SSM events may interfere with attainment and maintenance of the NAAQS. The EPA has also made the factual determination that other SIP provisions that authorize director's discretion exemptions during SSM events are inconsistent with the statutory provisions applicable to the approval and revision of SIP provisions. The EPA has found that overbroad enforcement discretion provisions are inconsistent with the enforcement structure of the CAA in that they could be interpreted to allow the state to make the final decision whether such emissions are violations, thus impeding the ability of the EPA and citizens to enforce the emission limitations of the SIP. Similarly, the EPA has found, consistent with the court's decision in
Finally, the EPA notes that the cases cited by the commenters to support their contentions concerning the factual basis for agency decisions are not relevant to the specific question at hand. The correct question is whether section 110(a)(2)(H)(ii) requires the type of factual or technical analysis that they claim. None of the cases they cited address this specific issue. By contrast, the decision of the Tenth Circuit in
3. Comments that the EPA lacks authority to issue a SIP call because it is interpreting the term “substantial inadequacy” incorrectly.
Other commenters acknowledged that the EPA took the position that the term “substantially inadequate” is not defined in the CAA and that the Agency can establish an interpretation of that provision under
State commenters claimed that the requirement that the EPA must determine that the SIP is “substantially” inadequate establishes a heavy burden for the EPA. The commenters relied on a dictionary definition of “substantially” as meaning “considerable in importance, value, degree, amount, or extent.” The commenters argued that when modifying the word “inadequate,” the use of the modifier “substantially” in section 110(k)(5) enhances the degree of proof required. Thus, the commenters argued that the EPA cannot just assume that the provisions may prevent attainment of the NAAQS.
Other industry commenters disagreed that the term “substantially inadequate” is ambiguous but claimed that even if it were, the EPA's own interpretation is vague and ambiguous. The commenters asserted that the EPA's statement that it must evaluate the adequacy of specific SIP provision “in light of the specific purposes for which the SIP provision at issue is required” and with respect to whether the provision meets “fundamental legal requirements applicable to such a provision” is not a reasonable interpretation of the statutory language. Furthermore, the commenters argued, the EPA's interpretation of section 110(k)(5) to authorize a SIP call in the absence of any causal evidence that the SIP provision at issue causes a particular environmental impact reads out of the statute “the explicit requirement that a SIP call related to NAAQS be made only where the state plan is substantially inadequate to attain or maintain the relevant standard.”
The EPA also disagrees with those commenters who argued that the Agency has ignored or misinterpreted the term “substantial” in this action. As many commenters acknowledged, this term is not defined in the statute. Their reliance on a dictionary definition, however, is based on the incorrect premise that a failure to comply with the legal requirements of the CAA for SIP provisions is not “considerable in importance, value, degree, amount, or extent.”
First, the commenters' argument ignores the full statutory language of section 110(k)(5) in which the EPA is authorized to issue a SIP call whenever it determines that a given SIP provision is inadequate, not only because of impacts on attainment of the NAAQS but also upon a failure to meet “any other requirement” of the CAA. As explained in the February 2013 proposal and in the SNPR, the EPA interprets its authority under section 110(k)(5) to encompass any type of deficiency, including failure to meet specific legal requirements of the CAA for SIP provisions. Failure to comply with these legal requirements can have the effect of interfering with attainment and maintenance of the NAAQS (
Second, the commenters' argument implies that failure of a SIP provision to meet a legal requirement of the CAA is not a “substantial” inadequacy. The EPA strongly disagrees with the view that complying with applicable legal requirements is not an important consideration in general, and not important with respect to the specific legal defects at issue here. For example, the EPA considers a SIP provision that does not apply continuously because it contains SSM exemptions to be substantially inadequate because it fails to meet legal requirements of sections 110(a)(2)(A), 110(a)(2)(C) and 302(k). In particular, failure to meet the legal requirements for an emission limitation as contemplated in section 302(k) is a “substantial” inadequacy. The EPA is not alone in this view; the D.C. Circuit in the
Third, the EPA notes that its reading of section 110(k)(5) does not “read out of the statute” the statutory language that SIP provisions can be substantially inadequate “to attain or maintain the relevant NAAQS” as claimed by the commenters. The EPA agrees that SIP provisions can be found substantially inadequate for this specific reason, but it is the commenters who read words out of section 110(k)(5) by disregarding the portion of the statute that also authorizes a SIP call whenever a SIP provision does not “comply with any requirement of” the CAA. Indeed, the EPA believes that SIP provisions that fail to meet the specific legal requirements of the CAA are very likely to have these impacts as well;
4. Comments that the EPA lacks authority to issue a SIP call because it is required to “quantify” the magnitude of any alleged SIP deficiency in order to establish that it is substantial.
The nature of the SIP deficiencies at issue in this action does not require that type of technical analysis and does not require a “quantification” of the extent of the deficiency. In this action, the EPA is promulgating a SIP call action that directs the affected states to revise existing SIP provisions with specific legal deficiencies that make the provisions inconsistent with fundamental legal requirements of the CAA for SIPs,
5. Comments that the EPA's interpretation of substantial inadequacy would override state discretion in development of SIP provisions.
Section 110(k)(5) explicitly authorizes the EPA to issue a SIP call for a broad range of reasons, including to address any SIP provisions that relate to attainment and maintenance of the NAAQS, to interstate transport, or to any other requirement of the CAA.
6. Comments that the EPA cannot issue a SIP call for an existing SIP provision unless the provision was deficient at the time the state originally developed and submitted the provision for EPA approval.
The commenters also argued that if a state's SIP provision was flawed at the time the EPA approved it, then the Agency's only alternative for addressing the deficient provision is through the error correction authority of section 110(k)(6). The EPA disagrees. The CAA provides a number of tools to address flawed SIPs and the EPA does not interpret these provisions to be mutually exclusive. While the EPA could potentially have relied on section 110(k)(6) to remove the deficient provisions at issue in this action, the Agency believes that section 110(k)(5) authority also provides a means to address flawed SIP provisions. As explained in the February 2013 proposal, the EPA specifically considered the relative merits of reliance on section 110(k)(5) and section 110(k)(6) and determined that the former was a better approach for this action.
Comparing the SIP call and error correction approaches, the EPA concluded that the SIP call authority under section 110(k)(5) provides the better approach for this action, in that it allows the states to evaluate the overall structure of their existing SIPs and determine how best to modify the affected SIP provisions in order to address the identified deficiencies. By contrast, use of the error correction authority under section 110(k)(6) would result in immediate disapproval and removal of existing SIP provisions from the SIP, which could cause confusion in terms of what requirements apply to sources. Moreover, the EPA's disapproval of a SIP submission through an error correction that reverses a prior SIP approval of a required SIP provision starts a “sanctions clock,” and sanctions would apply if the state has not submitted a revised SIP within 18 months. Similarly, the EPA would be required to promulgate a FIP if the Agency has not approved a revised SIP submission from the state within 24 months. In comparison, the sanctions and federal plan “clocks” would not start under the SIP call approach unless and until the state fails to submit a SIP revision in response to this SIP call, or unless and until the EPA disapproves that SIP submission. As explained in the February 2013 proposal, the EPA determined that the SIP call process was a better procedure through which to address the deficient SIP provisions at issue in this action.
7. Comments that the EPA failed to consider how excess emissions resulting from SSM exemptions would affect compliance with specific NAAQS, including NAAQS with different averaging periods or different statistical forms.
To support the argument that the validity of SSM exemptions must be evaluated with respect to specific NAAQS, the commenters relied upon recent modeling guidance for the 1-hour NO
For example, section 302(k) does not differentiate between the legal requirements applicable to SIP emission limitations for an annual NAAQS versus for a 1-hour NAAQS, nor between any NAAQS based upon the statistical form of the respective standards. In addition to being supported by the text of section 302(k), the EPA's interpretation of the requirement for sources to be subject to continuous emission limitations is also the most logical given the consequences of the commenters' theory. The commenters' argument provides additional practical reasons to support the EPA's interpretation of the CAA to preclude exemptions for emissions during SSM events from SIP emission limitations as a basic legal requirement for all emission limitations.
The EPA agrees that to ascertain the specific ambient impacts of emissions during a given SSM event can sometimes be difficult. This difficulty can be exacerbated by factors such as exemptions in SIP provisions that not only excuse compliance with emission limitations but also affect reporting or recordkeeping related to emissions during SSM events. Determining specific impacts of emissions during SSM events can be further complicated by the fact that the limited monitoring network for the NAAQS in many states may make it more difficult to establish that a given SSM event at a given source caused a specific violation of the NAAQS. Even if a NAAQS violation is monitored, it may be the result of emissions from multiple sources, including multiple sources having an SSM event simultaneously. The different averaging periods and statistical forms of the NAAQS may make it yet more difficult to determine the impacts of specific SSM events at specific sources, perhaps until years after the event occurred. By the commenters' own logic, there could be situations in which it is functionally impossible to demonstrate definitively that emissions during a given SSM event at a single source caused a specific violation of a specific NAAQS.
The commenters' argument, taken to its logical extension, could result in situations where a SIP emission limitation is only required to be continuous for purposes of one NAAQS but not for another, based on considerations such as averaging time or statistical form of the NAAQS. Such situations could include illogical outcomes such as the same emission limitation applicable to the same source simultaneously being allowed to contain exemptions for emissions during SSM events for one NAAQS but not for another. For example, purely hypothetically under the commenters' premise, a given source could simultaneously be required to comply with a rate-based NO
Under the commenters' premise, the same SIP emission limitation, subject to the same statutory definition in section 302(k), could validly include SSM exemptions for purposes of some NAAQS but not others. Such a system of regulation would make it unnecessarily hard for regulated entities, regulators and other parties to determine whether a source is in compliance. The EPA does not believe that this is a reasonable interpretation of the requirements of the CAA, nor of its authority under section 110(k)(5). This unnecessary confusion is easily resolved simply by interpreting the CAA to require that a source subject to a SIP emission limitation for NO
Finally, the EPA disagrees with the specific arguments raised by commenters concerning the modeling guidance for the 1-hour NO
The commenters argued that this EPA guidance “allows sources to completely exclude all emissions during startup and shutdown scenarios.” This characterization is inaccurate for a number of reasons. First, the guidance in question is only intended to address certain modeling issues related to predictive modeling to demonstrate that proposed construction will not cause or contribute to violation of the 1-hour NO
Second, to the extent that the guidance indicates that air quality considerations might in certain circumstances and for certain purposes be relevant to determining what emission limitations should apply to a source, that does not mean a source may legally have an exemption from compliance with existing emissions limitations during SSM events. In the guidance cited by the commenter, the EPA did recommend that under certain circumstances, it may be appropriate to model the projected impact of the source on the NAAQS without taking into account “intermittent” emissions from sources such as emergency generators or emissions from particular kinds of “startup/shutdown” operations.
Third, the guidance does not say that all SSM emissions may be considered intermittent and excluded from the modeling demonstration. The guidance explicitly recommends that the modeling be based on “emission scenarios that can logically be assumed to be relatively continuous or which occur frequently enough to contribute significantly to the annual distribution of daily maximum 1-hour concentrations” and gives the example that it may be appropriate to include startup and shutdown emissions from a peaking unit at a power plant in the modeling demonstration because those units go through frequent startup/shutdown cycles.
8. Comments that this SIP call action is inconsistent with 1976 EPA guidance for such actions.
Second, even setting aside that the guidance is not relevant to the EPA's authority under section 110(k)(5), the 1976 guidance on its face did not purport to define the full contours of the term “substantially inadequate” in section 110(a)(2)(H). The 1976 guidance stated explicitly that “it is difficult to develop comprehensive guidelines for all cases” and only listed “[s]ome factors that could be considered” in evaluating whether a state's SIP is substantially inadequate.
Third, the EPA notes that the commenter did not advocate that the Agency follow the 1976 guidance with respect to other issues,
The EPA has fully articulated its interpretation of the term “substantial inadequacy” in section 110(k)(5) in the February 2013 proposal. As explained in the proposal, the EPA interprets its current authority to include the issuance of a SIP call for the types of legal deficiencies identified in this action. In order to establish that these legal deficiencies are substantial inadequacies, the EPA does not interpret section 110(k)(5) to require the Agency to document precisely how each deficiency factually undermines the objectives of the CAA, such as attainment and maintenance of the NAAQS in a particular location on a particular date. It is sufficient that these provisions are inconsistent with the legal requirements for SIP provisions set forth in the CAA that are intended to assure that SIPs in fact do achieve the intended objectives.
10. Comments that because the EPA has misinterpreted the statutory terms “emission limitation” and “continuous,” the EPA has not established a substantial inadequacy.
With respect to the arguments that the EPA has incorrectly interpreted the terms “emission limitation” and “continuous” in this action, the EPA has responded in detail in section VII.A.3 of this document and need not repeat those responses here. In short, the EPA is interpreting those terms consistent with the relevant statutory language and consistent with the decision of the court in
11. Comments that section 110(k)(5) imposes a “higher burden of proof” upon the EPA than section 110(l) and that section 110(l) requires the EPA to conduct a specific technical analysis of the impacts of a SIP revision.
The commenters argued that, by the “plain language” of the CAA and because of “common sense,” Congress intended the section 110(k)(5) SIP call standard to be “higher” than the section 110(l) SIP revision. The EPA disagrees that this is a question resolved by the “plain language.” To the contrary, the three most relevant statutory provisions, section 110(k)(3), section 110(l), and section 110(k)(5), are each to some degree ambiguous and are likewise ambiguous with respect to how they operate together to apply to newly submitted SIP provisions versus existing SIP provisions. Section 110(k)(3) requires the EPA to approve a newly submitted SIP provision “if it meets all of the applicable requirements of [the CAA].” Implicitly, the EPA is required to disapprove a SIP provision if it does not meet all applicable CAA requirements. Section 110(l) provides that the EPA may not approve any SIP revision that “would interfere with . . . any other applicable requirement of [the CAA].” Section 110(k)(5) provides that the EPA shall issue a SIP call “whenever” the Agency finds an existing SIP provision “substantially inadequate . . . to otherwise comply with [the CAA].” None of the core terms in each of the three provisions is defined in the CAA. Thus, whether the “would interfere with” standard of section 110(l) is
As explained in detail in the February 2013 proposal, the EPA interprets its authority under section 110(k)(5) broadly to include authority to require a state to revise an existing SIP provision that fails to meet fundamental legal requirements of the CAA.
Notwithstanding that each of these three statutory provisions applies to different stages of the SIP process, all three of them explicitly make compliance with the legal requirements of the CAA a part of the analysis. At a minimum, the EPA believes that Congress intended these three sections, working together, to ensure that SIP provisions must meet all applicable legal CAA requirements when they are initially approved and to ensure that SIP provisions continue to meet CAA requirements over time, allowing for potential amendments to the CAA, changes in interpretation of the CAA by the EPA or courts or simply changed facts. With respect to compliance with the applicable legal requirements of the
The EPA also disagrees with the commenters' characterization of the requirements of section 110(l) and their arguments based on court decisions concerning section 110(l). Commenters rely on the decision in
First, the EPA notes that the commenters mischaracterize section 110(l) as requiring a particular form or method of analysis to support approval or disapproval of a SIP revision. Section 110(l) does not contain any such explicit requirement or specifications. The EPA interprets section 110(l) only to require an analysis that is appropriate for the particular SIP revision at issue, and that analysis can take different forms or different levels of complexity depending on the facts and circumstances relevant to the SIP revision. Like section 110(l), the EPA believes that section 110(k)(5) does not specify a particular form of analysis necessary to find a SIP provision substantially inadequate.
Second, the commenters mischaracterize the primary decision that they rely upon. The court in
Third, the section 110(1) cases cited by the commenters did not involve SIP revisions in which states sought to change existing SIP provisions so that they would fail to meet the specific CAA requirements at issue in this action. For example, none of the cases involved the EPA's approval of a new automatic exemption for emissions during SSM events. Had the state submitted a SIP revision that failed to meet applicable requirements of the CAA for SIP provisions, such as changing existing SIP emission limitations so that they would thereafter include SSM exemptions, then the EPA would have had to disapprove them.
12. Comments that the EPA is misinterpreting
First, the
Second, the court specifically upheld the EPA's SIP call action requiring the state to revise its SIP to remove or revise another SIP provision that could be interpreted to give state personnel the authority to determine unilaterally whether excess emissions from sources are a violation of the applicable emission limitation and thereby preclude any enforcement action by the EPA or citizens.
Third, the court also upheld the EPA's authority to issue a SIP call requiring a state “to clarify language in the SIP that could be read to violate the CAA, when a court has not yet interpreted the language in that way.” Indeed, the court opined that “in light of the potential conflicts” between competing interpretations of the SIP provision,
Fourth, the court explicitly upheld the EPA's reasonable interpretation of section 110(k)(5) to authorize a SIP call when a state's SIP provision is substantially inadequate to meet applicable legal requirements, without making “specific factual findings” that the deficient provision resulted in a NAAQS violation. The EPA interpreted the CAA to allow a SIP call if the Agency “determined that aspects of the SIP undermine the fundamental integrity of the CAA's SIP process and structure, regardless of whether or not the EPA could point to specific instances where the SIP allowed violations of the NAAQS.” The
Fifth, the court rejected claims that the EPA was requiring states to comply with the SSM Policy guidance rather than the CAA requirements, and the court noted that the Agency had undertaken notice-and-comment rulemaking to evaluate whether the SIP provisions at issue were consistent with CAA requirements.
Sixth, the court rejected the claim that the EPA was interpreting the requirements of the CAA incorrectly because the EPA is in the process of bringing its own NSPS and NESHAP regulations into line with CAA requirements for emission limitations, in accordance with the
On these and many other issues, the EPA believes that the court's decision in
13. Comments that EPA has to evaluate a SIP “as a whole” to have the authority to issue a SIP call.
To the extent that an affected state believes that the EPA has overlooked another valid provision of the SIP that would cure the substantial inadequacy that the Agency has identified in this action, the state may seek to correct the deficient SIP provision by properly revising it to remove the impermissible exemption or affirmative defense and replacing it with the requirements of the other SIP provision or by including a clear cross-reference that clarifies the applicability of such provision as a component of the specific emission limitation at issue. The state should make this revision in such a way that the SIP emission limitation is clear on its face as to what the affected sources are required to do during all modes of operation. The emission limitation should apply continuously, and what is required by the emission limitation under any mode of operation should be
14. Comments that the EPA inappropriately is “using guidance” as a basis for the SIP call action.
The EPA also disagrees with commenters that in order to rely on its interpretation of the CAA in the SSM Policy, the EPA must first issue regulatory provisions applicable to SIP provisions. There is no such general obligation for the EPA to codify its interpretations of the CAA in regulatory text. Unless Congress has specifically directed the EPA to promulgate regulations for a particular purpose, the EPA has authority and discretion to promulgate such regulations as it deems necessary or helpful in accordance with its authority under section 301. With respect to issues concerning proper treatment of excess emissions during SSM events in SIP provisions, the EPA has historically proceeded by issuance of guidance documents. In this action, the EPA is undergoing notice-and-comment rulemaking to update and revise its guidance and to apply that guidance to specific existing SIP provisions. Thus, the EPA is not required to promulgate specific implementing regulations as a precondition to making a finding of substantial inadequacy to address existing deficient SIP provisions.
15. Comments that the EPA's redesignation and approval of a maintenance plan for an area in a state with a SIP that has provisions at issue in the SIP call establishes that all provisions in the SIP meet CAA requirements.
The CAA sets forth the general criteria for redesignation of an area from nonattainment to attainment in section 107(d)(3)(E). These criteria include a determination by the EPA that the area has attained the relevant standard (section 107(d)(3)(E)(i)) and that the EPA has fully approved the applicable implementation plan for the area for purposes of redesignation (section 107(d)(3)(E)(ii) and (v)). The EPA must also determine that the improvement in air quality in the area is due to reductions that are permanent and enforceable (section 107(d)(3)(E)(iii)) and that the EPA has fully approved a maintenance plan for the area under section 175A (section 107(d)(3)(E)(iv)).
For purposes of redesignation, the EPA has long held that SIP requirements that are not linked with a particular nonattainment area's designation and classification, including certain section 110 requirements, are not “applicable” for purposes of evaluating compliance with the specific redesignation criteria in CAA sections 107(d)(3)(E)(ii) and (v).
The EPA therefore approves redesignation requests in many instances without passing judgment on every part of a state's existing SIP, if it finds those parts of the SIP are not “applicable” for purposes of section 107(d)(3). For example, the EPA recently approved Arizona's request to redesignate the Phoenix-Mesa 1997 8-hour ozone nonattainment area and its accompanying maintenance plan, while recognizing that Arizona's SIP may contain affirmative defense provisions that are not consistent with CAA requirements.
The EPA also disagrees with commenters to the extent they suggest that the Agency must use the redesignation process to evaluate whether any existing SIP provisions are legally deficient. The EPA has other statutory mechanisms through which to address existing deficiencies in a state's SIP, and courts have agreed that the EPA retains the authority to issue a SIP call to a state pursuant to CAA section 110(k)(5) even after redesignation of a nonattainment area in that state.
In some cases, the EPA has stated that the presence of illegal SSM provisions does constitute grounds for denying a redesignation request. For example, the EPA issued a proposed disapproval of Utah's redesignation requests for Salt Lake County, Utah County and Ogden City PM
Finally, the EPA disagrees with commenters that approval of a maintenance plan for any area has the result of precluding the Agency from later finding that certain SIP provisions are substantially inadequate under the CAA on the basis that those provisions may interfere with attainment or maintenance of the NAAQS or fail to meet any other legal requirement of the CAA. The approval of a state's redesignation request and maintenance plan for a particular NAAQS is not the conclusion of the state's and the EPA's responsibilities under the CAA but rather is one step in the process Congress established for identifying and addressing the nation's air quality problems on a continuing basis. The redesignation process allows states with nonattainment areas that have attained the relevant NAAQS to provide the EPA with a demonstration of the control measures that will keep the area in attainment for 10 years, with the caveat that the suite of measures may be revisited if necessary and must be revisited with a second maintenance plan for the 10 years following the initial 10-year maintenance period.
Moreover, it is clear from the structure of section 175A maintenance plans that Congress understood that the EPA's approval of a maintenance plan is not a guarantee of future attainment air quality in a nonattainment area. Rather, Congress foresaw that violations of the NAAQS could occur following a redesignation of an area to attainment and therefore required section 175A maintenance plans to include contingency measures that a state could implement quickly in response to a violation of a standard. The notion that the EPA's approval of a maintenance plan must be the last word with regard to the contents of a state's SIP simply does not comport with the framework Congress established in the CAA for redesignations. The EPA has continuing authority and responsibility to assure that a state's SIP meets CAA
In conclusion, the EPA is not required to reevaluate the validity of all previously approved SIP provisions as part of a redesignation. The existence of provisions such as impermissible exemptions and affirmative defenses applicable during SSM events in an approved SIP does not preclude the EPA's determination that emission reductions that have provided for attainment and that will provide for maintenance of a NAAQS in a nonattainment area are “permanent and enforceable,” as those terms are meant in section 107(d)(3), or that the state has met all applicable requirements under section 110 and part D relevant for the purposes of redesignation. Finally, if the EPA separately determines that the state's SIP is deficient after the redesignation of the area to attainment, the Agency can issue a SIP call requiring a corrective SIP revision. Redesignation of areas to attainment in no way relieves states of their continuing responsibilities to remove deficient SIP provisions from their SIPs in the event of a SIP call.
16. Comments that in issuing a SIP call the EPA is “dictating” to states how to regulate their sources and taking away their discretion to adopt appropriate control measures of their own choosing in developing a SIP.
Commenters claimed that states are provided substantial discretion under the Act in how to develop SIPs and that the EPA's SIP call action is inconsistent with this long-recognized discretion because it limits the states to one option: “Eliminate any consideration of unavoidable emissions during planned startups and shutdowns and adopt only an extremely limited affirmative defense for unavoidable emissions during a malfunction.” The commenters claimed that other options available to states include “justifying existing provisions, adopting alternative numeric emission limitations, work practice standards, additional operational limitations, or revising existing numeric emission limitations and/or their associated averaging times to create a sufficient compliance margin for unavoidable SSM emissions.”
The commenters further asserted that the EPA's February 2013 proposal contained inconsistent statements about how the Agency expects states to respond to the SIP call. For example, according to one commenter, the EPA states in one place that startup and shutdown emissions above otherwise applicable limits must be considered a violation yet elsewhere discusses the fact that states can adopt alternative emission limitations for startup and shutdown. The commenter also asserted that the EPA recommended that states could elect to adopt the an approach to emissions during startup and shutdown like that of the EPA's recent MATS rule but that the EPA then failed to explain that the MATS rule contains “exemptions” for emissions during startup and shutdown that apply so long as the source meets the general work practice standards in the rule. This commenter claimed that the EPA's own approach is inconsistent with statements in the February 2013 proposal that states should treat all startups and shutdowns as “normal operations.”
The Act gives the Agency no authority to question the wisdom of a State's choices of emissions limitations if they are part of a plan which satisfies the standards of § 110(a)(2) . . . [S]o long as the ultimate effect of a State's choice of emissions limitations is compliance with the national standards, the State is at liberty to adopt whatever mix of emissions limitations it deems best suited to its particular situation.
As the EPA has consistently explained in its SSM Policy, the Agency does not believe that exemptions from compliance with any applicable SIP emission limitation requirements during periods of SSM are consistent with the obligation of states in SIPs, including the requirements to demonstrate that plans will attain and maintain the NAAQS, protect PSD increments and improve visibility. If a source is free from any obligation during periods of SSM, there is nothing restraining those emissions and such emissions could cause or contribute to an exceedance or violation of the NAAQS. Moreover, neither the state nor citizens would have authority to take enforcement
Despite claims by the commenter to the contrary, the EPA has not mandated the specific means by which states should regulate emissions from sources during startup and shutdown events. Requiring states to ensure that periods of startup and shutdown are regulated consistent with CAA requirements is not tantamount to prescribing the specific means of control that the state must adopt. By the SIP call, the EPA has simply explained the statutory boundaries to the states for SIP provisions, and the next step is for the states to revise their SIPs consistent with those boundaries. States remain free to choose the “mix of controls,” so long as the resulting SIP revisions meet CAA requirements. The EPA agrees with the commenter who notes several options available to the states in responding to the SIP call. The commenter stated that there are various options available to states, such as “adopting alternative numeric emission limitations, work practice standards, additional operational limitations, or revising existing numeric emission limitations and/or their associated averaging times to create a sufficient compliance margin for unavoidable SSM emissions.” However, the state must demonstrate how that mix of controls for all periods of operation will ensure attainment and maintenance of the NAAQS or meet other required goals of the CAA relevant to the SIP provision, such as visibility protection. For example, if a state chooses to modify averaging times in an emission limitation to account for higher emissions during startup and shutdown, the state would need to consider and demonstrate to the EPA how the variability of emissions over that averaging period might affect attainment and maintenance of a NAAQS with a short averaging period (
The EPA regrets any confusion that may have resulted from its discussion in the preamble to the February 2013 proposal. The EPA's statement that startup and shutdown emissions above otherwise applicable limitations must be considered a violation is simply another way of stating that states cannot exempt sources from complying with emissions standards during periods of startup and shutdown. This is not inconsistent with the EPA's statement that states can develop alternative requirements for periods of startup and shutdown where emission limitations that apply during steady-state operations could not be feasibly met. In such a case, startup and shutdown emissions would not be exempt from compliance but rather would be subject to a different, but enforceable, standard. Then, only emissions that exceed such alternative emission limitations would constitute violations.
17. Comments that because areas are in attainment of the NAAQS, SIP provisions such as automatic exemptions for excess emissions during SSM events are rendered valid under the CAA.
The statutory requirements applicable to SIPs are not limited to areas designated nonattainment. To the contrary, section 107(a) imposes the responsibility on each state to attain and maintain the NAAQS “within the entire geographic areas comprising such State.” The requirement to maintain the NAAQS in section 107(a) clearly applies to areas that are designated attainment, including those that may previously have been designated nonattainment. Similarly, section 110(a)(1) explicitly requires states to have SIPs with provisions that provide for the implementation, maintenance and enforcement of the NAAQS. By inclusion of “maintenance,” section 110(a)(1) clearly encompasses areas designated attainment as well as nonattainment. The SIPs that states develop must also meet a number of more specific requirements set forth in section 110(a)(2) and other sections of the CAA relevant to particular air quality issues (
Section 110(a)(2)(A) requires states to include “emission limitations” in their SIPs “as may be necessary or appropriate to meet applicable requirements of” the CAA. The EPA notes that the commenters have raised other arguments concerning the precise meeting of “necessary or appropriate” (
The EPA's interpretation of the CAA in the SSM Policy has long extended to SIP provisions applicable to attainment areas as well as to nonattainment areas. Since at least 1982, the SSM Policy has stated that SIP provisions with SSM exemptions are inconsistent with requirements of the CAA to provide both for attainment and maintenance of the NAAQS,
Finally, the EPA disagrees with the commenters' theory that, absent proof that the SIP deficiency has caused or will cause a specific violation of the NAAQS, the Agency lacks authority to issue a SIP call for SIP provisions that apply only in areas attaining the NAAQS. This argument is inconsistent with the plain language of section 110(k)(5). Section 110(k)(5) authorizes the EPA to issue a SIP call whenever the SIP is substantially inadequate to attain or maintain the NAAQS, to mitigate interstate transport or to comply with any other CAA requirement. The explicit reference to a SIP's being inadequate to maintain the NAAQS clearly indicates that the EPA has authority to make a finding of substantial inadequacy for a SIP provision applicable to attainment areas, not only for a SIP provision applicable to nonattainment areas. In addition, section 110(k)(5) explicitly authorizes the EPA to issue a SIP call not only in instances related to a specific violation of the NAAQS but rather whenever the Agency determines that a SIP provision is inadequate to meet requirements related to attainment and maintenance of the NAAQS or any other applicable requirement of the Act, including when the provision is inadequate to meet the fundamental legal requirements applicable to SIP provisions. Were the EPA's authority limited to issuing a SIP call only in the event an area was violating the NAAQS, section 110(k)(5) would not explicitly include requirements related to “maintenance” and would not explicitly include the statement “otherwise comply with any requirement of [the CAA].”
18. Comments that the EPA's initial approval of these deficient provisions, or subsequent indirect approval of them through action on other SIP submissions, establishes that these provisions meet CAA requirements.
The EPA also disagrees with the argument that the Agency's action on other intervening SIP submissions from a state over the years since the approval
19. Comments that exemptions for excess emissions during exempt SSM events would not distort emissions inventories, SIP control measure development or modeling, because the EPA's regulations and guidance concerning “rule effectiveness” adequately account for these emissions, and therefore the proposed SIP calls are not needed or justified.
In addition to estimating the actual emissions during startup/shutdown periods, another approach to estimate startup/shutdown emissions is to adjust control parameters via the emissions calculation parameters of rule effectiveness or primary capture efficiency.
Furthermore, as explained in the proposals for this action and in this document, the EPA believes that it is a fundamental requirement of the CAA that SIP emission limitations be continuous, which therefore precludes exemptions for excess emissions during startup and shutdown. At bottom, although it is true that these guidance documents indicated that one less preferable way to account for startup and shutdown emissions could be through the rule effectiveness analysis, this does not in any way indicate that exemptions from emissions limitations would be appropriate for such periods.
Generally, the EPA's guidance and rules do not say that it is correct for estimates of source emissions used in SIP development to be based on an assumption of continuous compliance with the SIP emission limitations even if the SIP contains exemptions for SSM periods. Rather, the EPA has generally emphasized that SIPs and permits should be based on the best available information on actual emissions, including in most cases the effects of known or reasonably anticipatable noncompliance with emission limitations that do apply.
As explained in a response provided earlier in this document, the EPA guidance documents also cited by these commenters in fact do not address how the effect of exemptions in SIPs for excess emissions during startup and shutdown can be accounted for in an attainment or maintenance demonstration. The cited 1992 “rule effectiveness” guidance in regard to issues such as noncompliance in the form of non-operation of control equipment, malfunctions, poor maintenance and deterioration of control equipment was meant to address how the issues affected emissions in 1990, not in a future year when the NAAQS must be attained. The 2005 guidance also did not provide any particular advice on how “rule effectiveness” concepts could be used to estimate emissions during exempt SSM periods. Given that the EPA's longstanding SSM Policy has been that exemptions for excess emissions during SSM events are not permissible, the EPA had no reason to provide guidance on how attainment demonstrations should account for such exemptions.
The commenters are right to infer that the EPA does believe that where exemptions for excess emissions during anticipatable events still remain in current SIPs, attainment demonstrations ideally should account for them. Indeed, the EPA's guidance has recommended that all emissions during startup and shutdown events be included in both historical and projected emissions inventories.
Footnote 4 of the EPA's 1999 SSM Guidance suggested that “[s]tates may account for [potential worst-case emissions that could occur during startup and shutdown] by including them in their routine rule effectiveness estimates.” This statement in the 1999 document's footnote may seem at odds with the statement in this response that the “rule effectiveness” concept was not meant to embrace excess emissions during startup and shutdown that were allowed because of SIP exemptions. However, the footnote is attached to text that addresses “worst-case” emissions that are higher than allowed by the applicable SIP, because that text speaks about the required demonstration to support a SIP revision containing an affirmative defense for violations of applicable SIP emission limitations. Thus, estimates of such worst-case emissions would reflect the effects of noncompliance, which is within the intended scope of the EPA's “rule effectiveness” guidance. Footnote 4 was not referring to the issue of how to account for the effect of SSM exemptions.
20. Comments that exemptions for excess emissions during SSM events are not a concern with respect to PSD and protection of PSD increments.
The commenters' concerns seem to be focused on PSD permitting for individual sources rather than on emission limitations in SIPs. The commenters asserted that the EPA already adequately accounts for all emissions during SSM events when calculating the baseline and increment consumption and expressed concern about the potential for “double counting” of emissions by counting them both toward the baseline and against increment. The EPA agrees that
21. Comments that because ambient air quality has improved over the duration of the CAA through various regulatory programs such as the Acid Rain Program, this disproves that SIP provisions including exemptions for excess emissions during SSM events pose any concerns with respect to protection of public health and the environment.
22. Comments that the EPA's position that SIP provisions such as automatic exemptions for excess emissions during SSM events hinder effective enforcement for violations is incorrect, because there have been a number of citizen suits brought under the CAA.
In the February 2013 proposal, the EPA discussed in detail an enforcement case that illustrates and supports the Agency's position.
As the outcome of this case demonstrates, the mere fact that a number of enforcement actions have been filed does not mean that the deficient SIP provisions identified by the EPA in this SIP call action do not hinder effective enforcement under sections 113 and 304. To the contrary, that case illustrates exactly how conduct that might otherwise be a clear violation of the applicable SIP emission limitations by a source was rendered immune from enforcement through the application of a provision that operated to excuse liability for violations and potentially allowed unlimited excess emissions during SSM events.
The commenters cited 15 other enforcement cases brought by government and citizen groups over a span of 17 years, but the commenters do not indicate whether any SIP provisions relevant to emissions during SSM events were involved, nor do the commenters indicate whether any provisions at issue in this SIP call action were involved in any of the enforcement cases it cited.
A number of commenters on the February 2013 proposal indicated that, from their perspective, a primary benefit of automatic or discretionary exemptions in SIP provisions applicable to emissions during SSM events is to shield sources from liability. Similarly, commenters on the SNPR indicated that, from their perspective, a key benefit of affirmative defense provisions is to prevent what is in their opinion inappropriate enforcement action for violations of SIP emission limitations during SSM events. The EPA does not agree that the purpose of SIP provisions should be to preclude or impede effective enforcement of SIP emission limitations. To the contrary, the potential for enforcement for violations of CAA requirements is a key component of the enforcement structure of the CAA. To the extent that commenters are concerned about inappropriate enforcement actions for conduct that is not in violation of CAA requirements, the EPA believes that the sources already have the ability to defend against any such invalid claims in court.
23. Comments that the EPA's alleged inclusion of “exemptions” or “affirmative defenses” in enforcement consent decrees negates the Agency's interpretation of the CAA to prohibit them in SIP provisions.
The EPA has the authority to enter consent decrees and settlement agreements in its enforcement cases and uses this discretion to resolve these cases. Settlements aim to achieve the best possible result for a given case, taking into account its specific circumstances and risks, but are still compromises between the parties to the litigation.
The EPA also disagrees with comments that attempt to equate affirmative defense provisions in SIPs with affirmative defense clauses that the EPA and defendants agree to contractually in a consent decree or settlement agreement to resolve an enforcement case. Some consent decrees and settlement agreements that the EPA enters into contain provisions referred to as “affirmative defenses” that apply only with respect to whether a source must pay stipulated penalties specified in the consent decree or settlement agreement. However, the EPA does not believe these agreements are counter to CAA requirements. The provisions in these contractual agreements are distinguishable from affirmative defense provisions in SIPs for excess emissions during SSM events. Affirmative defenses to stipulated penalties apply only in the limited context of violations of the contract terms of the consent decree or settlement agreement.
Significantly, these affirmative defense provisions apply only to the stipulated penalties of the consent decree or settlement agreement and do not carry over for incorporation into the source's permit. Most importantly, these affirmative defense provisions do not affect the penalty for violations of CAA requirements in general or of SIP emission limitation violations in particular. Further, a consent decree is itself a court order, and where these provisions have been used in a consent decree they are sanctioned by the court and cannot be seen as a compromise of the court's own jurisdiction or authority. Indeed, the specific consent decree cited by the commenter contains exactly these types of “affirmative defense” provisions that are applicable only to the stipulated penalties imposed contractually by the consent decree and that do not operate to create any other form of affirmative defense applicable more broadly.
The EPA's use of these provisions in enforcement consent decrees or settlement agreements is not inconsistent with the EPA's interpretation of the CAA to preclude such provisions in SIPs. The EPA interprets the CAA to preclude such affirmative defenses in SIP provisions because they purport to alter or eliminate the jurisdiction of courts to find liability or to impose remedies for CAA violations in the event of judicial enforcement. No such concern is presented by the types of provisions in consent decrees or settlement agreements raised by the commenters, because the terms of such agreements must be approved and sanctioned by a court.
24. Comments that the EPA should provide more than 18 months for the SIP call because state law administrative process can take longer than that.
An industry commenter asserted that it has taken EPA numerous years to address the startup and shutdown provisions in its own MACT standards and that states will need a similar amount of time to “unspin” the SSM provisions from SIP emission limitations and replace them with new requirements. The commenter pointed to the difficulty of modifying multiple permits and source-specific or source-category specific regulations. The commenter urged the EPA to provide much more time that the 18 months allowed by statute for a SIP call through “a transition period of a reasonable length far exceeding 48 months.”
Another industry commenter stated that more time is necessary but recognized that the maximum statutory period is 18 months. The commenter supported the EPA's providing states with the full 18 months to submit SIP revisions, because that time is needed in order for the states to undertake the necessary technical analyses to support the SIP revisions and in order to allow for the state rulemaking processes.
The commenter who cited to 40 CFR 51.166(a)(6) is incorrect that it provides authority for the EPA to grant states 3 years to correct SIPs in response to a SIP call. The regulatory provision cited by the commenter is part of the EPA's regulations for the PSD program and simply provides that if the EPA amends that section of the PSD regulations, then a state will have 3 years to make a SIP submission to revise its SIP to meet the new PSD requirements in response to such amendments. This final action does not amend the PSD regulations and 40 CFR 51.166(a)(6) is not implicated. Under CAA section 110(k)(5), the EPA is only authorized to provide a maximum period of 18 months for states to submit SIP revisions to rectify the SIP deficiencies.
25. Comments that EPA should issue an interim enforcement policy, with respect to enforcement between the time that states revise SIP requirements and source permits are revised to reflect those changes.
The EPA is in this final action reiterating that the issuance of the SIP call action does not automatically alter any provisions in existing operating permits. By design, sources for which emission limitations are incorporated in permits will thus have a
The EPA shares the commenter's concern that there is the potential for confusion on the part of sources or other parties in the interim period between the correction of deficient SIP provisions and the revision of source operating permits in the ordinary course. However, the EPA presumes that most sources required to have a permit, especially a title V operating permit, are sufficiently sophisticated and aware of their legal rights and responsibilities that the possibility for confusion on the part of sources should be very limited. Likewise, by making clear in this final action that sources will continue to be authorized to operate in accordance with existing permit terms until such time as the permits are revised after the necessary SIP revision, the EPA anticipates that other parties should be on notice of this fact as well. Regardless of the potential for confusion by any party, the EPA believes that the legal principle of the “permit shield” is well known by regulated entities, regulators, courts and other interested parties. Accordingly, the EPA is not issuing any “enforcement policy” in connection with this SIP call action.
26. Comments that a SIP call directing states to eliminate exemptions for excess emissions during SSM events is a “paper exercise” or “exalts form over substance.”
The EPA believes that revision of the existing deficient SIP provisions has the potential to decrease emissions significantly in comparison to existing provisions, such as those that authorize unlimited emissions during startup and shutdown. Elimination of automatic and director's discretion exemptions for emissions during SSM events should encourage sources to reduce emissions during startup and shutdown and to take steps to avoid malfunctions. Elimination of inappropriate enforcement discretion provisions and affirmative defense provisions should
27. Comments that the EPA should make its interpretation of the CAA with respect to SSM exemptions applicable only “prospectively” and not require states to correct existing deficient provisions.
Other commenters argued that the EPA cannot require states to revise their SIP provisions if this would have the effect of making existing sources have to comply with the revised SIP. According to the commenters, existing sources should be “grandfathered” and should not have to change their control strategies or modes of operation to meet the revised SIP requirements. The commenters asserted that issuance of a SIP call without grandfathering existing sources would “retroactively” require sources to comply with the new SIP provisions and “suddenly” render sources noncompliant, even though they were in compliance with the SIP when they were originally designed, financed and built. The commenter claimed that the SIP call would “change the legal structure for commercial transactions that have already taken place.” The thrust of the commenters' argument is that sources, once built, should never be subjected to any additional pollution control requirements once they are in existence.
In addition, it is not appropriate for the EPA to allow states to retain deficient SIP provisions that would continue to excuse existing sources from complying with the revised SIP provisions in perpetuity or that would only require that future sources comply with such revised SIP provisions. The commenters advocate for “grandfathering” that would authorize current sources to continue to operate under existing deficient SIP provisions (
Finally, the EPA notes, the need for states to establish new emission limitations and change permit terms for many sources should not be viewed as an unusual occurrence. The need to reexamine existing SIP provisions and permit terms applicable to sources in response to this SIP call action is comparable to the process that states would undertake to update their SIPs as necessary to meet new and evolving CAA requirements, including future revised NAAQS. For example, under section 110(a)(1) and section 110(a)(2) states are already required to reexamine and potentially to revise their SIP provisions whenever the EPA promulgates a new or revised NAAQS. States already need to reexamine emission limitations required by section 110(a)(2)(A) and other relevant sections of the CAA in their SIPs on a regular basis as the NAAQS are revised (
28. Comments that directing states to correct their existing SIP provisions will require many sources to change terms of their operating permits.
The EPA also acknowledges that the SIP revisions initiated by this SIP call action will result in the removal of deficient provisions such as automatic and discretionary SSM exemptions, overly broad enforcement discretion provisions and affirmative defense provisions. These SIP revisions will ultimately need to be reflected in revised operating permit terms for sources. This SIP call action will not, however, have an automatic impact on any permit terms and conditions, and the resource burden to revise permits will be spread over many years. After a state makes the necessary revisions to its SIP provisions, any needed revisions to operating permits to reflect the revised SIP provisions will occur in the ordinary course as the state issues new permits or reviews and revises existing permits. For example, in the case of title V operating permits, permits with more than 3 years remaining will be reopened to add new applicable requirements within 18 months of the promulgation of the requirements. If a permit has less than 3 years remaining, the new applicable requirement will be added at renewal.
In reviewing the Petitioner's concerns with respect to the specific SIP provisions identified in the Petition, the EPA notes that most of the provisions relate to a small number of common issues. Many of these provisions are as old as the original SIPs that the EPA approved in the early 1970s, when the states and the EPA had limited experience in evaluating the provisions' adequacy, enforceability and consistency with CAA requirements.
In some instances the EPA does not agree with the Petitioner's reading of the provision in question, or with the Petitioner's conclusion that the provision is inconsistent with the requirements of the CAA. However, given the common issues that arise for multiple states in the Petition as well as in the EPA's independent evaluation, there are some overarching conceptual points that merit discussion in general terms. Thus, this section IX.A of the document provides a general discussion of each of the overarching points, including a summary of what the EPA proposed to determine with respect to the relevant SIP provisions collectively. The EPA received comments on the proposed determinations from affected states, the Petitioner and other commenters. A detailed discussion of the comments received with the EPA's responses is provided in the Response to Comment document available in the docket for this rulemaking.
Sections IX.B through IX.K of this document name the specific SIP provisions identified in the Petition or by the EPA, including a summary of what the EPA proposed and followed by the EPA's stated final action with respect to each SIP provision.
A significant number of provisions identified by the Petitioner pertain to existing SIP provisions that create automatic exemptions for excess emissions during periods of SSM. Some of these provisions also pertain to exemptions for excess emissions that occur during maintenance, load change or other types of normal source operation. These provisions typically provide that a source subject to a specific SIP emission limitation is exempted from compliance during SSM, so that the excess emissions are defined as not violations. Most of these provisions are artifacts of the early phases of the SIP program, approved before state and EPA regulators recognized the implications of such exemptions. Whatever the genesis of these existing SIP provisions, however, these automatic exemptions from emission limitations are not consistent with the CAA, as the EPA has stated in its SSM Policy since at least 1982.
After evaluating the Petition, the EPA proposed to determine that a number of states have existing SIP provisions that create impermissible automatic exemptions for excess emissions during malfunctions or during startup, shutdown or other types of normal source operation. In those instances where the EPA agreed that a SIP provision identified by the Petitioner contained such an exemption contrary to the requirements of the CAA, the EPA proposed to grant the Petition and accordingly to issue a SIP call to the appropriate state.
Another category of problematic SIP provision identified by the Petitioner is exemptions for excess emissions that, while not automatic, are exemptions for such emissions granted at the discretion of state regulatory personnel. In some cases, the SIP provision in question may provide some minimal degree of process and some parameters for the granting of such discretionary exemptions, but the typical provision at issue allows state personnel to decide unilaterally and without meaningful limitations that what would otherwise be a violation of the applicable emission limitation is instead exempt. Because the state personnel have the authority to decide that the excess emissions at issue are not a violation of the applicable emission limitation, such a decision would transform the violation into a nonviolation, thereby barring enforcement by the EPA or others.
The EPA refers to this type of provision as a “director's discretion” provision, and the EPA interprets the CAA generally to forbid such provisions in SIPs because they have the potential to undermine fundamental statutory objectives such as the attainment and maintenance of the NAAQS and to undermine effective enforcement of the SIP. As described in sections VII.C and VIII.A.3 of this document, unbounded director's discretion provisions purport to allow unilateral revisions of approved SIP provisions without meeting the applicable statutory substantive and procedural requirements for SIP revisions. The specific SIP provisions at issue in the Petition are especially inappropriate because they purport to allow discretionary creation of case-by-case exemptions from the applicable emission limitations, when the CAA does not permit any such exemptions in the first instance. The practical impact of such provisions is that in effect they transform an enforcement discretion decision by the state (
The Petitioner identified existing SIP provisions in many states that ostensibly pertain to parameters for the exercise of enforcement discretion by state personnel for violations due to excess emissions during SSM events. The EPA's SSM Policy has consistently encouraged states to utilize traditional enforcement discretion within appropriate bounds for such violations and, in the 1982 SSM Guidance, explicitly recommended criteria that states might consider in the event that they elected to formalize their enforcement discretion with provisions in the SIP. The intent has been that such enforcement discretion provisions in a SIP would be “state-only,” meaning that the provisions apply only to the state's own enforcement personnel and not to the EPA or to others.
The EPA determined that a number of states have SIP provisions that, when evaluated carefully, could reasonably be construed to allow the state to make enforcement discretion decisions that would purport to foreclose enforcement by the EPA under CAA section 113 or by citizens under section 304. In those instances where the EPA agreed that a specific provision could have the effect of impeding adequate enforcement of the requirements of the SIP by parties other than the state, the EPA proposed to grant the Petition and to take action to rectify the problem. By contrast, where the EPA's evaluation indicated that the existing provision on its face or as reasonably construed could not be read to preclude enforcement by parties other than the state, the EPA proposed to deny the Petition, and the EPA invited comment on this issue in particular to assure that the state and the EPA have a common understanding that the provision does not have any impact on potential enforcement by the EPA or through a citizen suit. This process was intended to ensure that there is no misunderstanding in the future that the correct reading of the SIP provision would not bar enforcement by the EPA or through a citizen suit when the state elected to exercise its own enforcement discretion.
In the February 2013 proposal, the EPA noted that another method by which to eliminate any potential ambiguity about the meaning of these enforcement discretion provisions would be for the state to revise its SIP to remove the provisions. Because these provisions are only applicable to the state, the EPA's view was, and still is, that the provisions need not be included within the SIP. Thus, the EPA supports states that elect to revise their SIPs to remove these provisions to avoid any unnecessary confusion.
The Petitioner asked the EPA to rescind its SSM Policy element that interpreted the CAA to allow SIPs to include affirmative defenses for violations due to excess emissions during any type of SSM events. Related to this request, the Petitioner asked the EPA to find that states with SIPs containing an affirmative defense to monetary penalties for excess emissions during SSM events are substantially inadequate because they do not comply with the CAA. If the EPA were to deny the Petitioner's request that the EPA revise its interpretation of the CAA, the Petitioner asked that the EPA in the alternative require states with SIPs that contain such affirmative defense provisions to revise them so that they are consistent with the EPA's 1999 SSM Guidance for excess emissions during SSM events and to issue a SIP call to states with provisions inconsistent with the EPA's interpretation of the CAA.
The Petitioner drew no distinction between affirmative defense provisions for malfunctions versus affirmative defense provisions for startup and shutdown or other normal modes of operation. As explained in section IV.B of the February 2013 proposal, the EPA did make such distinction in its proposed response to the Petition, at that time proposing to revise its SSM Policy to reflect an interpretation of the CAA that affirmative defense provisions applicable during startup and shutdown were not appropriate but reasoning that affirmative defense provisions remained appropriate for violations when due to malfunction events. Thus, in the February 2013 proposal, the EPA proposed to issue a SIP call to a state to rectify a problem with an affirmative defense provision only if the provision included an affirmative defense that was applicable to excess emissions during startup and shutdown or included an affirmative defense that was applicable to excess emissions during malfunctions but was inconsistent with the criteria recommended in the EPA's SSM Policy.
Subsequent to that February 2013 proposal, a federal court ruled that the CAA precludes authority of the EPA to create affirmative defense provisions applicable to private civil suits. The
For some of the affirmative defense provisions identified by the Petitioner, the EPA in the SNPR reproposed granting of the Petition but proposed a revised basis for its proposed findings of inadequacy and SIP calls. For other affirmative defense provisions identified
As described in section IX.B.1 of the February 2013 proposal, the Petitioner first objected to a specific provision in the Maine SIP that provides an exemption for certain boilers from otherwise applicable SIP visible emission limits during startup and shutdown (06–096–101 Me. Code R. § 3). Second, the Petitioner objected to a provision that empowers the state to “exempt emissions occurring during periods of unavoidable malfunction or unplanned shutdown from civil penalty under section 349, subsection 2” (06–096–101 Me. Code R. § 4).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 06–096–101 Me. Code R. § 3 and 06–096–101 Me. Code R. § 4.
Consequently, the EPA proposed to find that 06–096–101 Me. Code R. § 3 and 06–096–101 Me. Code R. § 4 are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to 06–096–101 Me. Code R. § 3 and 06–096–101 Me. Code R. § 4. Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call to Maine to correct its SIP with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Maine SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.B.2 of the February 2013 proposal, the Petitioner objected to two generally applicable provisions in the New Hampshire SIP that allow emissions in excess of otherwise applicable SIP emission limitations during “malfunction or breakdown of any component part of the air pollution control equipment.” The Petitioner argued that the challenged provisions provide an automatic exemption for excess emissions during the first 48 hours when any component part of air pollution control equipment malfunctions (N.H. Code R. Env-A 902.03) and further provide that “[t]he director may . . . grant an extension of time or a temporary variance” for excess emissions outside of the initial 48-hour time period (N.H. Code R. Env-A 902.04). Second, the Petitioner objected to two specific provisions in the New Hampshire SIP that provide source-specific exemptions for periods of startup for “any process, manufacturing and service industry” (N.H. Code R. Env-A 1203.05) and for pre-June 1974 asphalt plants during startup, provided they are at 60-percent opacity for no more than 3 minutes (N.H. Code R. Env-A 1207.02).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to N.H. Code R. Env-A 902.03, N.H. Code R. Env-A 1203.05 and N.H. Code R. Env-A 902.04. Also for reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to N.H. Code R. Env-A 1207.02.
Consequently, the EPA proposed to find that N.H. Code R. Env-A 902.03, N.H. Code R. Env-A 1203.05 and N.H. Code R. Env-A 902.04 were substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions. Through comments submitted on the February 2013 proposal, however, the EPA has ascertained that the versions of N.H. Code R. Env-A 902.03 and N.H. Code R. Env-A 902.04 identified in the Petition and evaluated in the February 2013 proposal are no longer in the state's SIP. In November 2012, the EPA approved a SIP revision that replaced N.H. Code R. Env-A 902.03 and N.H. Code R. Env-A 902.04 with a new version of Env-A 900 that does not contain the deficient provisions identified in the February 2013 proposal.
In this final action, the EPA is denying the Petition with respect to N.H. Code R. Env-A 902.03, N.H. Code R. Env-A 902.04, N.H. Code R. Env-A 1203.05 and N.H. Code R. Env-A 1207.02. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the New Hampshire SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.B.3 of the February 2013 proposal, the Petitioner objected to a generally applicable provision in the Rhode Island SIP that allows for a case-by-case petition procedure whereby a source can obtain a variance from state personnel under R.I. Gen. Laws § 23–23–15 to continue to operate during a malfunction of its control equipment that lasts more than 24 hours, if the source demonstrates that enforcement would constitute undue hardship without a corresponding benefit (25–4–13 R.I. Code R. § 16.2).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 25–4–13 R.I. Code R. § 16.2.
Consequently, the EPA proposed to find that 25–4–13 R.I. Code R. § 16.2 is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to 25–4–13 R.I. Code R. § 16.2. Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Rhode Island SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.C.1 of the February 2013 proposal, the Petitioner objected to two specific provisions in the New Jersey SIP that allow for automatic exemptions for excess emissions during emergency situations. The Petitioner objected to the first provision because it provides industrial process units that have the potential to emit sulfur compounds an exemption from the otherwise applicable sulfur emission limitations where “[t]he discharge from any stack or chimney [has] the sole function of relieving pressure of gas, vapor or liquid under abnormal emergency conditions” (N.J. Admin. Code 7:27–7.2(k)(2)). The Petitioner objected to the second provision because it provides electric generating units (EGUs) an exemption from the otherwise applicable NO
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to N.J. Admin. Code 7:27–7.2(k)(2). Also for reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to N.J. Admin. Code 7:27–19.1.
Consequently, the EPA proposed to find that N.J. Admin. Code 7:27–7.2(k)(2) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to N.J. Admin. Code 7:27–7.2(k)(2) and denying the Petition with respect to N.J. Admin. Code 7:27–19.1. Accordingly, the EPA is finding that the provision in N.J. Admin. Code 7:27–7.2(k)(2) is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the New Jersey SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.D.1 of the February 2013 proposal, the Petitioner objected to seven provisions in the Delaware SIP that provide exemptions during startup and shutdown from the otherwise applicable SIP emission limitations. The seven source-specific and pollutant-specific provisions that provide exemptions during periods of startup and shutdown are: 7–1100–1104 Del. Code Regs § 1.5 (Particulate Emissions from Fuel Burning Equipment); 7–1100–1105 Del. Code Regs § 1.7 (Particulate Emissions from Industrial Process Operations); 7–1100–1108 Del. Code Regs § 1.2 (Sulfur Dioxide Emissions from Fuel Burning Equipment); 7–1100–1109 Del. Code Regs § 1.4 (Emissions of Sulfur Compounds From Industrial Operations); 7–1100–1114 Del. Code Regs § 1.3 (Visible Emissions); 7–1100–1124 Del. Code Regs § 1.4 (Control of Volatile Organic Compound Emissions); and 7–1100–1142 Del. Code Regs § 2.3.5 (Specific Emission Control Requirements).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 7–1100–1104 Del. Code Regs § 1.5, 7–1100–1105 Del. Code Regs § 1.7, 7–1100–1108 Del. Code Regs § 1.2, 7–1100–1109 Del. Code Regs § 1.4, 7–1100–1114 Del. Code Regs § 1.3, 7–1100–1124 Del. Code Regs § 1.4 and 7–1100–1142 Del. Code Regs § 2.3.5.
Consequently, the EPA proposed to find that 7–1100–1104 Del. Code Regs § 1.5, 7–1100–1105 Del. Code Regs § 1.7, 7–1100–1108 Del. Code Regs § 1.2, 7–1100–1109 Del. Code Regs § 1.4, 7–1100–1114 Del. Code Regs § 1.3, 7–1100–1124 Del. Code Regs § 1.4 and 7–1100–1142 Del. Code Regs § 2.3.5 are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to 7–1100–1104 Del. Code Regs § 1.5, 7–1100–1105 Del. Code Regs § 1.7, 7–1100–1108 Del. Code Regs § 1.2, 7–1100–1109 Del. Code Regs § 1.4, 7–1100–1114 Del. Code Regs § 1.3, 7–1100–1124 Del. Code Regs § 1.4 and 7–1100–1142 Del. Code Regs § 2.3.1.6 (updated to § 2.3.1.6 from earlier identification as § 2.3.5). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions.
As described in section IX.D.2 of the February 2013 proposal, the Petitioner objected to five provisions in the District of Columbia (DC) SIP as being inconsistent with the CAA and the EPA's SSM Policy. The Petitioner first objected to a generally applicable provision in the DC SIP that allows for discretionary exemptions during periods of maintenance or malfunction (D.C. Mun. Regs. tit. 20 § 107.3). Secondly, the Petitioner objected to the alternative limitations on stationary sources for visible emissions during periods of “start-up, cleaning, soot blowing, adjustment of combustion controls, or malfunction,” (D.C. Mun. Regs. tit. 20 § 606.1) and, for fuel-burning equipment placed in initial operation before January 1977, alternative limits for visible emissions during startup and shutdown (D.C. Mun. Regs. tit. 20 § 606.2). The Petitioner also objected to the exemption from emission limitations for emergency standby engines (D.C. Mun. Regs. tit. 20 § 805.1(c)(2)). Finally, the Petitioner objected to the provision in the DC SIP that provides an affirmative defense for violations of visible emission limitations during “unavoidable malfunction” (D.C. Mun. Regs. tit. 20 § 606.4).
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to D.C. Mun. Regs. tit. 20 § 107.3 and D.C. Mun. Regs. tit. 20 §§ 606.1 and 606.2. Also for reasons explained in the February 2013 proposal, the EPA proposed to deny the Petition with respect to D.C. Mun. Regs. tit. 20 § 805.1(c)(2). Also for reasons explained in the February 2013 proposal, the EPA proposed to grant the petition with respect to D.C. Mun. Regs. tit. 20 § 606.4 on the basis that it was not a permissible affirmative defense provision consistent with the requirements of the CAA as interpreted in the EPA's SSM Policy at the time.
Subsequently, for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provision in D.C. Mun. Regs. tit. 20 § 606.4, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that D.C. Mun. Regs. tit. 20 § 107.3, D.C. Mun. Regs. tit. 20 §§ 606.1 and 606.2 and D.C. Mun. Regs. tit. 20 § 606.4 are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to D.C. Mun. Regs. tit. 20 § 107.3, D.C. Mun. Regs. tit. 20 §§ 606.1 and 606.2 and D.C. Mun. Regs. tit. 20 § 606.4 and is denying the Petition with respect to D.C. Mun. Regs. tit. 20 § 805.1(c)(2). Accordingly, the EPA is finding that the provisions in D.C. Mun. Regs. tit. 20 § 107.3, D.C. Mun. Regs. tit. 20 §§ 606.1 and 606.2 and D.C. Mun. Regs. tit. 20 § 606.4 are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call to the District of Columbia to correct its SIP with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the DC SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.D.3 of the February 2013 proposal, the Petitioner objected to a generally applicable provision in the Virginia SIP that allows for discretionary exemptions during periods of malfunction (9 Va. Admin. Code § 5–20–180(G)). First, the Petitioner objected because this provision provides an exemption from the otherwise applicable SIP emission limitations. Second, the Petitioner objected to the discretionary exemption for excess emissions during malfunction because the provision gives the state the authority to determine whether a violation “shall be judged to have taken place.” Third, the Petitioner argued that while the regulation provides criteria, akin to an affirmative defense, by which the state must make such a judgment that the event is not a violation, the criteria “fall far short of EPA policy at the time” and the provision “fails to establish any procedure through which the criteria are to be evaluated.”
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 9 Va. Admin. Code § 5–20–180(G). Also for reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to this provision on the basis that it was not a permissible affirmative defense provision consistent with the requirements of the CAA as interpreted in the EPA's SSM Policy.
Subsequently, for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to 9 Va. Admin. Code § 5–20–180(G), but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that 9 Va. Admin. Code § 5–20–180(G) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to 9 Va. Admin. Code § 5–20–180(G) and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Virginia SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.D.4 of the February 2013 proposal, the Petitioner made four types of objections identifying inadequacies regarding SSM provisions in West Virginia's SIP. First, the Petitioner objected to three specific provisions in the West Virginia SIP that allow for automatic exemptions from emission limitations, standards, and monitoring and recordkeeping requirements for excess emission during startup, shutdown, or malfunction (W. Va. Code R. § 45–2–9.1, W. Va. Code R. § 45–7–10.3 and W. Va. Code R. § 45–40–100.8). Second, the Petitioner objected to seven discretionary exemption provisions because these provisions provide exemptions from the otherwise applicable SIP emission limitations. The Petitioner noted that the provisions allow a state official to “grant an exception to the otherwise applicable visible emissions standards” due to “unavoidable shortage of fuel” or “any emergency situation or condition creating a threat to public safety or welfare” (W. Va. Code R. § 45–2–10.1), to permit excess emissions “due to unavoidable malfunctions of equipment” (W. Va. Code R. § 45–3–7.1, W. Va. Code R. § 45–5–13.1, W. Va. Code R. § 45–6–8.2, W. Va. Code R. § 45–7–9.1 and W. Va. Code R. § 45–10–9.1) and to permit exceedances where the limit cannot be “satisfied” because of “routine maintenance” or “unavoidable malfunction” (W. Va. Code R. § 45–21–9.3). Third, the Petitioner objected to the alternative limit imposed on hot mix asphalt plants during periods of startup and shutdown in W. Va. Code R. § 45–3–3.2 because it was “not sufficiently justified” under the EPA's SSM Policy regarding source category-specific rules. Fourth, the Petitioner objected to a discretionary provision allowing the state to approve an alternative visible emission standard during startups and shutdowns for manufacturing processes and associated operations (W. Va. Code R. § 45–7–10.4). The Petitioner argued that such a provision “allows a decision of the state to preclude enforcement by EPA and citizens.”
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to W. Va. Code R. § 45–2–9.1, W. Va. Code R. § 45–7–10.3 and W. Va. Code R. § 45–40–100.8 on the basis that each of these provisions allows for automatic exemptions. Also for reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to W. Va. Code R. § 45–2–10.1, W. Va. Code R. § 45–3–7.1, W. Va. Code R. § 45–5–13.1, W. Va. Code R. § 45–6–8.2, W. Va. Code R. § 45–7–9.1, W. Va. Code R. § 45–10–9.1 and W. Va. Code R. § 45–21–9.3 on the basis that these provisions allow for discretionary exemptions from otherwise applicable SIP emission limitations. Further, for reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to W. Va. Code R. § 45–3–3.2, W. Va. Code R. § 45–2–10.2 and W. Va. Code R. § 45–7–10.4. The W. Va. Code R. § 45–3–3.2 applies to a broad category of sources and is not narrowly limited to a source category that uses a specific control strategy, as required by the EPA's SSM Policy interpreting the CAA. Similarly, W. Va. Code R. § 45–2–10.2 is inconsistent with the EPA's SSM Policy interpreting the CAA because it is an alternative limit that allows for discretionary exemptions from otherwise applicable SIP emission limitations.
Subsequently, for reasons explained fully in the SNPR, the EPA identified one affirmative defense provision in the West Virginia SIP in W. Va. Code R. § 45–2–9.4 that was not identified by the Petitioner, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for this provision.
Consequently, the EPA proposed to find that W. Va. Code R. § 45–2–9.1, W. Va. Code R. § 45–7–10.3, W. Va. Code R. § 45–40–100.8, W. Va. Code R. § 45–2–10.1, W. Va. Code R. § 45–3–7.1, W. Va. Code R. § 45–5–13.1, W. Va. Code R. § 45–6–8.2, W. Va. Code R. § 45–7–9.1, W. Va. Code R. § 45–10–9.1, W. Va. Code R. § 45–21–9.3, W. Va. Code R. § 45–3–3.2 and W. Va. Code R. § 45–7–10.4, which are provisions identified by the Petitioner, and W. Va. Code R. § 45–2–10.2 and W. Va. Code R. § 45–2–9.4, which are provisions identified by the EPA, are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to the West Virginia SIP provisions identified by the Petitioner. Accordingly, the EPA is finding that the provisions in W. Va. Code R. § 45–2–9.1, W. Va. Code R. § 45–7–10.3, W. Va. Code R. § 45–40–100.8, W. Va. Code R. § 45–2–10.1, W. Va. Code R. § 45–3–7.1, W. Va. Code R. § 45–5–13.1, W. Va. Code R. § 45–6–8.2, W. Va. Code R. § 45–7–9.1, W. Va. Code R. § 45–10–9.1, W. Va. Code R. § 45–21–9.3, W. Va. Code R. § 45–3–3.2 and W. Va. Code R. § 45–7–10.4, which are provisions identified by the Petitioner, and W. Va. Code R. § 45–2–10.2 and W. Va. Code R. § 45–2–9.4, which are provisions identified by the EPA, are substantially inadequate to meet CAA requirements. The EPA is thus issuing a SIP call to West Virginia to correct its SIP with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the West Virginia SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.1 of the February 2013 proposal, the Petitioner objected to two generally applicable provisions in the Alabama SIP that allow for discretionary exemptions during startup, shutdown or load change (Ala Admin Code Rule 335–3–14–.03(1)(h)(1)), and during emergencies (Ala Admin Code Rule 335–3–14–.03(1)(h)(2)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Ala Admin Code Rule 335–3–14–.03(1)(h)(1) and Ala Admin Code Rule 335–3–14–.03(1)(h)(2).
Consequently, the EPA proposed to find that Ala Admin Code Rule 335–3–14–.03(1)(h)(1) and Ala Admin Code Rule 335–3–14–.03(1)(h)(2) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to Ala Admin Code Rule 335–3–14–.03(1)(h)(1) and Ala Admin Code Rule 335–3–14–.03(1)(h)(2). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Alabama SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.2 of the February 2013 proposal, the Petitioner objected to three specific provisions in the Florida SIP that allow for generally applicable automatic exemptions for excess emissions during SSM (Fla. Admin. Code Ann Rule 62–210.700(1)), for fossil fuel steam generators during startup and shutdown (Fla. Admin. Code Ann Rule 62–210.700(2)), and for such sources during boiler cleaning and load change (Fla. Admin. Code Ann Rule 62–210.700(3)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Fla. Admin. Code Ann Rule 62–210.700(1), Fla. Admin. Code Ann Rule 62–210.700(2), Fla. Admin. Code Ann Rule 62–210.700(3) and Fla. Admin. Code Ann Rule 62–210.700(4).
Consequently, the EPA proposed to find that Fla. Admin. Code Ann Rule 62–210.700(1), Fla. Admin. Code Ann Rule 62–210.700(2), Fla. Admin. Code Ann Rule 62–210.700(3) and Fla. Admin. Code Ann Rule 62–210.700(4) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to Fla. Admin. Code Ann Rule 62–210.700(1), Fla. Admin. Code Ann Rule 62–210.700(2), Fla. Admin. Code Ann Rule 62–210.700(3) and Fla. Admin. Code Ann Rule 62–210.700(4). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Florida SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.3 of the February 2013 proposal, the Petitioner objected to a provision in the Georgia SIP that provides for exemptions for excess emissions during SSM under certain circumstances (Ga. Comp. R. & Regs. 391–3–1–.02(2)(a)(7)). The Petitioner acknowledged that this provision of the Georgia SIP includes some conditions for when sources may be entitled to seek the exemption under state law, such as when the source has
First, the Petitioner objected because the provision creates an exemption from the applicable emission limitations by providing that the excess emissions “shall be allowed” subject to certain conditions. Second, the Petitioner argued that although the provision provides some “substantive criteria,” the provision does not meet the criteria the EPA recommended at the time for an affirmative defense provision consistent with the requirements of the CAA in the EPA's SSM Policy. Third, the Petitioner asserted that the provision is not a permissible “enforcement discretion” provision applicable only to state personnel, because it “is susceptible to interpretation as an enforcement exemption, precluding EPA and citizen enforcement as well as state enforcement.”
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Ga. Comp. R. & Regs. 391–3–1–.02(2)(a)(7). Also for reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to this provision on the basis that it was not a permissible affirmative defense provision consistent with the requirements of the CAA and the EPA's recommendations in the EPA's SSM Policy at the time.
Subsequently, for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to Ga. Comp. R. & Regs. 391–3–1–.02(2)(a)(7), but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that Ga. Comp. R. & Regs. 391–3–1–.02(2)(a)(7) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Ga. Comp. R. & Regs. 391–3–1–.02(2)(a)(7). Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Georgia SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.4 of the February 2013 proposal, the Petitioner objected to a generally applicable provision that allows discretionary exemptions from otherwise applicable SIP emission limitations in Kentucky's SIP (401 KAR 50:055 § 1(1)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 401 KAR 50:055 § 1(1).
Consequently, the EPA proposed to find that 401 KAR 50:055 § 1(1) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to 401 KAR 50:055 § 1(1). Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Kentucky SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.5 of the February 2013 proposal, the Petitioner objected to a generally applicable provision in the Jefferson County Air Regulations 1.07 because it provided for discretionary exemptions from compliance with emission limitations during SSM. The provision required different demonstrations for exemptions for excess emissions during startup and shutdown (Regulation 1.07 § 3), malfunction (Regulation 1.07 § 4 and § 7) and emergency (Regulation 1.07 § 5 and § 7). Second, the Petitioner objected to the affirmative defense for emergencies in Jefferson County Air Regulations 1.07.
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to provisions in the Jefferson County Air Regulations 1.07.
Subsequently, for reasons explained fully in the SNPR, the EPA reversed its prior proposed granting of the Petition with respect to Jefferson County Air Regulations 1.07. For Jefferson County, Kentucky, the provisions for which the EPA proposed in February 2013 to grant the Petition were subsequently removed from the SIP. Thus, in the SNPR, the EPA proposed instead to deny the Petition.
In this final action, the EPA is denying the Petition with respect to Jefferson County Air Regulations 1.07. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Kentucky SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.6 of the February 2013 proposal, the Petitioner objected to two generally applicable provisions in the Mississippi SIP that allow for affirmative defenses for violations of otherwise applicable SIP emission limitations during periods of upset,
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 11–1–2 Miss. Code R. § 10.1 and 11–1–2 Miss. Code R. § 10.3. Also for reasons explained in the February 2013 proposal, the EPA proposed to grant the petition with respect to these provisions on the basis that they were not appropriate as an affirmative defense provisions because they were
Subsequently, for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provisions in 11–1–2 Miss. Code R. § 10.1 and 11–1–2 Miss. Code R. § 10.3, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for these provisions.
Consequently, the EPA proposed to find that 11–1–2 Miss. Code R. § 10.1, 11–1–2 Miss. Code R. § 10.2 and 11–1–2 Miss. Code R. § 10.3 are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to 11–1–2 Miss. Code R. § 10.1, 11–1–2 Miss. Code R. § 10.2 and 11–1–2 Miss. Code R. § 10.3. Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Mississippi SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.7 of the February 2013 proposal, the Petitioner objected to two generally applicable provisions in the North Carolina SIP that provide exemptions for emissions exceeding otherwise applicable SIP emission limitations at the discretion of the state agency during malfunctions (15A N.C. Admin. Code 2D.0535(c)) and during startup and shutdown (15A N.C. Admin. Code 2D.0535(g)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 15A N.C. Admin. Code 2D.0535(c) and 15A N.C. Admin. Code 2D.0535(g).
Consequently, the EPA proposed to find that 15A N.C. Admin. Code 2D.0535(c) and 15A N.C. Admin. Code 2D.0535(g) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to 15A N.C. Admin. Code 2D.0535(c) and 15A N.C. Admin. Code 2D.0535(g). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the North Carolina SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.8 of the February 2013 proposal, the Petitioner objected to two generally applicable provisions in the Forsyth County Code that provide exemptions for emissions exceeding otherwise applicable SIP emission limitations at the discretion of a local official during malfunctions (Forsyth County Code, ch. 3, 3D.0535(c)) and startup and shutdown (Forsyth County Code, ch. 3, 3D.0535(g)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Forsyth County Code, ch. 3, 3D.0535(c) and Forsyth County Code, ch. 3, 3D.0535(g).
Consequently, the EPA proposed to find that Forsyth County Code, ch. 3, 3D.0535(c) and Forsyth County Code, ch. 3, 3D.0535(g) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to Forsyth County Code, ch. 3, 3D.0535(c) and Forsyth County Code, ch. 3, 3D.0535(g). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the North Carolina SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.9 of the February 2013 proposal, the Petitioner objected to three provisions in the South Carolina SIP, arguing that they contained impermissible source category- and pollutant-specific exemptions. The Petitioner characterized these provisions as providing exemptions from opacity limits for fuel-burning operations for excess emissions that occur during startup or shutdown (S.C. Code Ann. Regs. 61–62.5 St 1(C)), exemptions from NO
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to S.C. Code Ann. Regs. 61–62.5 St 1(C) and S.C. Code Ann. Regs. St 4(XI)(D)(4). Also for reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to S.C. Code Ann. Regs. 61–62.5 St 5.2(I)(b)(14).
Subsequently, for reasons explained fully in the SNPR, the EPA identified one affirmative defense provision in the South Carolina SIP in S.C. Code Ann. Regs. 62.1, Section II(G)(6) that was not identified by the Petitioner, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for this provision.
Consequently, the EPA proposed to find that the provisions in S.C. Code Ann. Regs. 61–62.5 St 1(C), S.C. Code Ann. Regs. St 4(XI)(D)(4) and S.C. Code Ann. Regs. 62.1, Section II(G)(6) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to S.C. Code Ann. Regs. 61–62.5 St 1(C), S.C. Code Ann. Regs. St 4(XI)(D)(4) and S.C. Code Ann. Regs. 62.1, Section II(G)(6) and denying the Petition with respect to S.C. Code Ann. Regs. 61–62.5 St 5.2(I)(b)(14). Accordingly, the EPA is finding that the provisions in S.C. Code Ann. Regs. 61–62.5 St 1(C), S.C. Code Ann. Regs. St 4(XI)(D)(4) and S.C. Code Ann. Regs. 62.1, Section II(G)(6) are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the South Carolina SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.10 of the February 2013 proposal, the Petitioner objected to three provisions in the Tennessee SIP. First, the Petitioner objected to two provisions that authorize a state official to decide whether to “excuse or proceed upon” (Tenn. Comp. R. & Regs. 1200–3–20–.07(1)) violations of otherwise applicable SIP emission limitations that occur during “malfunctions, startups, and shutdowns” (Tenn. Comp. R. & Regs. 1200–3–20–.07(3)). Second, the Petitioner objected to a provision that excludes excess visible emissions from the requirement that the state automatically issue a notice of violation for all excess emissions (Tenn. Comp. R. & Regs. 1200–3–5–.02(1)). This provision states that “due allowance may be made for visible emissions in excess of that permitted in this chapter which are necessary or unavoidable due to routine startup and shutdown conditions.”
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Tenn. Comp. R. & Regs. 1200–3–20–.07(1), Tenn. Comp. R. & Regs. 1200–3–20–.07(3) and Tenn. Comp. R. & Regs. 1200–3–5–.02(1).
Consequently, the EPA proposed to find that Tenn. Comp. R. & Regs. 1200–3–20–.07(1), Tenn. Comp. R. & Regs. 1200–3–20–.07(3) and Tenn. Comp. R. & Regs. 1200–3–5–.02(1) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to Tenn. Comp. R. & Regs. 1200–3–20–.07(1), Tenn. Comp. R. & Regs. 1200–3–20–.07(3) and Tenn. Comp. R. & Regs. 1200–3–5–.02(1). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Tennessee SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.11 of the February 2013 proposal, the Petitioner objected to a provision in the Knox County portion of the Tennessee SIP that bars evidence of a violation of SIP emission limitations from being used in a citizen enforcement action (Knox County Regulation 32.1(C)). The provision specifies that “[a] determination that there has been a violation of these regulations or orders issued pursuant thereto shall not be used in any law suit brought by any private citizen.”
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Knox County Regulation 32.1(C). For instance, the regulation was inconsistent with requirements related to credible evidence.
Consequently, the EPA proposed to find that Knox County Regulation 32.1(C) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Knox County Regulation 32.1(C). Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Tennessee SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.E.12 of the February 2013 proposal, the Petitioner objected to a provision in the Shelby County Code (Shelby County Code § 16–87) that addresses enforcement for excess emissions that occur during “malfunctions, startups, and shutdowns” by incorporating by reference the state's provisions in Tenn. Comp. R. & Regs. 1200–3–20. Shelby County Code § 16–87 provides that “all such additions, deletions, changes and amendments as may subsequently be made” to Tennessee's regulations will automatically become part of the Shelby County Code.
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Shelby County Code § 16–87.
Consequently, the EPA proposed to find that Shelby County Code § 16–87 is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Shelby County Code § 16–87. Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Tennessee SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.F.1 of the February 2013 proposal, the Petitioner objected to three generally applicable provisions in the Illinois SIP which together have the effect of providing discretionary exemptions from otherwise applicable SIP emission limitations. The Petitioner noted that the provisions invite sources to request, during the permitting process, advance permission to continue to operate during a malfunction or breakdown, and, similarly to request advance permission to “violate” otherwise applicable emission limitations during startup (Ill. Admin. Code tit. 35 § 201.261). The Illinois SIP provisions establish criteria that a state official must consider before granting the advance permission to violate the emission limitations (Ill. Admin. Code tit. 35 § 201.262). However, the Petitioner asserted, the provisions state that, once granted, the advance permission to violate the emission limitations “shall be a prima facie defense to an enforcement action” (Ill. Admin. Code tit. 35 § 201.265).
Further, the Petitioner objected to the use of the term “prima facie defense” in Ill. Admin. Code tit. 35 § 201.265, arguing that the term is “ambiguous in its operation.” The Petitioner argued that the provision is not clear regarding whether the defense is to be evaluated “in a judicial or administrative proceeding or whether the Agency determines its availability.” Allowing defenses to be raised in these undefined contexts, the Petitioner argued, is “inconsistent with the enforcement structure of the Clean Air Act.”
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Ill. Admin. Code tit. 35 § 201.261, Ill. Admin. Code tit. 35 § 201.262 and Ill. Admin. Code tit. 35 § 201.265.
Subsequently, for reasons explained fully in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provisions in Ill. Admin. Code tit. 35 § 201.261, Ill. Admin. Code tit. 35 § 201.262 and Ill.
Consequently, the EPA proposed to find that Ill. Admin. Code tit. 35 § 201.261, Ill. Admin. Code tit. 35 § 201.262 and Ill. Admin. Code tit. 35 § 201.265 are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to Ill. Admin. Code tit. 35 § 201.261, Ill. Admin. Code tit. 35 § 201.262 and Ill. Admin. Code tit. 35 § 201.265. Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Illinois SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.F.2 of the February 2013 proposal, the Petitioner objected to a generally applicable provision in the Indiana SIP that allows for discretionary exemptions during malfunctions (326 Ind. Admin. Code 1–6–4(a)). The Petitioner noted that the provision is ambiguous because it states that excess emissions during malfunction periods “shall not be considered a violation” if the source demonstrates that a number of conditions are met (326 Ind. Admin. Code 1–6–4(a)), but the provision does not specify to whom or in what forum such demonstration must be made.
If the demonstration was required to have been made in a showing to the state, the Petitioner argued, the provision would give a state official the sole authority to determine that the excess emissions were not a violation and could thus be read to preclude enforcement by the EPA or citizens in the event that the state official elects not to treat the excess emissions as a violation. If instead, as the Petitioner noted, the demonstration was required to have been made in an enforcement context, the provision could be interpreted as providing an affirmative defense.
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 326 Ind. Admin. Code 1–6–4(a).
Subsequently, for reasons explained fully in the SNPR, the EPA reproposed granting of the Petition with respect to 326 Ind. Admin. Code 1–6–4(a), but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that 326 Ind. Admin. Code 1–6–4(a) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to 326 Ind. Admin. Code 1–6–4(a). Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Indiana SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.F.3 of the February 2013 proposal, the Petitioner objected to a generally applicable provision in Michigan's SIP, Mich. Admin. Code r. 336.1916, that provides for an affirmative defense to monetary penalties for violations of otherwise applicable SIP emission limitations during periods of startup and shutdown.
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Mich. Admin. Code r. 336.1916.
Subsequently, for reasons explained fully in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provision in Mich. Admin. Code r. 336.1916, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that Mich. Admin. Code r. 336.1916 substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Mich. Admin. Code r. 336.1916. Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Michigan SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.F.4 of the February 2013 proposal, the Petitioner objected to a provision in the Minnesota SIP that provides automatic exemptions for excess emissions resulting from flared gas at petroleum refineries when those flares are caused by SSM (Minn. R. 7011.1415).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Minn. R. 7011.1415.
Consequently, the EPA proposed to find that Minn. R. 7011.1415 is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Minn. R. 7011.1415. Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Minnesota SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.F.5 of the February 2013 proposal, the Petitioner objected to a generally applicable provision in the Ohio SIP that allows for discretionary exemptions during periods of scheduled maintenance (Ohio Admin. Code 3745–15–06(A)(3)). The Petitioner also objected to two source category-specific and pollutant-specific provisions that provide for discretionary exemptions during malfunctions (Ohio Admin. Code 3745–17–07(A)(3)(c) and Ohio Admin. Code 3745–17–07(B)(11)(f)). The Petitioner also objected to a source category-specific provision in the Ohio SIP that allows for an automatic exemption from applicable emission limitations and requirements during periods of startup, shutdown, malfunction, or regularly scheduled maintenance activities (Ohio Admin. Code 3745–14–11(D)). Finally, the Petitioner objected to five provisions that contain exemptions for Hospital/Medical/Infectious Waste Incinerator (HMIWI) sources during startup, shutdown, and malfunction—Ohio
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Ohio Admin. Code 3745–15–06(A)(3), Ohio Admin. Code 3745–17–07(A)(3)(c), Ohio Admin. Code 3745–17–07(B)(11)(f) and Ohio Admin. Code 3745–14–11(D). Also for reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Ohio Admin. Code 3745–75–02(E), Ohio Admin. Code 3745–75–02(J), Ohio Admin. Code 3745–75–03(I), Ohio Admin. Code 3745–75–04(K) and Ohio Admin. Code 3745–75–04(L), on the basis that they are not part of the Ohio SIP and thus cannot represent a substantial inadequacy in the SIP. In addition, for reasons explained fully in the February 2013 proposal, the EPA proposed to find that another provision, Ohio Admin. Code 3745–15–06(C), is substantially inadequate to meet CAA requirements and proposed to issue a SIP call with respect to this provision, even though the Petitioner did not request that the EPA evaluate this provision. As explained in the February 2013 proposal, the EPA determined that Ohio Admin. Code 3745–15–06(C) was the regulatory mechanism in the SIP by which exemptions are granted in the two provisions to which the Petitioner did object.
Consequently, the EPA proposed to find that the provisions in Ohio Admin. Code 3745–15–06(A)(3), Ohio Admin. Code 3745–17–07(A)(3)(c), Ohio Admin. Code 3745–17–07(B)(11)(f), Ohio Admin. Code 3745–14–11(D) and Ohio Admin. Code 3745–15–06(C) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to Ohio Admin. Code 3745–15–06(A)(3), Ohio Admin. Code 3745–17–07(A)(3)(c), Ohio Admin. Code 3745–17–07(B)(11)(f), Ohio Admin. Code 3745–14–11(D) and Ohio Admin. Code 3745–15–06(C) are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. Also in this final action, the EPA is denying the Petition with respect to Ohio Admin. Code 3745–75–02(E), Ohio Admin. Code 3745–75–02(J), Ohio Admin. Code 3745–75–03(I), Ohio Admin. Code 3745–75–04(K) and Ohio Admin. Code 3745–75–04(L). This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Ohio SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.G.1 of the February 2013 proposal, the Petitioner objected to two provisions in the Arkansas SIP. First, the Petitioner objected to a provision that provides an automatic exemption for excess emissions of VOC for sources located in Pulaski County that occur due to malfunctions (Reg. 19.1004(H)). Second, the Petitioner objected to a separate provision that provides a “complete affirmative defense” for excess emissions that occur during emergency conditions (Reg. 19.602). The Petitioner argued that this provision, which the state may have modeled after the EPA's title V regulations, is impermissible because its application is not clearly limited to operating permits.
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Reg. 19.1004(H) and Reg. 19.602.
Subsequently, for reasons explained fully in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provision in Reg. 19.602, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that Reg. 19.1004(H) and Reg. 19.602
In this final action, the EPA is granting the Petition with respect to Reg. 19.1004(H) and Reg. 19.602. Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Arkansas SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.G.2 of the February 2013 proposal, the Petitioner objected to several provisions in the Louisiana SIP that allow for automatic and discretionary exemptions from SIP emission limitations during various situations, including startup, shutdown, maintenance and malfunctions. First, the Petitioner objected to provisions that provide automatic exemptions for excess emissions of VOC from wastewater tanks (LAC 33:III.2153(B)(1)(i)) and excess emissions of NO
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to LAC 33:III.2153(B)(1)(i) and LAC 33:III.2201(C)(8) on the basis that these provisions allow for automatic exemptions for excess emissions from otherwise applicable SIP emission limitations. Also for reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to LAC 33:III.1107(A), LAC 33:III.1507(A)(1), LAC 33:III.1507(B)(1), LAC 33:III.2307(C)(1)(a) and LAC 33:III.2307(C)(2)(a) on the basis that
Consequently, the EPA proposed to find that LAC 33:III.2153(B)(1)(i), LAC 33:III.2201(C)(8), LAC 33:III.1107(A), LAC 33:III.1507(A)(1), LAC 33:III.1507(B)(1), LAC 33:III.2307(C)(1)(a) and LAC 33:III.2307(C)(2)(a) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to LAC 33:III.2153(B)(1)(i), LAC 33:III.2201(C)(8), LAC 33:III.1107(A), LAC 33:III.1507(A)(1), LAC 33:III.1507(B)(1), LAC 33:III.2307(C)(1)(a) and LAC 33:III.2307(C)(2)(a). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Louisiana SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.G.3 of the February 2013 proposal, the Petitioner objected to three provisions in the New Mexico SIP that provide affirmative defenses for excess emissions that occur during malfunctions (20.2.7.111 NMAC), during startup and shutdown (20.2.7.112 NMAC) and during emergencies (20.2.7.113 NMAC).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 20.2.7.111 NMAC, 20.2.7.112 NMAC and 20.2.7.113 NMAC.
Subsequently, for reasons explained fully in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provisions in 20.2.7.111 NMAC, 20.2.7.112 NMAC and 20.2.7.113 NMAC, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for these provisions.
Consequently, the EPA proposed to find that the provisions in 20.2.7.111 NMAC, 20.2.7.112 NMAC and 20.2.7.113 NMAC are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to 20.2.7.111 NMAC, 20.2.7.112 NMAC and 20.2.7.113 NMAC. Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the New Mexico SIP that the EPA received and considered during the development of this rulemaking.
The Petitioner did not identify any provisions in the SIP for the state of New Mexico that specifically apply in the Albuquerque-Bernalillo County area, which is why this area was not explicitly addressed in the February 2013 proposal.
Subsequently, for reasons explained fully in the SNPR, the EPA identified three affirmative defense provisions in the SIP for the state of New Mexico that apply in the Albuquerque-Bernalillo County area, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for these provisions. These provisions provide affirmative defenses available to sources for excess emissions that occur during malfunctions (20.11.49.16.A NMAC), during startup and shutdown (20.11.49.16.B NMAC) and during emergencies (20.11.49.16.C NMAC).
In this final action, the EPA is finding that the provisions in 20.11.49.16.A NMAC, 20.11.49.16.B NMAC and 20.11.49.16.C NMAC are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. The EPA notes that removal of 20.11.49.16.A NMAC, 20.11.49.16.B NMAC and 20.11.49.16.C NMAC from the SIP will render 20.11.49.16.D NMAC, 20.11.49.16.E, 20.11.49.15.B (15) (concerning reporting by a source of intent to assert an affirmative defense for a violation), a portion of 20.11.49.6 NMAC (concerning the objective of establishing affirmative defense provisions) and 20.11.49.18 NMAC (concerning actions where a determination has been made under 20.11.49.16.E NMAC) superfluous and no longer operative, and the EPA thus recommends that these provisions be removed as well. This action is fully consistent with what the EPA proposed in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the New Mexico SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.G.4 of the February 2013 proposal, the Petitioner objected to two provisions in the Oklahoma SIP that together allow for discretionary exemptions from emission limitations during startup, shutdown, maintenance and malfunctions (OAC 252:100–9–3(a) and OAC 252:100–9–3(b)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to OAC 252:100–9–3(a) and OAC 252:100–9–3(b).
Consequently, the EPA proposed to find that OAC 252:100–9–3(a) and OAC 252:100–9–3(b) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to OAC 252:100–9–3(a) and OAC 252:100–9–3(b). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Oklahoma SIP that the EPA received and considered during the development of this rulemaking.
The Petitioner did not identify in the June 2011 petition any provisions in the SIP for the state of Texas, which is why this state was not explicitly addressed in the February 2013 proposal.
Subsequently, for reasons explained fully in the SNPR, the EPA identified four affirmative defense provisions in the SIP for the state of Texas, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for these provisions. These provisions provide affirmative defenses available to sources for excess emissions that occur during upsets (30 TAC 101.222(b)), unplanned events (30 TAC 101.222(c)), upsets with respect to opacity limits (30 TAC 101.222(d)) and unplanned events with respect to opacity limits (30 TAC 101.222(e)).
In this final action, the EPA is finding that the provisions in 30 TAC 101.222(b), 30 TAC 101.222(c), 30 TAC 101.222(d) and 30 TAC 101.222(e) are substantially inadequate to meet CAA requirements and the EPA is thus
As described in section IX.H.1 of the February 2013 proposal, the Petitioner objected to a specific provision in the Iowa SIP that allows for automatic exemptions from otherwise applicable SIP emission limitations during periods of startup, shutdown or cleaning of control equipment (Iowa Admin. Code r. 567–24.1(1)). Also, the Petitioner objected to a provision that empowers the state to exercise enforcement discretion for violations of the otherwise applicable SIP emission limitations during malfunction periods (Iowa Admin. Code r. 567–24.1(4)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Iowa Admin. Code r. 567–24.1(1) on the basis that this provision allows for exemptions from the otherwise applicable SIP emission limitations. Also for reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Iowa Admin. Code r. 567–24.1(4) on the basis that the provision is on its face clearly applicable only to Iowa state enforcement personnel and that the provision thus could not reasonably be read by a court to foreclose enforcement by the EPA or through a citizen suit where Iowa state personnel elect to exercise enforcement discretion.
Consequently, the EPA proposed to find that Iowa Admin. Code r. 567–24.1(1) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Iowa Admin. Code r. 567–24.1(1). Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. Also in this final action, the EPA is denying the Petition with respect to Iowa Admin. Code r. 567–24.1(4). This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Iowa SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.H.2 of the February 2013 proposal, the Petitioner objected to three provisions in the Kansas SIP that allow for exemptions for excess emissions during malfunctions and necessary repairs (K.A.R. § 28–19–11(A)), scheduled maintenance (K.A.R. § 28–19–11(B)), and certain routine modes of operation (K.A.R. § 28–19–11(C)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to K.A.R. § 28–19–11(A), K.A.R. § 28–19–11(B) and K.A.R. § 28–19–11(C).
Consequently, the EPA proposed to find that K.A.R. § 28–19–11(A), K.A.R. § 28–19–11(B) and K.A.R. § 28–19–11(C) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to K.A.R. § 28–19–11(A), K.A.R. § 28–19–11(B) and K.A.R. § 28–19–11(C). Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Kansas SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.H.3 of the February 2013 proposal, the Petitioner objected to two provisions in the Missouri SIP that could be interpreted to provide discretionary exemptions. The first provides exemptions for visible emissions exceeding otherwise applicable SIP opacity limitations (Mo. Code Regs. Ann. tit 10, § 10–6.220(3)(C)). The second provides authorization to state personnel to decide whether excess emissions “warrant enforcement action” where a source submits information to the state showing that such emissions were “the consequence of a malfunction, start-up or shutdown.” (Mo. Code Regs. Ann. tit 10, § 10–6.050(3)(C)).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Mo. Code Regs. Ann. tit 10, § 10–6.220(3)(C) on the basis that this provision could be read to allow for exemptions from the otherwise applicable SIP emission limitations through a state official's unilateral exercise of discretionary authority that is insufficiently bounded and includes no additional public process at the state or federal level. Also for reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Mo. Code Regs. Ann. tit 10, § 10–6.050(3)(C) on the basis that the provision is on its face clearly applicable only to Missouri state enforcement personnel and that the provision thus could not reasonably be read by a court to foreclose enforcement by the EPA or through a citizen suit where Missouri state personnel elect to exercise enforcement discretion.
Consequently, the EPA proposed to find that the provision in Mo. Code Regs. Ann. tit 10, § 10–6.220(3)(C) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Mo. Code Regs. Ann. tit 10, § 10–6.220(3)(C). Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. Also in this final action, the EPA is denying the Petition with respect to Mo. Code Regs. Ann. tit 10, § 10–6.050(3)(C). This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Missouri SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.H.4 of the February 2013 proposal, the Petitioner objected to two provisions in the Nebraska SIP. First, the Petitioner objected to a generally applicable provision that provides authorization to state personnel to decide whether excess emissions “warrant enforcement action” where a source submits information to the state showing that such emissions were “the result of a malfunction, start-up or shutdown” (Neb. Admin. Code Title 129 § 11–35.001). Second, the Petitioner objected to a specific provision in Nebraska state law that contains exemptions for excess emissions at hospital/medical/infectious
For reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Neb. Admin. Code Title 129 § 11–35.001. Also for reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Neb. Admin. Code Title 129 § 18–004.02 on the basis that this regulation is not part of the Nebraska SIP and thus cannot represent an inadequacy in the SIP.
In this final action, the EPA is denying the Petition with respect to Neb. Admin. Code Title 129, Chapter 35, Section 001 (correction to citation, as per comment received from Nebraska DEQ, from earlier identification as Neb. Admin. Code Title 129 § 11–35.001) and Neb. Admin. Code Title 129 § 18–004.02.
This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any other comments specific to the Nebraska SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.H.5 of the February 2013 proposal, the Petitioner objected to a generally applicable provision in the Lincoln-Lancaster County Air Pollution Control Program (Art. 2 § 35), which governs the Lincoln-Lancaster County Air Pollution Control District of Nebraska, that is parallel “in all aspects pertinent to this analysis” to Neb. Admin. Code Title 129 § 11–35.001. (Note that as per comment subsequently received from Nebraska DEQ, the correct citation is Neb. Admin. Code Title 129, Chapter 35, Section 001.)
For reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Art. 2 § 35, on the basis that this provision is on its face clearly applicable only to Lincoln-Lancaster County enforcement personnel and that the provision thus could not reasonably be read by a court to foreclose enforcement by the EPA or through a citizen suit where personnel from Lincoln-Lancaster County elect not to bring an enforcement action.
In this final action, the EPA is denying the Petition with respect to Art. 2 § 35. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any other comments specific to the Nebraska SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.I.1 of the February 2013 proposal, the Petitioner objected to two affirmative defense provisions in the Colorado SIP that provide for affirmative defenses to qualifying sources during malfunctions (5 Colo. Code Regs § 1001–2(II.E)) and during periods of startup and shutdown (5 Colo. Code Regs § 1001–2(II.J)).
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to 5 Colo. Code Regs § 1001–2(II.J). Also for reasons explained in the February 2013 proposal, the EPA proposed to deny the Petition with respect to 5 Colo. Code Regs § 1001–2(II.E) on the basis that it included an affirmative defense applicable to malfunction events that was consistent with the requirements of the CAA as interpreted by the EPA in the 1999 SSM Guidance.
Subsequently, for reasons explained fully in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provision in 5 Colo. Code Regs § 1001–2(II.J) applicable to startup and shutdown, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision. Also for reasons explained in the SNPR, the EPA reversed its prior proposed denial of the Petition with respect to the affirmative defense provision 5 Colo. Code Regs § 1001–2(II.E) applicable to malfunctions.
Consequently, the EPA proposed to find that the provisions in 5 Colo. Code Regs § 1001–2(II.J) and 5 Colo. Code Regs § 1001–2(II.E) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to 5 Colo. Code Regs § 1001–2(II.J) and 5 Colo. Code Regs § 1001–2(II.E). Accordingly, the EPA is finding that the provisions in 5 Colo. Code Regs § 1001–2(II.J) and 5 Colo. Code Regs § 1001–2(II.E) are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call to Colorado to correct its SIP with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Colorado SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.I.2 of the February 2013 proposal, the Petitioner objected to an exemption from otherwise applicable emission limitations for aluminum plants during startup and shutdown (Montana Admin. R 17.8.334).
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to ARM 17.8.334.
Consequently, the EPA proposed to find that ARM 17.8.334 is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to ARM 17.8.334. Accordingly, the EPA is finding that ARM 17.8.334 is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Montana SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.I.3 of the February 2013 proposal, the Petitioner objected to two provisions in the North Dakota SIP that create exemptions from otherwise applicable emission limitations. The first provision creates exemptions from a number of cross-referenced opacity limits “where the limits specified in this article cannot be met because of operations and processes such as, but not limited to, oil field service and drilling operations, but only so long as it is not technically feasible to meet said specifications” (N.D. Admin. Code § 33–15–03–04(4)). The second provision creates an implicit exemption for “temporary operational breakdowns or cleaning of air pollution equipment” if the source meets certain conditions (N.D. Admin. Code § 33–15–05–01(2)(a)(1)).
For reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to N.D. Admin. Code 33–15–03–04.4 (cited in the Petition as N.D. Admin. Code § 33–15–03–04(4)) and also with respect to a
Subsequently, the state of North Dakota removed N.D. Admin. Code 33–15–03–04.4 and N.D. Admin. Code 33–15–05–01.2.a(1) and eliminated the SIP inadequacies with respect to those two of the three provisions identified in the February 2013 proposal notice. The EPA has already approved the necessary SIP revisions for those two provisions.
In this final action, the EPA is granting the Petition with respect to N.D. Admin. Code 33–15–03–04.3 and denying the Petition with respect to N.D. Admin. Code 33–15–03–04.4 and N.D. Admin. Code 33–15–05–01.2.a(1). Accordingly, the EPA is finding that the provision in N.D. Admin. Code 33–15–03–04.3 is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call to North Dakota to correct its SIP with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013 with respect to this provision. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the North Dakota SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.I.4 of the February 2013 proposal, the Petitioner objected to a provision in the South Dakota SIP that creates exemptions from otherwise applicable SIP emission limitations (S.D. Admin, R. 74:36:12:02(3)). The Petitioner asserted that the provision imposes visible emission limitations on sources but explicitly excludes emissions that occur “for brief periods during such operations as soot blowing, start-up, shut-down, and malfunctions.”
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to S.D. Admin, R. 74:36:12:02(3).
Consequently, the EPA proposed to find that S.D. Admin, R. 74:36:12:02(3) is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to S.D. Admin, R. 74:36:12:02(3). Accordingly, the EPA is finding that S.D. Admin, R. 74:36:12:02(3) is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the South Dakota SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.I.5 of the February 2013 proposal, the Petitioner objected to a specific provision in the Wyoming SIP that provides an exemption for excess PM emissions from diesel engines during startup, malfunction and maintenance (WAQSR Chapter 3, section 2(d), cited as ENV–AQ–1 Wyo. Code R. § 2(d) in the Petition). The provision exempts emission of visible air pollutants from diesel engines from applicable SIP limitations “during a reasonable period of warmup following a cold start or where undergoing repairs and adjustment following malfunction.”
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to WAQSR Chapter 3, section 2(d) (cited as ENV–AQ–1 Wyo. Code R. § 2(d) in the Petition).
Subsequently, the state of Wyoming revised WAQSR Chapter 3, section 2(d) and eliminated the SIP inadequacies identified in the February 2013 proposal document with respect to this provision. The EPA has already approved the necessary SIP revision for this provision.
In this final action, the EPA is denying the Petition with respect to WAQSR Chapter 3, section 2(d). Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Wyoming SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.J.1 of the February 2013 proposal, the Petitioner objected to two provisions in the Arizona Department of Air Quality's (ADEQ) Rule R18–2–310, which provide affirmative defenses for excess emissions during malfunctions (AAC Section R18–2–310(B)) and for excess emissions during startup or shutdown (AAC Section R18–2–310(C)).
For reasons explained in the February 2013 proposal, the EPA proposed to deny the Petition with respect to AAC Section R18–2–310(B) on the basis that it included an affirmative defense applicable to malfunction events that was consistent with the CAA as interpreted by the EPA in the 1999 SSM Guidance.
Also for reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to AAC Section R18–2–310(C).
Subsequently, for reasons explained fully in the SNPR, the EPA reversed its prior proposed denial of the Petition with respect to the affirmative defense provision AAC Section R18–2–310(B) applicable to malfunctions. Also for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provision in AAC Section R18–2–310(C) applicable to startup and shutdown, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that the provisions in AAC Section R18–2–310(B) and AAC Section R18–2–310(C) are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to AAC Section R18–2–310(B) and AAC Section R18–2–310(C). Accordingly, the EPA is finding that the provisions in AAC Section R18–2–310(B) and AAC Section R18–2–310(C) are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments
As described in section IX.J.2 of the February 2013 proposal, the Petitioner objected to two provisions in the Maricopa County Air Pollution Control Regulations that provide affirmative defenses for excess emissions during malfunctions (Maricopa County Air Pollution Control Regulation 3, Rule 140, § 401) and for excess emissions during startup or shutdown (Maricopa County Air Pollution Control Regulation 3, Rule 140, § 402). These provisions in Maricopa County Air Quality Department (MCAQD) Rule 140 are similar to the affirmative defense provisions in ADEQ R18–2–310.
For reasons explained in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Maricopa County Air Pollution Control Regulation 3, Rule 140, § 401 on the basis that it included an affirmative defense applicable to malfunction events that was consistent with the CAA as interpreted by the EPA in the 1999 SSM Guidance. Also for reasons explained in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Maricopa County Air Pollution Control Regulation 3, Rule 140, § 402.
Subsequently, for reasons explained fully in the SNPR, the EPA reversed its prior proposed denial of the Petition with respect to the affirmative defense provision Maricopa County Air Pollution Control Regulation 3, Rule 140, § 401 applicable to malfunctions. Also for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to the affirmative defense provision in Maricopa County Air Pollution Control Regulation 3, Rule 140, § 402 applicable to startup and shutdown, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that the provisions in Maricopa County Air Pollution Control Regulation 3, Rule 140, § 401 and Maricopa County Air Pollution Control Regulation 3, Rule 140, § 402 are substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to these provisions.
In this final action, the EPA is granting the Petition with respect to Maricopa County Air Pollution Control Regulation 3, Rule 140, § 401 and Maricopa County Air Pollution Control Regulation 3, Rule 140, § 402. Accordingly, the EPA is finding that these provisions are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Arizona SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.J.3 of the February 2013 proposal, the Petitioner objected to a provision in the Pima County Department of Environmental Quality's (PCDEQ) Rule 706 that pertains to enforcement discretion.
For reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to PCDEQ Rule 706.
In this final action, the EPA is denying the Petition with respect to PCDEQ Rule 706. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Arizona SIP that the EPA received and considered during the development of this rulemaking.
The Petitioner did not identify any provisions in the SIP for the state of California, which is why this state was not explicitly addressed in the February 2013 proposal.
Subsequently, for reasons explained fully in the SNPR, the EPA identified an affirmative defense provision in the SIP for the state of California applicable in the Eastern Kern Air Pollution Control District (APCD), and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for this provision. The affirmative defense is included in Kern County “Rule 111 Equipment Breakdown.” This SIP provision provides an affirmative defense available to sources for excess emissions that occur during a breakdown condition (
In this final action, the EPA is finding that Kern County Rule 111 Equipment Breakdown in the California SIP applicable in the Eastern Kern APCD
The Petitioner did not identify any provisions in the SIP for the state of California, which is why this state was not explicitly addressed in the February 2013 proposal.
Subsequently, for reasons explained fully in the SNPR, the EPA identified an affirmative defense provision in the SIP for the state of California applicable in the Imperial Valley APCD, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for this provision. The affirmative defense is included in Imperial County “Rule 111 Equipment Breakdown.” This SIP provision provides an affirmative defense available to sources for excess emissions that occur during a breakdown condition (
In this final action, the EPA is finding that Imperial County “Rule 111 Equipment Breakdown” in the California SIP applicable in the Imperial Valley APCD is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the California SIP that the EPA received and considered during the development of this rulemaking.
The Petitioner did not identify any provisions in the SIP for the state of California, which is why this state was not explicitly addressed in the February 2013 proposal.
Subsequently, for reasons explained fully in the SNPR, the EPA identified affirmative defense provisions in the SIP for the state of California applicable in the San Joaquin Valley Unified APCD, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for these provisions. The affirmative defenses are included in: (i) Fresno County “Rule 110 Equipment
In this final action, the EPA is finding that the following six provisions in the California SIP applicable in the San Joaquin Valley Unified APCD are substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to these provisions: (i) Fresno County “Rule 110 Equipment Breakdown”; (ii) Kern County “Rule 111 Equipment Breakdown”; (iii) Kings County “Rule 111 Equipment Breakdown”; (iv) Madera County “Rule 113 Equipment Breakdown”; (v) Stanislaus County “Rule 110 Equipment Breakdown”; and (vi) Tulare County “Rule 111 Equipment Breakdown.”
As described in section IX.K.1 of the February 2013 proposal, the Petitioner objected to a provision in the Alaska SIP that provides an excuse for “unavoidable” excess emissions that occur during SSM events, including startup, shutdown, scheduled maintenance and “upsets” (Alaska Admin. Code tit. 18 § 50.240). The provision provides: “Excess emissions determined to be unavoidable under this section will be excused and are not subject to penalty. This section does not limit the department's power to enjoin the emission or require corrective action.” The Petitioner also stated that the provision is worded as if it were an affirmative defense but it uses criteria for enforcement discretion.
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Alaska Admin. Code tit. 18 § 50.240 on the basis that, to the extent the provision was intended to be an affirmative defense, it was not a permissible affirmative defense provision consistent with the requirements of the CAA as interpreted in the EPA's 1999 SSM Guidance.
Subsequently, for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to Alaska Admin. Code tit. 18 § 50.240, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that Alaska Admin. Code tit. 18 § 50.240 is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Alaska Admin. Code tit. 18 § 50.240. Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Alaska SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.K.2 of the February 2013 proposal, the Petitioner objected to a provision in the Idaho SIP that appears to grant enforcement discretion to the state as to whether to impose penalties for excess emissions during certain SSM events (Idaho Admin. Code r. 58.01.01.131).
For reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Idaho Admin. Code r. 58.01.01.131.
In this final action, the EPA is denying the Petition with respect to Idaho Admin. Code r. 58.01.01.131. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Idaho SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.K.3 of the February 2013 proposal, the Petitioner objected to a provision in the Oregon SIP that grants enforcement discretion to the state to pursue violations for excess emissions during certain SSM events (Or. Admin. R. 340–028–1450).
For reasons explained fully in the February 2013 proposal, the EPA proposed to deny the Petition with respect to Or. Admin. R. 340–028–1450.
In this final action, the EPA is denying the Petition with respect to Or. Admin. R. 340–028–1450. This action is fully consistent with what the EPA proposed in February 2013. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Oregon SIP that the EPA received and considered during the development of this rulemaking.
As described in section IX.K.4 of the February 2013 proposal, the Petitioner objected to a provision in the Washington SIP that provides an excuse for “unavoidable” excess emissions that occur during certain SSM events, including startup, shutdown, scheduled maintenance and “upsets” (Wash. Admin. Code § 173–400–107). The provision provides that “[e]xcess emissions determined to be unavoidable under the procedures and criteria under this section shall be excused and are not subject to penalty.” The Petitioner argued that this provision excuses excess emissions in violation of the CAA and the EPA's SSM Policy, which require all such emissions to be treated as violations of the applicable SIP emission limitations. The Petitioner also stated that the provision is worded as if it were an affirmative defense but it uses criteria for enforcement discretion.
For reasons explained fully in the February 2013 proposal, the EPA proposed to grant the Petition with respect to Wash. Admin. Code § 173–400–107 on the basis that, to the extent the provision was intended to be an affirmative defense, it was not a permissible affirmative defense provision consistent with the requirements of the CAA as interpreted in the EPA's 1999 SSM Guidance.
Subsequently, for reasons explained in the SNPR, the EPA reproposed granting of the Petition with respect to Wash. Admin. Code § 173–400–107, but it proposed to revise the basis for the finding of substantial inadequacy and the SIP call for this provision.
Consequently, the EPA proposed to find that Wash. Admin. Code § 173–400–107 is substantially inadequate to meet CAA requirements and thus proposed to issue a SIP call with respect to this provision.
In this final action, the EPA is granting the Petition with respect to Wash. Admin. Code § 173–400–107. Accordingly, the EPA is finding that this provision is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in February 2013 as revised in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Washington SIP that the EPA received and considered during the development of this rulemaking.
The Petitioner did not identify any provisions in the SIP for the state of Washington that specifically apply to the Energy Facility Site Evaluation Council (EFSEC) area, which is why this area was not explicitly addressed in the February 2013 proposal.
Subsequently, for reasons explained fully in the SNPR, the EPA identified affirmative defense provisions in the SIP for the state of Washington that relate to the EFSEC, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for these provisions in Wash. Admin. Code § 463–39–005. In the EFSEC portion of the SIP, Wash. Admin. Code § 463–39–005 adopts by reference Wash. Admin. Code § 173–400–107, thereby incorporating the affirmative defenses applicable to startup, shutdown, scheduled maintenance and “upsets” that the EPA is also finding substantially inadequate in Wash. Admin. Code § 173–400–107 (see section IX.K.4 of this document).
In this final action, the EPA is finding that Wash. Admin. Code § 463–39–005 is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Washington SIP that the EPA received and considered during the development of this rulemaking.
The Petitioner did not identify any provisions in the SIP for the state of Washington that specifically apply in the portion of the state regulated by the Southwest Clean Air Agency (SWCAA),
Subsequently, for reasons explained fully in the SNPR, the EPA identified affirmative defense provisions in the SIP for the state of Washington that apply in the portion of the state regulated by SWCAA, and the EPA proposed to make a finding of substantial inadequacy and to issue a SIP call for these provisions. The affirmative defenses are included in the SIP in SWAPCA “400–107 Excess Emissions.” This SIP section provides an affirmative defense available to sources for excess emissions that occur during startup and shutdown, maintenance and “upsets” (
In this final action, the EPA is finding that SWAPCA “400–107 Excess Emissions” in the Washington SIP applicable in the area regulated by SWCAA is substantially inadequate to meet CAA requirements and the EPA is thus issuing a SIP call with respect to this provision. This action is fully consistent with what the EPA proposed in the SNPR. Please refer to the Response to Comment document available in the docket for this rulemaking concerning any comments specific to the Washington SIP that the EPA received and considered during the development of this rulemaking.
In response to a SIP call concerning an existing automatic or discretionary exemption for excess emissions during SSM events, the EPA anticipates that a state may elect to create an alternative emission limitation that applies during startup and shutdown events (or during any other normal mode of operation during which the exemption may have applied) as a revised element or component of the existing emission limitation. The EPA emphasizes that states have discretion to revise the identified deficient provisions by any means they choose, so long as the revised provision is consistent with CAA requirements for SIP provisions. If a state elects to create an alternative emission limitation to replace an existing exemption, there are several issues that the state should consider.
First, as explained in sections VII.B and XI of this document, the EPA has longstanding guidance that provides recommendations to states concerning the development of alternative emission limitations applicable during startup and shutdown to replace exemptions in existing SIP provisions. The EPA first provided this guidance in the 1999 SSM Guidance but has reiterated and clarified its guidance in this action. The EPA recommends that states consider the seven clarified criteria described in sections VII.B and XI of this document when developing new alternative emission limitations to replace automatic or discretionary exemptions, in order to assure that the revised provisions submitted to the EPA for approval meet basic CAA requirements for SIP emission limitations.
Second, the EPA reiterates that SIP emission limitations that are expressed as numerical limitations do not necessarily have to require the same numerical level of emissions during all modes of normal source operation. Under appropriate circumstances consistent with the criteria that the EPA recommends for alternative emission limitations, it may be appropriate to have a numerical emission limitation that has a higher numerical level applicable during specific modes of source operation, such as during startup and shutdown. For example, if a rate-based NO
Third, the EPA reiterates that SIP emission limitations do not necessarily have to be expressed in terms of a numerical level of emissions. There are many sources for which a numerically expressed emission limitation will be the most appropriate and will result in
Fourth, the EPA notes that revisions to replace existing automatic or discretionary exemptions for SSM events with alternative emission limitations applicable during startup and shutdown also need to meet the applicable overarching CAA requirements with respect to the SIP emission limitation at issue. For example, if the emission limitation is in the SIP to meet the requirement that the source category be subject to RACT level controls for NO
Finally, the EPA notes that states should not replace automatic or discretionary exemptions for excess emissions during SSM events with alternative emission limitations that are a generic requirement such as a “general duty to minimize emissions” provision or an “exercise good engineering judgment” provision.
In response to a SIP call for any type of deficient provision, the EPA anticipates that each state will determine the best way to revise its SIP provisions to bring them into compliance with CAA requirements. In this action the EPA is only identifying the provisions that need to be revised because they violate fundamental requirements of the CAA and providing guidance to states in the SSM Policy concerning the types of provisions that are and are not permissible with respect to the treatment of excess emissions during SSM events. The EPA recognizes that one important consideration for air agencies as they evaluate how best to revise their SIP provisions in response to this SIP call is the nature of the analysis that will be necessary for the resulting SIP revisions under section 110(l) and section 193. The EPA is therefore providing in this document general guidance on this important issue in order to assist states with SIP revisions in response to the SIP call.
Section 110(k)(3) directs the EPA to approve SIP submissions that comply with applicable CAA requirements and to disapprove those that do not. Under section 110(l), the EPA is prohibited from approving any SIP revision that would interfere with any applicable requirement concerning attainment and reasonable further progress or any other requirements of the CAA. To illustrate different ways in which section 110(l) and section 193 may apply in the evaluation of future SIP submissions in response to the SIP call, the EPA anticipates that there are several common scenarios that states may wish to consider when revising their SIPs:
The EPA emphasizes that each SIP revision must be evaluated for compliance with section 110(l) and section 193 on the facts and circumstances of the specific revision, but these examples are intended to provide general guidance on the considerations and the nature of the analysis that may be appropriate for different types of SIP revisions. States should contact their respective EPA Regional Offices (see the
The EPA's longstanding interpretation of the CAA is that SIP provisions cannot include exemptions from emission limitations for emissions during SSM events. In order to be permissible in a SIP, an emission limitation must be applicable to the source continuously,
This section of the document provides more specific guidance on the appropriate treatment of emissions during SSM events in SIP provisions, replacing the EPA's prior guidance issued in memoranda of 1982, 1983, 1999 and 2001. The more extended explanations and interpretations provided in other sections of this document are also applicable, should a situation arise that is not sufficiently covered by this section's more concise policy statement. This SSM Policy as of 2015 is a policy statement and thus constitutes guidance. As guidance, this SSM Policy as of 2015 does not bind states, the EPA or other parties, but it does reflect the EPA's interpretation of the statutory requirements of the CAA. The EPA's evaluation of any SIP provision, whether prospectively in the case of a new provision in a SIP submission or retrospectively in the case of a previously approved SIP submission, must be conducted through a notice-and-comment rulemaking in which the EPA will determine whether a given SIP provision is consistent with the requirements of the CAA and applicable regulations.
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In accordance with CAA section 302(k), SIPs must contain emission limitations that “limit the quantity, rate, or concentration of emissions of air pollutants on a continuous basis.” All of the specific requirements of a SIP emission limitation must be discernible in the SIP, for clarity preferably within a single section or provision; must meet the applicable substantive and stringency requirements of the CAA; and must be legally and practically enforceable.
To the extent that a SIP provision allows any period of time when a source is
Accordingly, automatic or discretionary exemption provisions applicable during SSM events are impermissible in SIPs. This impermissibility applies even for “brief” exemptions from limits on emissions, because such exemptions nevertheless render the limitation noncontinuous. Furthermore, the fact that a SIP provision includes prerequisites to qualifying for an SSM exemption does not mean those prerequisites are themselves an “alternative emission limitation” applicable during SSM events.
If an air agency elects to have SIP provisions that contain a director's discretion feature, then to be consistent with CAA requirements the provisions must be structured so that any resulting variances or other deviations from the emission limitation or other SIP requirements have no federal law validity, unless and until the EPA specifically approves that exercise of the director's discretion as a SIP revision. Barring such a later ratification by the EPA through a SIP revision, the exercise of director's discretion is only valid for state (or tribal) law purposes and would have no bearing in the event of an action to enforce the provision of the SIP as it was originally approved by the EPA.
It may be appropriate for an air agency to establish an alternative numerical limitation or other form of control measure that applies during these modes of source operation, as for startup and shutdown events, but any such alternative emission limitation should be developed using the same criteria that the EPA recommends for alternative emission limitations applicable during startup and shutdown. Similarly, any SIP provision that includes an emission limitation for sources that includes alternative emission limitations applicable to modes of operation such as “maintenance,” “load change,” “soot-blowing” or “on-line operating changes” must also meet the applicable level of stringency for that type of emission limitation and be practically and legally enforceable.
There are approaches other than exemptions that would be consistent with CAA requirements for SIP provisions that states can use to address excess emissions during certain events. While automatic exemptions and director's discretion exemptions from otherwise applicable emission limitations for SSM events are not consistent with the CAA, SIPs may include criteria and procedures for the use of enforcement discretion by air agency personnel, as described in section XI.E of this document. Similarly, SIPs may, rather than exempt excess emissions, include emission limitations that subject those emissions to alternative numerical limitations or other control requirements during startup and shutdown events or other normal modes of operation, so long as those components of the emission limitations meet applicable CAA requirements and are legally and practically enforceable.
The EPA does not interpret section 110(a)(2) or section 302(k) to require that an emission limitation in a SIP provision be composed of a single, uniformly applicable numerical emission limitation. The text of section 110(a)(2) and section 302(k) does not require states to impose emission limitations that include a static, inflexible standard. The critical aspect for purposes of section 302(k) is that the SIP provision impose limits on emissions on a continuous basis, regardless of whether the emission
Startup and shutdown are part of the normal operation of a source and should be accounted for in the design and operation of the source.
In contrast to startup and shutdown, a malfunction is unpredictable as to the timing of the start of the malfunction event, its duration and its exact nature. The effect of a malfunction on emissions is therefore unpredictable and variable, making the development of an alternative emission limitation for malfunctions problematic. There may be rare instances in which certain types of malfunctions at certain types of sources are foreseeable and foreseen and thus are an expected mode of source operation. In such circumstances, the EPA believes that sources should be expected to meet the otherwise applicable emission limitation in order to encourage sources to be properly designed, maintained and operated in order to prevent or minimize any such malfunctions. To the extent that a given type of malfunction is so foreseeable and foreseen that a state considers it a normal mode of operation that is appropriate for a specifically designed alternative emission limitation, then such alternative should be developed in accordance with the recommended criteria for alternative emission limitations. The EPA does not believe that generic general-duty provisions, such as a general duty to minimize emissions, is sufficient as an alternative emission limitation for any type of event including malfunctions.
States developing SIP revisions to remove impermissible exemption provisions from emissions limitations may choose to consider reassessing particular emission limitations, for example to determine whether limits originally applicable only during non-SSM periods can be revised such that well-managed emissions during planned operations such as startup and shutdown would not exceed the revised emission limitation, while still protecting air quality and meeting other applicable CAA requirements. Such a revision of an emission limitation will need to be submitted as a SIP revision for EPA approval if the existing limitation to be changed is already included in the SIP or if the existing SIP relies on the particular existing emission limitation to meet a CAA requirement.
Some SIPs contain other generic regulatory requirements frequently referred to as “general duty” type requirements, such as a general duty to minimize emissions at all times, a general duty to use good engineering judgment at all times or a general duty not to cause a violation of the NAAQS at any time. To the extent that such other general-duty requirement is properly established and legally and practically enforceable, the EPA would agree that it may be an appropriate separate requirement to impose upon sources in addition to the (continuous) emission limitation. The EPA itself imposes separate general duties of this type in appropriate circumstances. The existence of these generic provisions does not, however, legitimize exemptions for emissions during SSM events in a SIP provision that imposes an emission limitation.
General-duty requirements that are not clearly part of or explicitly cross-referenced in a SIP emission limitation cannot be viewed as a component of a continuous emission limitation. Even if clearly part of or explicitly cross-referenced in the SIP emission limitation, however, a given general-duty requirement may not be consistent with the applicable stringency requirements for SIP provisions that should apply during startup and
A state can develop special, alternative emission limitations that apply during startup or shutdown if the source cannot meet the otherwise applicable emission limitation in the SIP. SIP provisions may include alternative emission limitations for startup and shutdown as part of a continuously applicable emission limitation when properly developed and otherwise consistent with CAA requirements. However, if a non-numerical requirement does not itself (or in combination with other components of the emission limitation) limit the quantity, rate or concentration of air pollutants on a continuous basis, then the non-numerical standard (or overarching requirement) does not meet the statutory definition of an emission limitation under section 302(k).
In cases in which measurement of emissions during startup and/or shutdown is not reasonably feasible, it may be appropriate for an emission limitation to include as a component a control for startup and/or shutdown periods other than a numerically expressed emission limitation.
The federal NESHAP and NSPS regulations and the technical materials in the public record for those rules may provide assistance for states as they develop and consider emission limitations and alternative emission limitations for sources in their states, and definitions of startup and shutdown events and work practices for them found in these regulations may be appropriate for adoption by the state in certain circumstances. In particular, the NSPS regulations should provide very relevant information for sources of the same type, size and control equipment type, even if the sources were not constructed or modified within a date range that would make them subject to the NSPS. The EPA therefore encourages states to explore these approaches.
The EPA recommends that, in order to be approvable (
(1) The revision is limited to specific, narrowly defined source categories using specific control strategies (
(2) Use of the control strategy for this source category is technically infeasible during startup or shutdown periods;
(3) The alternative emission limitation requires that the frequency and duration of operation in startup or shutdown mode are minimized to the greatest extent practicable;
(4) As part of its justification of the SIP revision, the state analyzes the potential worst-case emissions that could occur during startup and shutdown based on the applicable alternative emission limitation;
(5) The alternative emission limitation requires that all possible steps are taken to minimize the impact of emissions during startup and shutdown on ambient air quality;
(6) The alternative emission limitation requires that, at all times, the facility is operated in a manner consistent with good practice for minimizing emissions and the source uses best efforts regarding planning, design, and operating procedures; and
(7) The alternative emission limitation requires that the owner or operator's actions during startup and shutdown periods are documented by properly signed, contemporaneous operating logs or other relevant evidence.
If a state elects to create an emission limitation with different levels of control applicable during specifically defined periods of startup and shutdown than during other normal modes of operation, then the resulting emission limitation must meet the substantive requirements applicable to the type of SIP provision at issue, meet the applicable level of stringency for that type of emission limitation and be legally and practically enforceable. Alternative emission limitations applicable during startup and shutdown cannot allow an inappropriately high level of emissions or an effectively unlimited or uncontrolled level of emissions, as those would constitute impermissible
One approach other than exemptions that would be consistent with CAA requirements for SIP provisions that states can use to address excess emissions during SSM events is to include in the SIP criteria and procedures for the use of enforcement discretion by air agency personnel. SIPs may contain such provisions concerning the exercise of discretion by the air agency's own personnel, but such provisions cannot bar enforcement by the EPA or by other parties through a citizen suit.
Pursuant to the CAA, all parties with authority to bring an enforcement action to enforce SIP provisions (
As part of state programs governing enforcement, states can include regulatory provisions or may adopt policies setting forth criteria for how they plan to exercise their own
Also, states should not adopt overly broad enforcement discretion provisions for inclusion in their SIPs, even for their own personnel. Section 110(a)(2) requires states to have adequate enforcement authority, and overly broad enforcement discretion provisions would run afoul of this requirement if they have the effect of precluding adequate state authority to enforce SIP requirements. If such provisions are sufficiently specific, provide for sufficient public process and are sufficiently bounded, so that it is possible to anticipate at the time of the EPA's approval of the SIP provision how that provision will actually be applied and the potential adverse impacts thereof, then such a provision might meet basic CAA requirements. In essence, if it is possible to anticipate and evaluate in advance how the exercise of enforcement discretion could affect compliance with other CAA requirements, then it may be possible to determine in advance that the preauthorized exercise of director's discretion will not interfere with other CAA requirements, such as providing for attainment and maintenance of the NAAQS.
When using enforcement discretion in determining whether an enforcement action is appropriate in the case of excess emissions during a malfunction, satisfaction of the following criteria should be considered:
(1) To the maximum extent practicable the air pollution control equipment, process equipment or processes were maintained and operated in a manner consistent with good practice for minimizing emissions;
(2) Repairs were made in an expeditious fashion when the operator knew or should have known that applicable emission limitations were being exceeded. Off-shift labor and overtime were utilized, to the extent practicable, to ensure that such repairs were made as expeditiously as practicable;
(3) The amount and duration of the excess emissions (including any bypass) were minimized to the maximum extent practicable during periods of such emissions;
(4) All possible steps were taken to minimize the impact of the excess emissions on ambient air quality; and
(5) The excess emissions are not part of a recurring pattern indicative of inadequate design, operation or maintenance.
The EPA believes that SIP provisions that function to alter the jurisdiction or discretion of the federal courts under CAA section 113 and section 304 to determine liability and to impose remedies are inconsistent with fundamental legal requirements of the CAA, especially with respect to the enforcement regime explicitly created by statute. Affirmative defense provisions by their nature purport to limit or eliminate the authority of federal courts to find liability or to impose remedies through factual considerations that differ from, or are contrary to, the explicit grants of authority in section 113(b) and section 113(e). These provisions are not appropriate under the CAA, no matter what type of event they apply to, what criteria they contain or what forms of remedy they purport to limit or eliminate.
Section 113(b) provides courts with explicit jurisdiction to determine liability and to impose remedies of various kinds, including injunctive relief, compliance orders and monetary penalties, in judicial enforcement proceedings. This grant of jurisdiction comes directly from Congress, and the EPA is not authorized to alter or eliminate this jurisdiction under the CAA or any other law. With respect to monetary penalties, CAA section 113(e) explicitly includes the factors that federal courts and the EPA are required to consider in the event of judicial or administrative enforcement for violations of CAA requirements, including SIP provisions. Because Congress has already given federal courts the jurisdiction to determine what monetary penalties are appropriate in the event of judicial enforcement for a violation of a SIP provision, neither the EPA nor states can alter or eliminate that jurisdiction by superimposing restrictions on that jurisdiction and discretion granted by Congress to the courts. Accordingly, pursuant to section 110(k) and section 110(l), the EPA cannot approve any such affirmative defense provision in a SIP. If such an affirmative defense provision is included in an existing SIP, the EPA has authority under section 110(k)(5) to require a state to remove that provision.
Couching an affirmative defense provision in terms of merely defining whether the emission limitation applies and thus whether there is a “violation,” as suggested by some commenters, is also problematic. If there is no “violation” when certain criteria or conditions for an “affirmative defense” are met, then there is in effect no emission limitation that applies when the criteria or conditions are met; the affirmative defense thus operates to create an exemption from the emission limitation. As explained in the February 2013 proposal, the CAA requires that emission limitations must apply continuously and cannot contain exemptions, conditional or otherwise. This interpretation is consistent with the decision in
The EPA wishes to be clear that the absence of affirmative defense provisions in SIPs does not alter the legal rights of sources under the CAA. In the event of an enforcement action for an exceedance of a SIP emission limitation, a source can elect to assert any common law or statutory defenses that it determines are supported, based upon the facts and circumstances surrounding the alleged violation.
Once impermissible SSM exemptions are removed from the SIP, then any excess emissions during such events may be the subject of an enforcement action, in which the parties may use any appropriate evidence to prove or disprove the existence and scope of the alleged violation and the appropriate remedy for an established violation. Any alleged violation of an applicable SIP emission limitation, if not conceded by the source, must be established by the party bearing the burden of proof in a legal proceeding. The degree to which evidence of an alleged violation may derive from a specific reference method or any other credible evidence must be determined based upon the facts and circumstances of the exceedance of the emission limitation at issue.
The EPA recognizes that one important consideration for air agencies as they evaluate how best to revise their SIP provisions in response to this SIP call is the nature of the analysis that will be necessary for the resulting SIP revisions under section 110(k)(3), section 110(l) and section 193. Under section 110(l), the EPA is prohibited from approving any SIP revision that would interfere with any applicable requirement concerning attainment and reasonable further progress or any other requirements of the CAA. Section 193 prohibits states from modifying regulations in place prior to November 15, 1990, unless the modification ensures equivalent or greater reductions of the pollutant. SIP revision must be evaluated for compliance with section 110(l) and section 193 on the facts and circumstances of the specific revision. Section X of this document provides three example scenarios in which a state might remove an impermissible SSM provision from its SIP, including how sections 110(l) and 193 considerations might apply. These examples are intended to provide general guidance on the considerations and the nature of the analysis that may be appropriate for different types of SIP revisions. Air agencies should contact their respective EPA Regional Offices (see the
The final action restates the EPA's interpretation of the statutory requirements of the CAA. Through the SIP calls issued to certain states as part of this SIP call action under CAA section 110(k)(5), the EPA is only requiring each affected state to revise its SIP to comply with existing requirements of the CAA. The EPA's action therefore leaves to each affected state the choice as to how to revise the SIP provision in question to make it consistent with CAA requirements and to determine, among other things, which of the several lawful approaches to the treatment of excess emissions during SSM events will be applied to particular sources. The EPA has not performed an environmental justice analysis for purposes of this action, because it cannot geographically locate or quantify the resulting source-specific emission reductions. Nevertheless, the EPA believes this action will provide environmental protection for all areas of the country.
The following is a list of documents that are specifically referenced in this document. Some listed documents also include a document ID number associated with the docket for this rulemaking.
This action is a “significant regulatory action” that was submitted to the Office of Management and Budget (OMB) for review because it raises novel legal or policy issues. Any changes made in response to OMB recommendations have been documented in the docket.
This action does not impose an information collection burden under the PRA. This action merely reiterates the EPA's interpretation of the statutory requirements of the CAA and does not require states to collect any additional information. Through the SIP calls issued to certain states as part of this action under CAA section 110(k)(5), the EPA is only requiring each affected state to revise its SIP to comply with existing requirements of the CAA.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. Any agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to this rule. This action
This action does not contain any federal mandate as described in UMRA, 2 U.S.C. 1531–1538, and does not significantly or uniquely affect small governments. The action imposes no new enforceable duty on any state, local or tribal governments or the private sector. The regulatory requirements of this action apply to certain states for which the EPA is issuing a SIP call. To the extent that such affected states allow local air districts or planning organizations to implement portions of the state's obligation under the CAA, the regulatory requirements of this action do not significantly or uniquely affect small governments because those governments have already undertaken the obligation to comply with the CAA.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175. In this action, the EPA is not addressing any tribal implementation plans. This action is limited to states. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2–202 of the Executive Order. This action is not subject to Executive Order 13045 because, in prescribing the EPA's action for states regarding their obligations for SIPs under the CAA, it implements specific standards established by Congress in statutes.
This action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution or use of energy. This action merely prescribes the EPA's action for states regarding their obligations for SIPs under the CAA.
This rulemaking does not involve technical standards.
The EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations. The action is intended to ensure that all communities and populations across the affected states, including minority, low-income and indigenous populations overburdened by pollution, receive the full human health and environmental protection provided by the CAA. This action concerns states' obligations regarding the treatment they give, in rules included in their SIPs under the CAA, to excess emissions during startup, shutdown and malfunctions. This action requires that certain states bring their treatment of these emissions into line with CAA requirements, which will lead to certain sources' having greater incentives to control emissions during such events.
Pursuant to CAA section 307(d)(1)(V), the Administrator determines that this action is subject to the provisions of section 307(d). Section 307(d) establishes procedural requirements specific to rulemaking under the CAA. Section 307(d)(1)(V) provides that the provisions of section 307(d) apply to “such other actions as the Administrator may determine.”
This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
The Administrator determines that this action is “nationally applicable” within the meaning of section 307(b)(1) of the CAA. This action in scope and effect extends to numerous judicial circuits because the action on the Petition extends to states throughout the country. In these circumstances, section 307(b)(1) and its legislative history authorize the Administrator to find the action to be of “nationwide scope or effect” and thus to indicate the venue for challenges to be in the D.C Circuit. Thus, any petitions for review must be filed in the U.S. Court of Appeals for the District of Columbia Circuit.
In addition, pursuant to CAA section 307(d)(1)(V), the EPA is determining that this rulemaking action is subject to the requirements of section 307(d), which establish procedural requirements specific to rulemaking under the CAA. In the event there is a judicial challenge to this action and a court determines that the EPA has erred with respect to any portion of this action, the EPA intends the components of this action to be severable.
The statutory authority for this action is provided by CAA section 101
Environmental protection, Affirmative defense, Air pollution control, Carbon dioxide, Carbon dioxide equivalents, Carbon monoxide, Excess emissions, Greenhouse gases, Hydrofluorocarbons, Incorporation by reference, Intergovernmental relations, Lead, Methane, Nitrogen dioxide, Nitrous oxide, Ozone, Particulate matter, Perfluorocarbons, Reporting and recordkeeping requirements, Startup, shutdown and malfunction, State implementation plan, Sulfur hexafluoride, Sulfur oxides, Volatile organic compounds.
Nuclear Regulatory Commission.
Final rule.
The U.S. Nuclear Regulatory Commission (NRC), in consultation with the U.S. Department of Transportation (DOT), is amending its regulations for the packaging and transportation of radioactive material. These amendments make conforming changes to the NRC's regulations based on the International Atomic Energy Agency's (IAEA) 2009 standards for the international transportation of radioactive material and maintain consistency with the DOT's regulations. In addition, these amendments re-establish restrictions on materials that qualify for the fissile material exemption, clarify requirements, update administrative procedures, and make editorial changes.
Please refer to Docket ID NRC–2008–0198 when contacting the NRC about the availability of information for this final rule. You may obtain publicly-available information related to this final rule by any of the following methods:
• Federal rulemaking Web site: Go to
• NRC Agencywide Documents Access and Management System (ADAMS): You may obtain publicly-available documents online in the ADAMS Public Documents collection at
• NRC PDR: You may examine and purchase copies of public documents at the NRC PDR, Room O1–F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Solomon Sahle, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, telephone: 301–415–3781; email:
The NRC regulates the transportation of radioactive material under part 71 of Title 10 of the
The NRC is now publishing its final rule. Together with a related DOT final rule amending Title 49 of the
The IAEA was formed by member nations to promote safe, secure, and peaceful nuclear technologies. It establishes safety standards to protect public health and safety and to minimize the danger to life and property, and has developed safety standards for the safe transport of radioactive material in TS–R–1. Copies of TS–R–1 may be obtained from the United States distributors, Bernan, 15200 NBN Way, P.O. Box 191, Blue Ridge Summit, PA 17214; telephone:1–800–865–3457; email:
These IAEA safety standards and regulations were developed in consultation with IAEA Member States, and reflect an international consensus on what is needed to provide for a high level of safety. By providing a global framework for the consistent regulation of the transport of radioactive material, TS–R–1 facilitates international commerce and contributes to the safe conduct of international trade involving radioactive material. By periodically revising its regulations to be compatible with IAEA and DOT regulations, the NRC is able to remove inconsistencies that could impede international commerce and reflect knowledge gained in scientific and technical advances and accumulated expericence.
This rulemaking harmonizes the NRC's regulations with the IAEA's transportation regulations in TS–R–1 and aligns with the DOT regulations. The regulations in TS–R–1 represent an accepted set of requirements that provide a high level of safety in the
In November 2012, the IAEA issued revised standards for the safe transport of radioactive material and designated them as “Specific Safety Requirements Number SSR–6” (SSR–6). The present NRC rulemaking does not incorporate the SSR–6 requirements, because doing so would require significant changes to the NRC rule, and it would need to be re-published for further comment. The NRC will consider any necessary changes related to SSR–6 in a future rulemaking after consulting with the DOT, rather than further delay finalizing this rulemaking.
Historically, the NRC has coordinated its revisions to 10 CFR part 71 with the DOT, because the DOT and the NRC co-regulate transport of radioactive materials in the United States. The roles of the DOT and the NRC in the co-regulation of the transportation of radioactive materials are documented in a memorandum of understanding (MOU) (44 FR 38690; July 2, 1979). Consistent with this MOU, the NRC has coordinated its efforts with the DOT during this rulemaking, and representatives from the NRC and DOT have advised and consulted with one another. This final rule has been coordinated with DOT to ensure that consistent regulatory standards are maintained between NRC and DOT radioactive material transportation regulations, and to ensure coordinated publication of the final rules by both agencies. On July 11, 2014, the DOT published its final rule titled, “Hazardous Materials: Compatibility with the Regulations of the International Atomic Energy Agency” in the
The NRC is re-establishing restrictions on material that will qualify for the 10 CFR 71.15 fissile material exemption. In 10 CFR 71.15 (“Exemption from classification as fissile material”), the exemption in paragraph (d) is being revised. The 10 CFR 71.15 exemptions were formerly set forth in 10 CFR 71.53. In 1997, the NRC issued an emergency final rule (62 FR 5907; February 10, 1997) that revised the 10 CFR 71.53 regulations on fissile material exemptions and general license provisions that apply to fissile material.
Based on the public comments on the 1997 emergency final rule, the NRC contracted with the Oak Ridge National Laboratory (ORNL) to review the fissile material exemptions and general license provisions, study the regulatory and technical bases associated with these regulations, and perform criticality model calculations for different mixtures of fissile materials and moderators. The results of the ORNL study were documented in NUREG/CR–5342,
The NRC chose to implement this ORNL suggestion, as reflected in a 2002 rulemaking regarding 10 CFR part 71 (67 FR 21390; April 30, 2002). Similar to the present rulemaking, the NRC in 2002 proposed to make the NRC's regulations more consistent and compatible with IAEA's standards. Additionally, the NRC proposed to make changes to the fissile material exemption requirements to address the unintended economic impact of the 1997 final rule. In a final rule dated January 26, 2004 (69 FR 3698), the NRC removed the restriction (then stated in 10 CFR 71.53(b)) that, to qualify for the fissile material exemption, uranium enriched in U–235 must be distributed homogeneously throughout the package and may not form a lattice arrangement within the package. In addition, the 2004 final rule re-designated the section for fissile material exemptions from § 71.53 to § 71.15.
Although the NRC determined in 2004 that the limits on restricted moderators were sufficient to assure subcriticality for all moderators of concern, the NRC now believes that additional restrictions are needed to have a sufficient margin of criticality safety for shipments of material under the low-enriched fissile material exemption. Therefore, the NRC is revising 10 CFR 71.15(d) in this final rule by reinstating the requirement removed in 2004 that, for uranium enriched to a maximum of 1 percent to be exempted, the fissile material must be distributed homogeneously throughout the package contents and not form a lattice arrangement. Further technical details regarding the basis for now revising 10 CFR 71.15(d) are discussed in Section II.M of this document.
The regulations of 10 CFR part 71 require that licensees and certificate holders have quality assurance programs approved by the Commission as satisfying the applicable provisions of subpart H of 10 CFR part 71. Unlike 10 CFR part 50, there are no specific requirements in 10 CFR part 71 addressing changes to an NRC-approved quality assurance program. Once a 10 CFR part 71 quality assurance program is approved, no changes to the program may be made without further NRC approval, because a change would alter the program and make it an unapproved program. Consequently, the process has been overly burdensome and inefficient for both the licensee and the NRC. For example, under the existing 10 CFR part 71 requirements, a change in the quality assurance program to correct typographical errors or punctuation must be submitted to and approved by the NRC.
In 2004, the NRC changed the renewal period for quality assurance program approvals issued under 10 CFR part 71 from 5 years to 10 years in order to
Under the new 10 CFR 71.106, the NRC will allow some changes to be made to quality assurance programs previously approved under 10 CFR part 71 without obtaining additional NRC approval. The process for making changes to approved quality assurance program descriptions will now be similar to the process that the NRC has used to approve changes that are made to the quality assurance program descriptions for nuclear power plants licensed under 10 CFR part 50 through the provisions at § 50.54(a), and will result in a more consistent approach for allowing changes to approved quality assurance programs.
The NRC also will re-issue NRC Form 311 without an expiration date. The 24-month period for reporting changes will begin on the date of the NRC approval of a quality assurance program issued with no expiration date, as specified by the date of signature at the bottom of NRC Form 311. The changes being made to the quality assurance program approval process are discussed further in Sections II .H, II.I, and II.J of this document.
The NRC is amending its regulations to make them more consistent and compatible with the IAEA's international transportation regulations TS–R–1. These revisions are also consistent with the DOT's hazardous materials regulations, and maintain a consistent framework for regulating the transportation and packaging of radioactive material.
In addition, the NRC is revising 10 CFR part 71 to: (1) Update administrative procedures for the quality assurance program requirements described in subpart H of 10 CFR part 71; (2) re-establish criticality safety restrictions on certain material that qualifies for the fissile material exemption; (3) clarify the requirements for a general license; (4) clarify the responsibilities of certificate holders and licensees when making preliminary determinations; and (5) make editorial changes.
This action affects: (1) NRC licensees authorized by a specific or general NRC license to receive, possess, use, or transfer licensed material, if the licensee delivers that material to a carrier for transport, or transports the material outside of the site of usage as specified in the NRC license, or transports that material on public highways; (2) holders of, and applicants for a Certificate of Compliance (CoC); and (3) holders of a 10 CFR part 71, subpart H quality assurance program approval. This action would also affect holders of quality assurance program approvals under appendix B of 10 CFR part 50 or subpart G of 10 CFR part 72 to the extent that those approvals apply to transport packaging as specified in 10 CFR 71.101(f), “Previously approved programs.” This action also changes requirements that are matters of compatibility with Agreement States. Agreement States will need to update their regulations, as appropriate, at which time those licensees in Agreement States will need to meet the revised Agreement State regulations.
The NRC is revising its regulations in 10 CFR part 71 to be more consistent or compatible with the international transportation regulations. These changes also improve or maintain consistency between 10 CFR part 71 and the DOT's regulations to maintain a consistent framework for the transportation and packaging of radioactive material. To accomplish these goals, the NRC is revising 10 CFR part 71 as follows:
1. The concept of processing ores for purposes other than radioactive material content is added to the provisions that apply to natural materials and ores in the exemptions for low-level materials in § 71.14.
2. The NRC is adopting the scoping statement paragraph 107(f) of TS–R–1, which addresses non-radioactive solid objects with radioactive substances present on any surface in quantities not in excess of certain levels. In conjunction with this change, a definition of “contamination” corresponding to the definition in TS–R–1 is added to § 71.4.
3. The following definitions in 10 CFR 71.4 (“Definitions”) are amended to reflect the current definitions in TS–R–1: “Criticality Safety Index (CSI)”; “Low Specific Activity (LSA) material”; and “Uranium—natural, depleted, enriched.” When the NRC last revised subsection (1)(i) of the definition for LSA material, the NRC added the modifier “not,” which resulted in this component of the NRC definition being inconsistent with the DOT and IAEA definitions. The NRC is correcting this so that LSA material includes material intended to be processed for its radionuclides.
4. The NRC is adopting the use of the Class 5 impact test prescribed in the International Organization for Standardization's (ISO) Document 2919, “Radiation protection—Sealed radioactive sources—General requirements and classification,” Second Edition (February 15, 1999), ISO 2919:1999(E),
5. The NRC is incorporating by reference (A) ISO Document 2919, and (B) ISO Document 9978, “Radiation protection—Sealed radioactive sources—Leakage test methods,” First Edition (February 15, 1992), ISO 9978:1992(E).
6. The description of billet used in the percussion test in § 71.75(b)(2)(ii) is corrected by replacing “edges” with “edge.”
7. The definition of “Special form radioactive material” in § 71.4 is revised to allow special form radioactive material that is successfully tested in accordance with the current requirements to be transported as special form radioactive material, if the testing was completed before the effective date of the final rule.
8. In appendix A of 10 CFR part 71, footnote h to californium-252 (Cf-252) (alternate A
9. Krypton-79 (Kr-79) values are added to Table A–1 and Table A–2, “Exempt Material Activity Concentrations and Exempt Consignment Activity Limits for Radionuclides.” The A
10. Footnote a to Table A–1 is revised to include the list of parent radionuclides whose A
11. Footnote c to Table A–1 is moved to the A
12. In Appendix A, Table A–2, the activity limit in Table A–2 for exempt consignment for tellurium-121m (Te-121m) is revised to be consistent with the new IAEA value in TS–R–1.
13. The list of parent radionuclides and their progeny included in secular equilibrium in footnote b to Table A–2 is revised to be consistent with the list accompanying Table 2 in TS–R–1.
14. The descriptive language in Table A–3, “General Values for A
The NRC is revising its 10 CFR 71.14(a)(1) exemption for natural materials and ores containing naturally occurring radionuclides to reflect changes in the scope of TS–R–1.
The TS–R–1 includes statements that describe its activities included within the scope of this IAEA regulation. It also has a list of material to which TS–R–1 does not apply, hereafter referred to as “non-TS–R–1 material.” Included in the list of non-TS–R–1 materials are natural materials and ores containing naturally occurring radionuclides. These natural materials and ores are not intended to be processed for their radionuclides and are classified as non-TS–R–1 materials, provided that the activity concentration for the material does not exceed 10 times the activity concentration for exempt material specified in Table A–2 of Appendix A.
The NRC previously established its 10 CFR 71.14(a)(1) exemption from the requirements of 10 CFR part 71 for licensees who ship or carry certain natural materials and ores designated as low-level materials. The exemption allows the transport of certain qualifying natural material or ore without the material being regulated as a hazardous material during transportation. However, all applicable NRC regulations in other 10 CFR parts continue to apply to these natural materials and ores. The current exemption in § 71.14(a)(1) is consistent with the 1996 edition of TS–R–1 (as amended in 2000) and 49 CFR 173.401(b), as they apply to natural materials and ores containing naturally occurring radionuclides. The NRC is updating this exemption to include the shipment of natural materials and ores containing naturally occurring radionuclides that have been processed, which will retain consistency with the DOT's regulations and harmonize the NRC's regulations with the current TS–R–1. This exemption continues to be limited to those natural materials and ores containing naturally occurring radionuclides whose activity concentrations may be up to 10 times the activity concentration specified in Table A–2 of appendix A.
The NRC is also revising the definition of LSA–I material in 10 CFR 71.4 (
With the revision of the definition of LSA–I material, uranium and thorium ores, concentrates of uranium and thorium ores, and other ores containing naturally occurring radionuclides that are intended to be processed for these radionuclides may be able to qualify for the low-level material exemption in § 71.14(b)(3), provided that the other restrictions are satisfied. The restrictions include: (1) The package contains only LSA–I or Surface Contaminated Object (SCO)–I material or (2) the LSA or SCO material has an external radiation dose rate of less than 10 millisieverts per hour (mSv/h) (1 rem per hour (rem/h)) at a distance of 3 meters from the unshielded material. Section 71.14 provides an exemption from the requirements of 10 CFR part 71, with the exception of §§ 71.5 and 71.88. Section 71.5 references the DOT's regulations in 49 CFR parts 107, 171 through 180, and 390 through 397. If the DOT's regulations are not applicable to a shipment of licensed material, then § 71.5 requires licensees to conform to the referenced DOT standards and regulations to the same extent as if the shipment were subject to the DOT's regulations. Section 71.88 will continue to apply to the material because its applicability is not limited by any of the exemptions in 10 CFR part 71.
Natural material or ore that has been incorporated into a manufactured product, such as an article, instrument, component of a manufactured article or instrument, or consumer item, will not qualify for the low-level material exemption for natural materials and ores containing naturally occurring radionuclides. Slags, sludges, tailings, residues, bag house dust, oil scale, and washed sands that are the byproducts of processing or refining are examples that may contain natural material or ore that has been processed, are examples of material that may still qualify for the exemption, provided that the processed material has not been incorporated into a manufactured product.
The NRC is adding a definition for “contamination” to § 71.4 in conjunction with the new exemption in 10 CFR 71.14(a)(3) to include non-radioactive solid objects with substances present on any surface not exceeding the levels used to define contamination. Contamination is defined as quantities in excess of 0.4 Bq/cm
The IAEA has incorporated in TS–R–1 the Class 4 and Class 5 impact tests in ISO 2919:1999(E), the Class 6 temperature test in ISO 2919:1999(E), and the leaktightness tests in ISO 9978:1992(E). The NRC is updating the alternate tests in § 71.75 that may be used for the qualification of special form radioactive material by incorporating by reference the Class 4 and Class 5 impact tests and the Class 6 temperature test
The Class 4 impact test in ISO 2919:1999(E) replaces the impact test in § 71.75(d) and will be available for use with specimens that have a mass that is less than 200 grams. The Class 5 impact test, which is being added, will allow use of an ISO impact test for specimens that have a mass that is less than 500 grams. The updated ISO impact tests maintain the requirement that the mass of the hammer used in the test is greater than 10 times the mass of the specimen.
The Class 6 temperature test in ISO 2919:1999(E) replaces the temperature test in § 71.75(d). The Class 6 temperature test in ISO 2919:1999(E) is more stringent than the test that it replaces because it requires the same specimen to be used for both portions of the temperature test. The Class 6 temperature test will continue to be more stringent than the testing required by § 71.75(b).
The leaktightness tests prescribed in ISO 9978:1992(E) replace the tests in ISO/TR 4826.
The NRC is revising the definition of “Special form radioactive material” in § 71.4 to allow material tested using the current requirements to continue to be treated as special form material, provided that the testing was completed before the effective date of the final rule. This will allow material tested using requirements in effect at the time of the testing to continue to be used. The NRC is revising the reference in § 71.4, which went into effect on March 31, 1996, by changing the date of the revision from January 1, 1983, to January 1, 1996.
The NRC is replacing “edges” with “edge” to describe the billet used for the percussion test in § 71.75(b)(2). The edge corresponds to the circular edge at the face of the billet. This revision clarifies the description of the billet and maintains consistency with the language used by the DOT in 49 CFR 173.469.
The NRC is changing the following items in appendix A:
1. Determination of the quantity of radioactive material that can be shipped in a package that contains both special form and normal form radioactive material.
The final rule specifically addresses how to calculate the limit of the activity that may be transported in a Type A package, if the package contains both special form and normal form radioactive material and the identities and activity limits for the radionuclides are known.
2. Table A–1, “A
The values in Table A–1 have been revised to make the values in 10 CFR part 71 consistent with the values in Table 2, “Basic Radionuclide Values,” in TS–R–1. Specifically, the final rule: (1) Adds an entry for Kr-79, which is now found in Table 2 in TS–R–1; (2) adopts the A
The IAEA added an entry for Kr-79 in Table 2 of TS–R–1. The NRC is adopting the same radionuclide-specific values for Kr-79 in Table A–1 in 10 CFR part 71. The radionuclide-specific values replace the generic values in Table A–3, which were previously used for Kr-79. The radiological criteria underlying the A
The IAEA revised the A
The final rule revises footnote a to Table A–1 that identifies the A
Footnote c to Table A–1 has been revised to clarify that the activity of Ir-192 in special form may be determined from a measurement of the rate of decay or a measurement of the radiation level at a prescribed distance from the source.
3. Table A–2, “Exempt Material Activity Concentrations and Exempt Consignment Activity Limits for Radionuclides.”
The final rule revises Table A–2 to make the values in 10 CFR part 71 consistent with the values in TS–R–1 and adds an entry for Kr-79 adopted from Table 2 of TS–R–1. The final rule also updates the list of parent radionuclides and their progeny in footnote b to Table A–2 by removing the chains for the parent radionuclides cerium-134 (Ce-134), radon-220 (Rn-220), thorium-226 (Th-226), and U-240 and by adding the chain for the parent radionuclide silver-108m (Ag-108m) to make the footnote consistent with footnote (b) in Table 2 of TS–R–1. The activity limit for exempt consignment for Te-121m has also been updated to match the values in TS–R–1.
Materials that have an activity concentration that is less than the activity concentration for exempt material pose a very low radiological risk. The activity limit for exempt consignment has been established for the transportation of material in small quantities so that the total activity is unlikely to result in any significant radiological exposure. This is the case, even for material that exceeds the activity concentration for exempt material.
Previously, Kr-79 was not listed in Table A–2 and instead values from Table A–3, “General Values for A
In TS–R–1, the IAEA revised the activity limit for exempt consignment for Te-121m. The change to the activity level for exempt consignment for Te-121m, which is based on new analyses and information, is consistent
The IAEA has revised the list of parent radionuclides and their progeny included in secular equilibrium in footnote (b) to Table 2 in TS–R–1. This revision arose from the adoption of the nuclide-specific basic radionuclide values from the Basic Safety Standards (IAEA Safety Series No. 115, “International Basic Safety Standards for Protection against Ionizing Radiation and for the Safety of Radiation Sources” (1996)) for use in transportation. The list of parent radionuclides and their progeny was modified by adding the decay chain for Ag-108m and by removing the decay chains for Ce-134, Rn-220, Th-226, and U–240. The list of parent radionuclides and their progeny included in secular equilibrium presented in footnote b to Table A–2 is revised to be consistent with the changes to the list in TS–R–1.
4. Table A–3, “General Values for A
In the 2005 edition of TS–R–1, the IAEA revised Table 2, “Basic Radionuclide Values for unknown radionuclides or mixtures.” The values are now in Table 3 in the 2009 edition of TS–R–1. The table divides unknown radionuclides and mixtures into three groups, with a row for each group. The first column of each row provides a descriptive phrase for contents that are suitable for that group. The NRC is adopting the new descriptive phrases in Table A–3 of 10 CFR part 71.
The descriptive phrase for the first group, “Only beta or gamma emitting radionuclides are known to be present,” is not being changed. The phrase for the second group, “Only alpha emitting nuclides are known to be present,” is being changed to “Alpha emitting nuclides, but no neutron emitters, are known to be present.” The phrase for the third group, “No relevant data are available,” is being changed to “Neutron emitting nuclides are known to be present or no relevant data are available.”
Some users have assigned alpha-emitting radionuclides that also emit beta particles or gamma rays to the third group, when it was intended that they be assigned to the second group. The change in the descriptive phrase for the second group is intended to reduce the confusion caused by the current phrase because all alpha emitting radionuclides also emit other particles and/or gamma rays. The change in the descriptive phrase for the third group is intended to clarify that neutron-emitting radionuclides, or alpha emitters that also emit neutrons, such as Cf-252, Cf-254 and curium-248 (Cm-248), should be assigned to the third group.
It is intended that when groups of radionuclides are based on the total alpha activity and the total beta and gamma activity, the lowest radionuclide values (A
5. Other changes that correct formulas and their descriptions in section IV of appendix A.
The NRC is making several corrections to the formulas and the descriptions of the formulas that address mixtures of radionuclides in section IV of appendix A in 10 CFR part 71. These changes involve formatting and typographical changes in the formulas and their descriptions.
The final rule revises § 71.85(a)–(c) to make certificate holders, not licensees, responsible for making the required preliminary determinations before the first use of any package for shipping radioactive material. The preliminary determinations involve evaluating, testing, and marking the packaging. The DOT's requirements in 49 CFR 173.22 require that the person offering a hazardous material for shipping make determinations relating to the manufacturing, assembly, and marking of the packaging or container. New § 71.85(d) will require licensees to ascertain that the certificate holders have made the required preliminary determinations. Note that before each shipment, licensees must still make the findings required by the existing § 71.87(a)–(k) provisions, to ensure the continued safety of packages containing radioactive material.
The NRC is revising § 71.85, because it is more appropriate to assign the responsibility to certificate holders for evaluating, testing, and marking the packaging. Only certificate holders are authorized to design and fabricate packages, and only certificate holders have a full scope quality assurance program approval. By assigning the responsibility for making the preliminary determinations to the certificate holder, the NRC streamlines the implementation of its regulations, and the revisions to § 71.85 also better reflect current practice.
Reflecting the revisions to § 71.85(a)–(c) previously discussed, conforming changes are made to the § 71.101 Quality Assurande (QA) provisions, to clarify that only certificate holders and applicants for a CoC have QA responsibilities regarding the fabrication and testing of packages. In this regard, references to licensees §§ 71.101(a) and (c)(2) have been removed.
The duration of quality assurance program approvals issued under 10 CFR part 71 is a matter of practice and is not specified in the regulations. The NRC has limited the duration of the quality assurance program approval by assigning an expiration date to NRC Form 311, “Quality Assurance Program Approval for Radioactive Material Packages.” The inclusion of an expiration date provided an opportunity for the NRC to periodically review the quality assurance programs and for the NRC to maintain periodic contact with the quality assurance program approval holders.
The NRC is changing its practice regarding the duration of its quality assurance program approvals. The NRC will no longer limit the duration of its quality assurance program approvals issued under 10 CFR part 71. The NRC is amending 10 CFR part 71 to implement this change in order to make the periodic communication between the NRC and the quality assurance program approval holders more efficient. The NRC will reissue NRC Form 311 without an expiration date.
The NRC is still requiring quality assurance program approval holders to periodically report changes in their quality assurance program description to the NRC. However, the NRC has determined that with the continuing contact between the NRC and the quality assurance program approval holders, requiring the renewal of quality assurance program approvals is no longer necessary. Every 24 months, each quality assurance program approval holder is required to report those changes that do not reduce commitments made to the NRC in a quality assurance program description. Regarding quality assurance program description changes that reduce commitments made to the NRC, such changes will continue to require NRC approval.
The NRC expects that this new process will provide the NRC with
Previously, quality assurance program descriptions approved under 10 CFR part 71 could not be changed without NRC approval. Therefore, all changes to 10 CFR part 71 quality assurance programs, irrespective of their significance or importance to safety, were required to be submitted to the NRC for approval. Licensees with quality assurance programs approved under 10 CFR part 50, may make some changes to their quality assurance program without NRC approval, in accordance with 10 CFR 50.54. Under the final rule, the NRC will allow some changes to be made to quality assurance programs previously approved under 10 CFR part 71 without obtaining additional NRC approval. As indicated previously, the new process for making changes to approved quality assurance program descriptions under 10 CFR part 71 will be similar to the process that the NRC has used to approve changes that are made to the quality assurance program descriptions for nuclear power plants and will result in a more consistent NRC-wide approach. As stated previously in II.H, quality assurance program description changes that reduce commitments made to the NRC will continue to require NRC approval. For such changes, the following information will need to be provided for NRC review: A description of the proposed changes, the reason for the changes, and the basis for concluding that the revised program incorporating the changes will continue to satisfy the requirements of 10 CFR part 71, subpart H.
Quality assurance program approval holders will no longer be required to submit for NRC approval changes to their quality assurance program descriptions under 10 CFR part 71, if those changes do not reduce the commitments that they have made to the NRC. For example, administrative changes (
Under the revised requirements, every 24 months, quality assurance program approval holders will be required to report changes to their approved quality assurance program that do not reduce any commitments in their quality assurance program descriptions. Such changes will no longer require NRC approval before they can be implemented. If a quality assurance program approval holder has not made any changes to its approved quality assurance program description during the preceding 24-month period, the approval holder will be required to report this to the NRC.
The NRC inspection program relies on having current information about the quality assurance program available to the NRC. By requiring that the most important changes be submitted to the NRC for approval before they are implemented, and with the periodic reporting of non-substantive changes every 24 months, the NRC will have current information for its inspection program. The NRC considers the 24-month reporting period as providing an appropriate balance between the burden placed on the quality assurance program approval holders and the need to ensure that the NRC has current information for its oversight of these quality assurance programs.
As previously stated in Section I, the NRC will re-issue NRC Form 311 without an expiration date. The 24-month period for reporting of changes will begin on the date of the NRC approval of a quality assurance program issued with no expiration date, as specified by the date of signature at the bottom of NRC Form 311. By making these changes, the NRC is seeking to balance the regulatory burden for submitting and reviewing this information with the NRC's need to ensure that the NRC has current information.
The NRC is removing footnote 2 in § 71.103 regarding the use of the term “licensee” in subpart H because it is no longer necessary. The removal of the footnote does not change the quality assurance requirements in subpart H. The footnote regarding use of the term “licensee” was included to clarify that the quality assurance requirements in subpart H apply to whatever design, fabrication, assembly, and testing of a package is accomplished before a package approval is issued. The terms “certificate holder” and “applicant for a CoC” were added to the requirements in subpart H in a previous rulemaking to make explicit the application of those quality assurance requirements to certificate holders and applicants for a CoC. Although removing the footnote will not change the quality assurance requirements, other changes to subpart H in this rulemaking clarify which requirements apply to users of NRC-certified packaging and which apply to applicants for, or holders of CoCs, which are the entities that are performing design, fabrication, assembly, and testing of the package before a package approval is issued.
The NRC is changing the requirements for general licenses on the use of an NRC-approved package (§ 71.17) and use of a foreign-approved package (§ 71.21). In § 71.17, the NRC is revising the general license requirements to clarify the conditions for obtaining a general license and the responsibilities of the general licensee. A quality assurance program approved by the NRC that satisfies the provisions of subpart H of 10 CFR part 71 is required in order to be granted the general license. The changes clarify that the licensee is responsible for maintaining copies of the appropriate documents, such as the CoC, or other approval of the package, the documents associated with the use and maintenance of the packaging, and the actions that are to be taken before shipment with the package. The changes also clarify that the notifications to the NRC, as required in § 71.17(c)(3), are a responsibility of the licensee, rather than a condition for obtaining the license. The changes to §§ 71.17 and 71.21 do not change the current notification process nor the required timing or content of the notification required by § 71.17(c)(3) or any other
The changes also update the reference in § 71.21(a) from 49 CFR 171.12 to 49 CFR 171.23 to reflect a DOT final rule published on May 3, 2007 (72 FR 25162), that previously moved the requirements.
The NRC is revising § 71.15(d) criteria that, if satisfied, exempt certain material from being classified as fissile material. Material within the scope of § 71.15 is exempt from the fissile material package standards and criticality safety requirements stated in §§ 71.55 and 71.59.
The objective of the fissile material exemptions in § 71.15 is to facilitate the safe transport of low-risk (
The reactivity of uranium enriched in U–235 depends on the level of enrichment, the presence of moderators, and heterogeneity effects. Hydrogen is the most efficient moderator and water is the most common material containing large quantities of hydrogen; therefore, water is the typical moderating material of interest in criticality safety. The maximum enrichment in U–235 allowed to qualify for the fissile material exemption in § 71.15(d) is 1 percent by weight, which is slightly less than the minimum critical enrichment for an infinite, homogeneous mixture of enriched uranium and water.
The exemption for uranium enriched to a maximum of 1 percent at § 71.15(d) includes a limit on moderators that increases the reactivity of the low-enriched fissile material, but it does not include limits on heterogeneity. In contrast, TS–R–1 allows the uranium enriched to a maximum of 1 percent by weight to be distributed essentially homogeneously throughout the material and requires that if the U–235 is in metallic, oxide, or carbide forms then it cannot form a lattice arrangement, but TS–R–1 does not limit the amount of beryllium, graphite, or hydrogenous material enriched in deuterium. In its supplemental guidance to TS–R–1, TS–G–1.1 “Advisory Material for the IAEA Regulations for the Safe Transport of Radioactive Material,”
An analysis performed by the DOE indicated that large arrays of uranium with enrichment of 1 percent by weight of U–235, which qualify for the fissile material exemption at § 71.15(d), could exceed an effective neutron multiplication factor (k
As discussed in Section I of this document, the NRC in 2004 removed exemption provisions regarding homogeneous distribution and lattice arrangement. Although the NRC had determined that the limits on restricted moderators were sufficient to assure subcriticality for all moderators of concern, the NRC now believes that additional restrictions are needed to have a sufficient margin of safety for shipments of material under the low-enriched fissile material exemption. Therefore, the NRC is reinstating the requirement that, for uranium enriched to a maximum of 1 percent to be exempted, the fissile material must be distributed homogeneously throughout the package contents and not form a lattice arrangement. Some variability in the distribution and enrichment of the uranium enriched to a maximum of 1 percent is permissible, provided that the maximum enrichment does not exceed 1 percent. The total measured mass of U–233 and plutonium, plus two times the measurement uncertainty, must be less than 1.0 percent of the mass of U–235 in the material. The total measured mass of beryllium, graphite, and hydrogenous material enriched in deuterium, plus two times the measurement uncertainty, must be less than 5.0 percent of the uranium mass. Although there are heterogeneity effects
A requirement in § 71.19(a) that implemented transitional arrangements (“grandfathering”) expired on October 1, 2008, and § 71.19(a) was designated as “reserved.” Because this entry is no longer needed, paragraphs (b) through (e) have been redesignated as paragraphs (a) through (d). In the redesignated paragraph (b)(2), transitional language that is no longer needed has been removed because the transitional period has expired and the requirement now applies to all previously approved packages used for a shipment to a location outside of the United States.
The reference to § 71.20 in § 71.0 has been removed, because § 71.20 has expired and is no longer included in the regulations.
In § 71.31, the reference to § 71.13 has been changed to § 71.19. In § 71.91, the reference to § 71.10 has been changed to § 71.14. These changes will correct references that were not updated when the requirements were redesignated in 2004.
This rule is effective July 13, 2015. Compliance with the amendments adopted in this final rule is required beginning July 13, 2015. Agreement States, under their formal agreements with the NRC, have 3 years after the effective date of the rule to adopt the changes.
The proposed rule was published on May 16, 2013 (78 FR 28988), for a 75-day public comment period that ended on July 30, 2013. The NRC received eight comments from Federal agencies, States, licensees, industry organizations, and individuals. Copies of the public comments are available in the NRC Public Document Room, 11555 Rockville Pike, Rockville, MD 20852; or at
In general, there was a range of stakeholder views concerning the proposed rule. Two commenters voiced general support of the NRC's efforts to harmonize 10 CFR part 71 with the DOT's and the IAEA's regulations. Three other commenters indicated support for the proposed revisions to the definition of LSA group I, with two of those commenters stating their view that this proposed revision corrected a longstanding error in the NRC's regulations that created an incompatibility with existing DOT regulations. Other commenters voiced general support for the proposed revisions to quality assurance requirements and for provisions related to exempted low-level material. The comments and responses have been grouped into five topical areas: New and Revised Definitions, Exemptions for Low-level Materials, Quality Assurance, Technical Requirements, and Other. To the extent possible, all of the comments on a particular subject are grouped together.
The NRC specifically requested input on three subjects: (1) Frequency for reporting changes to an approved quality assurance program; (2) clarity of new restrictions on low-enriched fissile material in § 71.15(d); and (3) the cumulative effects of this rulemaking, including influence of other regulatory actions, unintended consequences, and reasonableness of the cost benefit estimates. These subjects are addressed within the appropriate area grouping. A discussion summarizing the comments and providing the NRC's comment responses follows. The NRC finds that the comments did not require any changes to the proposed rule's provisions.
The NRC is also revising the definition of LSA–I in 10 CFR 71.4 to include uranium and thorium ores, concentrates of uranium and thorium ores, and other ores containing naturally occurring radionuclides that are intended to be processed for the use of radioactive materials. Under existing 71.14(b)(3)(ii), a licensee is exempt from all the requirements of 10 CFR part 71, other than §§ 71.5 and 71.88, with respect to shipment or carriage of packages containing LSA–I, provided the packages do not contain any fissile material, or the material is exempt from classification as fissile material under § 71.15. As revised, the NRC finds that the definition of LSA–I is adequate to ensure that material is properly characterized; therefore, it is clear to the user when the exemption provisions in 71.14(b)(3)(ii) would apply.
(f) Natural material and ores containing naturally occurring radionuclides, which may have been processed, provided the activity concentration of the material does not exceed 10 times the values specified in Table 2, or calculated in accordance with paras 403(a) and 404–407. For natural materials and ores containing naturally occurring radionuclides that are not in secular equilibrium the calculation of the activity concentration shall be performed in accordance with para. 405.
The commenter therefore recommended revising the proposed 10 CFR 71.14(a)(1) provisions to exempt “Natural material and ores containing naturally occurring radionuclides that are either in their natural state, or have been processed, provided the activity concentration of the material does not exceed 10 times the applicable radionuclide activity concentration values specified in Appendix A, Table A–2, or Table A–3, of this part.”
(1) The revision has been reviewed and approved by management.
(2) Affected individuals are instructed on the revised program before the changes are implemented.
(3) A record of this instruction be created and maintained.”
The NRC finds that the first two recommended additions to proposed 10 CFR 71.106 are not necessary, because they are adequately addressed by the existing general provisions of 10 CFR 71.105 (“Quality assurance program”). Regarding management review and approval of non-substantive revisions to a quality assurance program, existing § 71.105(d) states in relevant part that management of organizations involved in a licensee's or CoC holder's quality assurance program “shall review regularly the status and adequacy of that part of the quality assurance program they are executing.” The NRC finds that this existing requirement adequately ensures management oversight of quality assurance programs. Regarding the recommended need to have affected individuals instructed on the revised QA program before the changes are implemented, existing § 71.105(d) states in relevant part that a licensee or CoC holder “shall provide for indoctrination and training of personnel performing activities affecting quality, as necessary to assure that suitable proficiency is achieved and maintained.” The NRC finds that this existing requirement adequately ensures that affected
Regarding the third recommendation to have records of these instructions created and maintained, the NRC finds that this addition to proposed 10 CFR 71.106 is not necessary, because it is adequately addressed by the existing criteria stated in § 71.135 (“Quality assurance records”). Specifically, § 71.135 states in relevant part that a licensee or CoC holder must maintain written records, and that such records include instructions pertaining to the “required qualifications of personnel.” The NRC finds that this existing requirement adequately ensures that training records will be created and maintained.
Uranium enriched to less than 5.0 weight percent U–235 is generally more reactive in a heterogeneous configuration than when it is distributed homogeneously within a transportation package. The fissile exemption for uranium enriched to a maximum of 1.0 weight percent U–235 in 10 CFR 71.15(d) is based on the fact that this enrichment level is slightly less than the minimum critical U–235 enrichment for infinite homogeneous mixtures of uranium and water. Accordingly, 10 CFR 71.15(d) as revised requires that the fissile material be distributed homogeneously within its transportation package, and excludes from the exemption's scope situations where fissile “lumps” or lattice arrangements of fissile material are present within the package. The 10 CFR 71.15(d) exemption language continues to exclude large quantities (less than 5 percent of the uranium mass) of low-absorbing moderators (beryllium, graphite, or hydrogenous material enriched in deuterium). These requirements will preclude fissile material arrangements in packages that can potentially result in criticality atU–235 enrichments less than 1 weight percent.
Homogeneity and lattice arrangement are well understood terms in the criticality safety community.
For the exemption in 10 CFR 71.15(d), small volumes of heterogeneity may exist, provided that a significant fraction of fissile material is homogeneous and mixed with non-fissile material, or lumps of fissile material are in a largely irregular arrangement. Further, heterogeneous effects in a package due to large fissile material lumps/particles or lattice arrangements of fissile material would only affect criticality safety in a regular or near-optimal configuration over a large volume. Large quantities of fissile material (kilograms of U–235) and regions of heterogeneity on the order of a cubic meter in size are necessary before a system could adversely affect the validity of the 1 weight percent U–235 enrichment limit for this fissile exemption.
Paragraph (d)(1) has been revised to delete § 71.20 from the list of sections in which a general license is issued without requiring the NRC to issue a package approval. The list of sections has been revised to add §§ 71.21 through 71.23.
The definition of “contamination” has been added and is now consistent with the definition of contamination in the DOT's regulations in 49 CFR 173 and TS–R–1.
The definition of “Criticality Safety Index (CSI)” has been revised to be more consistent with the definition in the DOT's regulations in 49 CFR 173 and TS–R–1 by addressing overpacks and freight containers in the definition.
The definition of “Low Specific Activity (LSA) material” has been revised so that it is more consistent with the definition in the DOT's regulations in 49 CFR 173 and TS–R–1 by revising paragraphs (1)(i) and (1)(ii). In paragraph (1)(i), the definition is changed to make the description of LSA–I material apply to material that is intended to be processed for the use of the uranium, thorium, and other naturally occurring radionuclides. In paragraph (1)(ii), the definition is changed to clarify consideration of compounds or mixtures regardless of the form (solid or liquid).
The definition of “Special form radioactive material” has been revised to allow special form radioactive material that was successfully tested using the current requirements of § 71.75(d) to continue to qualify as special form material, if the testing was completed before September 10, 2015. The reference to the version of 10 CFR part 71 in effect on March 31, 1996, is corrected by changing 1983 to 1996.
The definition of “Uranium—natural, depleted, enriched” has been revised by adding “(which may be chemically separated)” to paragraph (1), which applies to natural uranium.
Paragraph (b) is revised to add § 71.106 to the list of sections with information collections.
Paragraph (a)(1) has been revised to allow natural material and ores that contain naturally occurring radionuclides and that have been processed for purposes other than the extraction of the radionuclides, to qualify for the exemption. Natural material or ore that has been processed but has not been incorporated into a manufactured product, such as an article, instrument, component of a manufactured article or instrument, or consumer item, could qualify for the exemption. Slags, sludges, tailings, residues, bag house dust, oil scale, and washed sands that are the byproducts of processing or refining are considered to be a natural material and could qualify for the exemption, provided that they were not incorporated into a manufactured product. To qualify for this exemption, the activity concentration of the natural material or ore cannot exceed 10 times the activity concentration values, and the material cannot be intended to be processed for the use of the radionuclides. A reference to Table A–3 in appendix A is added as a source of activity concentration values that may be used to determine whether natural material or ore will qualify for the exemption. Table A–3 provides activity concentration values for exempt material that are used for individual radionuclides whose identities are known but which are not listed in Table A–2.
Paragraph (a)(2) has been revised to add a reference to Table A–3 in appendix A Table A–3 provides activity concentration values for exempt material that are used for individual radionuclides whose identities are known but which are not listed in Table A–2.
Paragraph (a)(3) has been added to provide an exemption for non-radioactive solid objects that have radioactive substances present on the surfaces of the object, provided that the quantity of radioactive substances is below the quantity used to define contamination. The definition of “contamination” has been added to § 71.4.
Paragraph (d), which applies to fissile material in the form of uranium enriched in U–235 to a maximum of 1 percent by weight, has been revised. To qualify under the revised exemption, the fissile material will need to be distributed homogeneously and not form a lattice arrangement within the package. The revision re-establishes restrictions on material that qualifies for the fissile material exemption.
Paragraph (c) is revised to clarify that the general licensee must comply with the requirements in § 71.17(c)(1) through (c)(3).
Paragraphs (b) through (e) are redesignated as (a) through (d).
In redesignated (b)(2), the phrase “After December 31, 2003” is deleted. This will not change the requirement that packages used for a shipment to a location outside the United States will continue to be subject to multilateral approval as defined in the DOT's regulations in 49 CFR 173.403 because all such shipments will occur after December 31, 2003.
Paragraph (a) is revised to update the reference to 49 CFR 171.12 to 49 CFR 171.23.
Paragraph (d) is revised to clarify that the general licensee must comply with the requirements in § 71.21(d)(1) and (d)(2). Paragraph (d)(2) is revised by deleting its second sentence, which provided an exemption from quality
In paragraph (b), the reference to § 71.13 is changed to § 71.19. This change was inadvertently omitted during a previous rulemaking, when certain sections were renumbered.
The title of this section is revised to remove the reference to the renewal of quality assurance program approvals. The section is revised to be limited to the renewal of CoCs by removing all references to quality assurance program approvals. The NRC is changing its practice regarding the duration of quality assurance program approvals. Quality assurance program approvals will not have an expiration date and the NRC will revise the current quality assurance program approvals so that they will not have an expiration date. The renewal of a quality assurance program approval is unnecessary. Paragraphs (a), (b) and (c) have also been revised for clarity.
This section is added to incorporate by reference the consensus standards referenced in § 71.75: ISO 9978:1992(E), “Radiation protection—Sealed radioactive sources—Leakage test methods”; and ISO 2919:1999(E), “Radiation protection—Sealed radioactive sources—General requirements and classification.” Interested parties, including members of the general public, can purchase the 1992 version of ISO 9978 from the American National Standards Institute, 25 West 43rd Street, 4th floor, New York, NY 10036, 212–642–4900,
In paragraph (a)(5), the 1992 edition of ISO 9978 has been incorporated by reference for the alternate leak test methods for the qualification of special form material. The ISO/TR 4826 has been withdrawn by ISO and replaced by ISO 9978:1992(E). This change makes 10 CFR part 71 consistent with the DOT's requirements in 49 CFR 173, which incorporated ISO 9978:1992(E) in 2004.
In paragraph (b)(2)(ii), the description of the billet used in the percussion test has been changed to provide better clarity and to maintain consistency with the language used by the DOT in 49 CFR 173.469 by replacing “edges” with “edge.” The edge corresponds to the circular edge at the face of the billet.
In paragraph (b)(2)(iii), the description of the sheet of lead used in the percussion test is changed to correct the thickness of the sheet of lead used in the percussion test to indicate that the thickness must not be more than 25 mm (1 inch) thick to be consistent with the thickness in TS–R–1.
In paragraph (d), subparagraphs (d)(1)(i) and (d)(1)(ii) have been added. Also, the 1999 edition of ISO 2919 has been incorporated by reference, replacing the reference to the 1980 edition of ISO 2919 for the alternate Class 4 impact test in paragraph (d)(1)(i) and the alternate Class 6 temperature test in paragraph (d)(2). The availability and other language incorporating this standard by reference is moved to new § 71.70. Paragraph (d)(1)(ii) allows the Class 5 impact tests prescribed in the 1999 edition of ISO 2919 to be used in place of the impact and percussion tests in paragraphs (b)(1) and (b)(2), if the specimen weighs less than 500 grams.
In paragraphs (a), (b), and (c), “licensee” is replaced by “certificate holder.” The NRC experience is that these determinations are performed by the certificate holders who manufacture the package. This change will make the requirements consistent with current practice, because only certificate holders will have a quality assurance program approval that will allow them to conduct the required tests under an approved quality assurance program. Paragraph (d) is added to address the responsibilities of licensees using a package for transportation. Although certificate holders are required to make the preliminary determinations under paragraphs (a), (b), and (c), licensees are responsible for ensuring that these determinations have been made before their first use of the packaging.
In paragraph (a), the reference to § 71.10 is changed to § 71.14. This reference was not updated when § 71.10 was redesignated as § 71.14.
Paragraph (a) is revised by deleting its first reference to licensees in order to clarify that with respect to the design, fabrication, testing, and modification of packaging, only certificate holders and applicants for a CoC are subject to the quality assurance requirements. Note that consistent with the existing 71.101(c)(1) QA-program-approval requirements, under 71.101(a), as revised, licensees are still subject to quality assurance requirements with respect to their use of packages when shipping radioactive material.
The provisions of 71.101(c)(2) are revised by removing the reference to licensees in the first sentence. This will remove the overlap between § 71.101(c)(1) and (c)(2) by making it clear that licensees must notify the NRC before their first use of any package as required under § 71.101(c)(1), and certificate holders and applicants for a CoC will notify the NRC before the fabrication, testing, or modification of a package as required under § 71.101(c)(2).
Footnote 2 is removed from paragraph (a). The activities described in the footnote are performed by certificate holders and applicants for a CoC. The footnote is unnecessary, because the requirements no longer rely on the use of the term “licensee” for those activities performed by certificate holders and applicants for a CoC.
This new section is added to establish requirements that will apply to changes to quality assurance programs. It allows some changes to a quality assurance program to be made without obtaining the prior approval of the NRC. Previously, all changes, no matter how
Paragraph (a) will establish the requirements that will apply when a holder of a quality assurance program approval intends to make a change in its quality assurance program that would reduce its commitments to the NRC. The holder of a quality assurance program approval will be required to identify the change, the reason for the change, and the basis for concluding that the revised program incorporating the change will continue to satisfy the requirements of subpart H of 10 CFR part 71 that apply.
Paragraph (a)(2) will require that each holder of a quality assurance program approval maintain quality assurance program changes as records. These records will need to be maintained as required in § 71.135.
Paragraph (b) will allow the holder of a quality assurance program approval to make changes to its quality assurance program that will not reduce its commitments to the NRC and identify the changes that will not be considered as reducing its commitments to the NRC.
Paragraph (c) will require that records be maintained documenting any changes to the quality assurance program.
This section is revised to include those quality assurance records that apply to changes that are made to previously approved quality assurance programs. The second sentence is revised to include in the list of the types of records to be maintained the changes to the quality assurance program as required by new § 71.106.
In paragraphs IV.a. through IV.f., the equations and accompanying text are revised to make minor corrections. In paragraphs IV.a. and IV.b., the description of the equations will make it explicit that B(i) is the activity of radionuclide i in special form and normal form in paragraphs IV.a. and IV.b., respectively.
Current paragraphs IV.c. through IV.f. are redesignated as paragraphs IV.d. through IV.g. New paragraph IV.c. is added and provides an equation to be used for determining the quantity of radioactive material that can be shipped in a package that contains both special form and normal form radioactive material. This equation increases the consistency between appendix A and TS–R–1.
In paragraph V., the existing text is redesignated as paragraph V.a. Paragraph V.b. is added to provide direction on calculating the exempt activity concentration for a mixture and the exempt consignment activity limit of a mixture when the identity of each radionuclide is known, but the individual activities of some radionuclides are not known.
Table A–1 is revised to change the A
Table A–2 is revised to include values for Kr-79, reflect changes in TS–R–1 for the activity limit for exempt consignment for Te-121m and in the list of parent radionuclides and their progeny included in secular equilibrium in Table A–2 in footnote b. The value for the activity concentration for exempt material for Kr-79 is 1.0 × 0
Table A–3 is revised to reflect changes in TS–R–1. In the second entry, the descriptive phrase “only alpha emitting radionuclides are known to be present” is changed to “alpha emitting nuclides, but no neutron emitters, are known to be present” to reduce the confusion caused by the current phrase because all alpha emitting radionuclides also emit other particles and/or gamma rays. In the third entry, the descriptive phrase “no relevant data are available” is changed to “neutron emitting nuclides are known to be present or no relevant data are available” to clarify that neutron-emitting radionuclides, or alpha emitters that also emit neutrons, such as Cf-252, Cf-254, and Cm-248, should be assigned to the third group. Footnote a indicates the appropriate value of A
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 attempted to use plain language in promulgating this rule consistent with the Federal Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883).
The Commission has determined under the National Environmental Policy Act of 1969, as amended, and the Commission's regulations in subpart A of 10 CFR part 51, not to prepare an environmental impact statement for this final rule. The Commission has concluded on the basis of an Environmental Assessment (ADAMS Accession No. ML15105A527) that this final rule is not a major Federal action significantly affecting the quality of the human environment.
Many of the changes fall under a categorical exclusion for which the Commission has previously determined that such actions, neither individually nor cumulatively, will have significant impacts on the human environment. The categorical exclusions in 10 CFR 51.22(c)(2) and 10 CFR 51.22(c)(3) were used in the Environmental Assessment.
The categorical exclusion at 10 CFR 51.22(c)(3) applies to amendments to 10 CFR part 71 that relate to—(1) procedures for filing and reviewing applications for licenses or construction permits or early site permits or other forms of permission or for amendments to or renewals of licenses or construction permits or early site permits or other forms of permission; (2) recordkeeping requirements; (3) reporting requirements; (4) education, training, experience, qualification, or other employment suitability requirements; or (5) actions on petitions for rulemaking relating to these amendments.
Those changes not qualifying for a categorical exclusion were evaluated for their environmental impacts and include changes to (1) definitions, (2) the exemption of low-level materials, (3) the fissile material exemption for low-enriched fissile material, (4) alternate tests that may be used for the qualification of special form material, (5) preliminary determinations; (6) the A
This final rule contains new or amended information collection requirements that are subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
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.
This action is a rule as defined in the Congressional Review Act (5 U.S.C. 801–808). However, the Office of Management and Budget has not found it to be a major rule as defined in the Congressional Review Act.
In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the Commission certifies that this rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. This rule affects NRC licensees who transport or deliver to a carrier for transport, relatively large quantities of radioactive material in a single package; holders of a 10 CFR part 71, subpart H, quality assurance program description issued under 10 CFR parts 50, 71, or 72; and holders of a CoC for a transportation package. These entities do not typically fall within the scope of the definition of “small entities” set forth in the Regulatory Flexibility Act or the size standards adopted by the NRC in 10 CFR 2.810.
The NRC has prepared a regulatory analysis (ADAMS Accession No. ML14237A383) of this final rule. The analysis examines the costs and benefits of the alternatives considered by the Commission.
The analysis is available for inspection in the NRC Public Document Room, 11555 Rockville Pike, Rockville, MD 20852; or at
The NRC has determined that the backfit rule (§§ 50.109, 70.76, 72.62, or 76.76) and the issue finality provisions in 10 CFR part 52 do not apply to this final rule, because this final rule does not establish any provisions that will impose backfits as defined in 10 CFR Chapter I. Therefore, a backfit analysis is not required for this final rule, and the NRC did not prepare a backfit analysis for this final rule.
For the purpose of Section 223 of the Atomic Energy Act of 1954, as amended (AEA), the Commission is amending 10 CFR part 71 under one or more of Sections 161b, 161i, or 161o of the AEA. Willful violations of the rule will be subject to criminal enforcement.
Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, and published in the
There are four compatibility categories (A, B, C, and D). In addition, the NRC program elements can also be identified as having particular health and safety significance or as being reserved solely to the NRC. Compatibility Category A is assigned to those program elements that are basic radiation protection standards and scientific terms and definitions that are necessary to understand radiation protection concepts. An Agreement State should adopt Compatibility Category A program elements in an essentially identical manner to provide uniformity in the regulation of agreement material on a nationwide basis. Compatibility Category B is assigned to those program elements that apply to activities that have direct and significant effects in multiple jurisdictions. An Agreement State should adopt Compatibility Category B program elements in an essentially identical manner. Compatibility Category C is assigned to those program elements that do not meet the criteria of Compatibility Category A or B, but the essential objectives of which an Agreement State should adopt to avoid conflict, duplication, gaps, or other conditions that would jeopardize an orderly pattern in the regulation of agreement material on a nationwide basis. An Agreement State should adopt the essential objectives of the Compatibility Category C program elements. Compatibility Category D is assigned to those program elements that do not meet any of the criteria of Compatibility Category A, B, or C and, therefore, do not need to be adopted by Agreement States for purposes of compatibility. Health and Safety (H&S) are program elements that are not required for compatibility but are identified as having a particular health and safety role (
The following table lists the parts and sections that are revised and their corresponding categorization under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs.” A bracket around a category means that the section may have been adopted elsewhere, and it is not necessary to adopt it again. The presence or absence of a bracket does not affect the compatibility category or the degree of uniformity required when an Agreement State adopts the requirement. The Agreement States have 3 years from the effective date of the final rule to adopt compatible regulations.
In § 71.4, the definition of contamination will be designated Compatibility Category B, because it applies to activities that have direct and significant effects in multiple jurisdictions and it is also defined in the corresponding DOT regulations.
In §§ 71.17, 71.21, and 71.103 the compatibility category is unchanged, but the brackets were not retained because there are no corresponding DOT regulations.
The new § 71.70, “Incorporations by reference,” will be designated Compatibility Category NRC, because the documents incorporated by reference are incorporated for use in § 71.75, which addresses activities under Federal jurisdiction.
Section 71.85, “Preliminary determinations,” will be changed to make the requirements in § 71.85(a) through (c) apply to holders of a CoC. Paragraphs 71.85(a) through (c) are designated as Compatibility Category NRC, because they apply exclusively to certificate holders and the granting of the package approval is reserved to the NRC. Paragraph 71.85(d) will be added and applies to licensees and it is designated as Compatibility Category B, because it applies to activities that have direct and significant effects in multiple jurisdictions and there is no corresponding DOT requirement.
The compatibility category for § 71.91, “Records,” will be changed from Compatibility Category D to Compatibility Category C. In reaching an agreement with the NRC, the States have a general provision relating to records and for incident reporting. The recordkeeping requirements in § 71.91 include requirements associated with transportation, which may involve multiple jurisdictions. With the exception of § 71.91(b), the NRC is designating the compatibility of the requirements in § 71.91 as Compatibility Category C to require that the essential objectives of the requirements be adopted to avoid conflict, duplication, gaps, or other conditions that would jeopardize the orderly pattern in the regulation of agreement material on a nationwide basis, including creating an undue burden on interstate commerce through additional recordkeeping requirements; § 71.91(b) only applies to CoC holders and applicants and are designated as compatibility category NRC. The States are not required to adopt them in an essentially identical manner, as might be necessary if the requirements had a more direct and significant impact on multiple jurisdictions.
In § 71.101, the compatibility category will be simplified with the removal of the separate compatibility category for States that do not have a user of a Type B package. If a State does not have a user of a Type B package, the State is able to seek an exemption from the requirement to make their requirement compatible. The State requirements only need to be essentially compatible with respect to the requirements as they apply to licensees, because the application of the requirements to CoC holders and applicants would be performed by the NRC. The note that references the quality assurance programs for industrial radiographers is updated by changing § 71.12(b) to § 71.17(b).
In § 71.103, the compatibility category for some users of packages was not designated. The compatibility category will be simplified by removing the separate compatibility category for States that do not have a user of a Type B package and by removing the bracket around the compatibility category for § 71.103(a). If a State does not have a user of a Type B package, the State can seek an exemption from the requirement to make their requirement compatible. The State requirements only need to be essentially compatible with respect to the requirements as they apply to licensees, because the application of the requirements to CoC holders and
The new § 71.106, “Changes to quality assurance program,” will apply to licensees and holders of, or applicants for, a CoC. The assigned compatibility category is consistent with the other quality assurance requirements that apply to licensees. The State requirements only need to be essentially compatible with respect to the requirements as they apply to licensees, because the application of the requirements to CoC holders and applicants will be performed by the NRC.
In § 71.135, the compatibility category will be simplified by removing the separate compatibility category for States that do not have a user of a Type B package. If a State does not have a user of a Type B package, the State can seek an exemption from the requirement to make their requirement compatible. The State requirements only need to be essentially compatible with respect to the requirements as they apply to licensees, because the application of the requirements to CoC holders and applicants will be performed by the NRC. The note that references the quality assurance programs for industrial radiographers is updated by changing § 71.12(b) to § 71.17(b).
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 final rule, the NRC uses the consensus standards identified as follows and will incorporate them by reference. The NRC is adopting ISO 2919:1999(E), “Radiation protection—Sealed radioactive sources—General requirements and classification,” Second Edition (February 15, 1999), for the Class 4 and Class 5 impact tests and the Class 6 temperature test; and ISO 9978:1992(E), “Radiation protection—Sealed radioactive sources—Leakage test methods,” First Edition (February 15, 1992), for the leaktightness tests.
In other portions of this final rule, the NRC is revising requirements that do not constitute the establishment of a standard that establishes generally applicable requirements. These revisions to the NRC's requirements include changes to: (1) The scope of material falling under an existing exemption for natural materials and ores containing naturally occurring radionuclides at an activity concentration below a specified value, (2) conditions on general licenses, (3) the oversight of quality assurance programs, and (4) the removal of transitional arrangements for previously approved packages.
In the Rules and Regulations section of this issue of the
The NRC is required by law to obtain approval for incorporation by reference from the Office of the Federal Register (OFR). The OFR's requirements for incorporation by reference are set forth in 1 CFR part 51. On November 7, 2014, the OFR adopted changes to its regulations governing incorporation by reference (79 FR 66267). The OFR regulations require an agency to discuss, in the preamble of the final rule, the ways that the materials it incorporates by reference are reasonably available to interested parties and how interested parties can obtain the materials. The discussion in this section complies with the requirement for proposed rules as set forth in 1 CFR 51.5(b)(2).
The NRC considers “interested parties” to include all potential NRC stakeholders, not just the individuals and entities regulated or otherwise subject to the NRC's regulatory oversight. These NRC stakeholders are not a homogenous group but vary with respect to the considerations for determining reasonable availability. Therefore, the NRC distinguishes between different classes of interested parties for purposes of determining whether the material is “reasonably available.” The NRC considers the following to be classes of interested parties in NRC rulemakings generally:
• Individuals and small entities regulated or otherwise subject to the NRC's regulatory oversight (this class also includes applicants and potential applicants for licenses and other NRC regulatory approvals).
• Large entities otherwise subject to the NRC's regulatory oversight (this class also includes applicants and potential applicants for licenses and other NRC regulatory approvals). In this context, “large entities” are those which do not qualify as a “small entity” under 10 CFR 2.810.
• Non-governmental organizations with institutional interests in the matters regulated by the NRC.
• Other Federal agencies, states, local governmental bodies (within the meaning of 10 CFR 2.315(c)).
• Federally-recognized and State-recognized Indian tribes.
• Members of the general public (
International Organization for Standardization's (ISO) 9978:1992(E), “Radiation protection—Sealed radioactive sources—Leakage test methods,” First Edition (February 15, 1992), is incorporated by reference for § 71.75(a). Interested parties, including the general public, can purchase the February 1992 version of ISO 9978 from the American National Standards Institute, 25 West 43rd Street, 4th floor, New York, NY 10036, 212–642–4900,
ISO 2919:1999(E), “Radiation protection—Sealed radioactive sources—General requirements and classification,” Second Edition (February 15, 1999), is incorporated by reference for § 71.75(d). Interested parties, including the general public, can purchase the 1992 edition of ISO 2919 on
The two ISO standards incorporated by reference into 10 CFR 71.75 may be examined at the NRC's Public Document Room, O1–F21, 11555 Rockville Pike, Rockville, Maryland 20852 or at the NRC Library located at Two White Flint North, 11545 Rockville Pike, Rockville, Maryland 20852; telephone: 301–415–5610; email:
The NRC believes that the two ISO standards are reasonably available to large entities subject to the NRC's regulatory oversight pursuant to 10 CFR 71.75, non-governmental organizations with institutional interests in the matters regulated by the NRC, other Federal agencies, states, local governmental bodies (within the meaning of 10 CFR 2.315(c)), and Federally-recognized and State-recognized Indian tribes. With respect to individuals and small entities regulated or otherwise subject to the NRC's regulatory oversight pursuant to 10 CFR 71.75, the NRC believes that the approximately $213 cost of obtaining the two ISO standards is reasonable for such individuals and small entities, and therefore that the two standards are reasonably available to these individuals and small entities. With respect to the general public, the NRC has identified above the ways in which the two ISO standards may be obtained. Because individuals and small entities are not required to comply with these two ISO standards, the NRC believes that the two standards are reasonably available to general public in accordance with the ways described above for obtaining access.
Criminal penalties, Hazardous materials transportation, Incorporation by reference, Nuclear materials, Packaging and containers, Reporting and recordkeeping requirements.
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; and 5 U.S.C. 552 and 553; the NRC is adopting the following amendments to 10 CFR part 71.
Atomic Energy Act secs. 53, 57, 62, 63, 81, 161, 182, 183, 223, 234, 1701 (42 U.S.C. 2073, 2077, 2092, 2093, 2111, 2201, 2232, 2233, 2273, 2282, 2297f); Energy Reorganization Act secs. 201, 202, 206, 211 (42 U.S.C. 5841, 5842, 5846, 5851); Nuclear Waste Policy Act sec. 180 (42 U.S.C. 10175); Government Paperwork Elimination Act sec. 1704 (44 U.S.C. 3504 note); Energy Policy Act of 2005, Pub. L. 109–58, 119 Stat. 594 (2005).
Section 71.97 also issued under sec. 301, Pub. L. 96–295, 94 Stat. 789–790.
(1)
(2)
(1) LSA–I.
(i) Uranium and thorium ores, concentrates of uranium and thorium ores, and other ores containing naturally occurring radionuclides that are intended to be processed for the use of these radionuclides;
(ii) Natural uranium, depleted uranium, natural thorium or their compounds or mixtures, provided they are unirradiated and in solid or liquid form;
(iii) Radioactive material other than fissile material, for which the A
(iv) Other radioactive material in which the activity is distributed throughout and the estimated average specific activity does not exceed 30 times the value for exempt material activity concentration determined in accordance with appendix A.
(2) LSA–II.
(i) Water with tritium concentration up to 0.8 TBq/liter (20.0 Ci/liter); or
(ii) Other radioactive material in which the activity is distributed throughout and the estimated average specific activity does not exceed 10
(3) LSA–III. Solids (
(i) The radioactive material is distributed throughout a solid or a collection of solid objects, or is essentially uniformly distributed in a solid compact binding agent (such as concrete, bitumen, ceramic, etc.);
(ii) The radioactive material is relatively insoluble, or it is intrinsically contained in a relatively insoluble material, so that even under loss of packaging, the loss of radioactive material per package by leaching when placed in water for 7 days will not exceed 0.1 A
(iii) The estimated average specific activity of the solid, excluding any shielding material, does not exceed 2 × 10
(1) It is either a single solid piece or is contained in a sealed capsule that can be opened only by destroying the capsule;
(2) The piece or capsule has at least one dimension not less than 5 mm (0.2 in); and
(3) It satisfies the requirements of § 71.75. A special form encapsulation designed in accordance with the requirements of § 71.4 in effect on June 30, 1983 (see 10 CFR part 71, revised as of January 1, 1983), and constructed before July 1, 1985; a special form encapsulation designed in accordance with the requirements of § 71.4 in effect
(2) Depleted uranium means uranium containing less uranium-235 than the naturally occurring distribution of uranium isotopes.
(3) Enriched uranium means uranium containing more uranium-235 than the naturally occurring distribution of uranium isotopes.
(b) The approved information collection requirements contained in this part appear in §§ 71.5, 71.7, 71.9, 71.12, 71.17, 71.19, 71.22, 71.23, 71.31, 71.33, 71.35, 71.37, 71.38, 71.39, 71.41, 71.47, 71.85, 71.87, 71.89, 71.91, 71.93, 71.95, 71.97, 71.101, 71.103, 71.105, 71.106, 71.107, 71.109, 71.111, 71.113, 71.115, 71.117, 71.119, 71.121, 71.123, 71.125, 71.127, 71.129, 71.131, 71.133, 71.135, 71.137, and appendix A, paragraph II.
(a) * * *
(1) Natural material and ores containing naturally occurring radionuclides that are either in their natural state, or have only been processed for purposes other than for the extraction of the radionuclides, and which are not intended to be processed for the use of these radionuclides, provided the activity concentration of the material does not exceed 10 times the applicable radionuclide activity concentration values specified in appendix A, Table A–2, or Table A–3 of this part.
(2) Materials for which the activity concentration is not greater than the activity concentration values specified in appendix A, Table A–2, or Table A–3 of this part, or for which the consignment activity is not greater than the limit for an exempt consignment found in appendix A, Table A–2, or Table A–3 of this part.
(3) Non-radioactive solid objects with radioactive substances present on any surfaces in quantities not in excess of the levels cited in the definition of contamination in § 71.4.
(d) Uranium enriched in uranium-235 to a maximum of 1 percent by weight, and with total plutonium and uranium-233 content of up to 1 percent of the mass of uranium-235, provided that the mass of any beryllium, graphite, and hydrogenous material enriched in deuterium constitutes less than 5 percent of the uranium mass, and that the fissile material is distributed homogeneously and does not form a lattice arrangement within the package.
(c) Each licensee issued a general license under paragraph (a) of this section shall—
(1) Maintain a copy of the Certificate of Compliance, or other approval of the package, and the drawings and other documents referenced in the approval relating to the use and maintenance of the packaging and to the actions to be taken before shipment;
(2) Comply with the terms and conditions of the license, certificate, or other approval, as applicable, and the applicable requirements of subparts A, G, and H of this part; and
(3) Submit in writing before the first use of the package to: ATTN: Document Control Desk, Director, Division of Spent Fuel Storage and Transportation, Office of Nuclear Material Safety and Safeguards, using an appropriate method listed in § 71.1(a), the licensee's name and license number and the package identification number specified in the package approval.
(b) * * *
(2) A package used for a shipment to a location outside the United States is subject to multilateral approval as defined in the DOT's regulations at 49 CFR 173.403.
(a) A general license is issued to any licensee of the Commission to transport, or to deliver to a carrier for transport, licensed material in a package, the design of which has been approved in a foreign national competent authority certificate, that has been revalidated by the DOT as meeting the applicable requirements of 49 CFR 171.23.
(d) Each licensee issued a general license under paragraph (a) of this section shall—
(1) Maintain a copy of the applicable certificate, the revalidation, and the drawings and other documents referenced in the certificate, relating to the use and maintenance of the packaging and to the actions to be taken before shipment; and
(2) Comply with the terms and conditions of the certificate and revalidation, and with the applicable requirements of subparts A, G, and H of this part.
(a) Except as provided in paragraph (b) of this section, each Certificate of Compliance expires at the end of the day, in the month and year stated in the approval.
(b) In any case in which a person, not less than 30 days before the expiration of an existing Certificate of Compliance issued pursuant to the part, has filed an application in proper form for renewal, the existing Certificate of Compliance for which the renewal application was filed shall not be deemed to have expired until final action on the application for renewal has been taken by the Commission.
(c) In applying for renewal of an existing Certificate of Compliance, an applicant may be required to submit a consolidated application that is
(a) The materials listed in this section are incorporated by reference in the corresponding sections noted and made a part of the regulations in part 71. These incorporations by reference were approved by the Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. These materials are incorporated as they exist on the date of the approval. A notice of any changes made to the material incorporated by reference will be published in the
(b) International Organization for Standardization, ISO Central Secretariat, Chemin de Blandonnet 8 CP 401, 1214 Vernier, Geneva, Switzerland; email:
(1) ISO 9978:1992(E), “Radiation protection—Sealed radioactive sources—Leakage test methods,” First Edition (February 15, 1992), incorporation by reference approved for § 71.75(a), is available for purchase from the American National Standards Institute, 25 West 43rd Street, 4th Floor, New York, NY 10036, 212–642–4900,
(2) ISO 2919:1999(E), “Radiation protection—Sealed radioactive sources—General requirements and classification,” Second Edition (February 15, 1999), incorporation by reference approved for § 71.75(d), is available on
(a) * * *
(5) A specimen that comprises or simulates radioactive material contained in a sealed capsule need not be subjected to the leaktightness procedure specified in this section, provided it is alternatively subjected to any of the tests prescribed in ISO 9978:1992(E), “Radiation protection—Sealed radioactive sources—Leakage test methods” (incorporated by reference, see § 71.70).
(b) * * *
(2) * * *
(ii) The flat face of the billet must be 25 millimeters (mm) (1 inch) in diameter with the edge rounded off to a radius of 3 mm ± 0.3 mm (0.12 in ± 0.012 in);
(iii) The lead must be hardness number 3.5 to 4.5 on the Vickers scale and not more than 25 mm (1 inch) thick, and must cover an area greater than that covered by the specimen;
(d) * * *
(1) The impact test and the percussion test of this section, provided that the specimen is:
(i) Less than 200 grams and alternatively subjected to the Class 4 impact test prescribed in ISO 2919:1999(E), “Radiation protection—Sealed radioactive sources—General requirements and classification” (incorporated by reference, see § 71.70); or
(ii) Less than 500 grams and alternatively subjected to the Class 5 impact test prescribed in ISO 2919:1999(E), “Radioactive protection—Sealed radioactive sources—General requirements and classification” (incorporated by reference, see § 71.70); and
(2) The heat test of this section, provided the specimen is alternatively subjected to the Class 6 temperature test specified in ISO 2919:1999(E), “Radioactive protection—Sealed radioactive sources—General requirements and classification” (incorporated by reference, see § 71.70).
(a) The certificate holder shall ascertain that there are no cracks, pinholes, uncontrolled voids, or other defects that could significantly reduce the effectiveness of the packaging;
(b) Where the maximum normal operating pressure will exceed 35 kPa (5 lbf/in
(c) The certificate holder shall conspicuously and durably mark the packaging with its model number, serial number, gross weight, and a package identification number assigned by the NRC. Before applying the model number, the certificate holder shall determine that the packaging has been fabricated in accordance with the design approved by the Commission; and
(d) The licensee shall ascertain that the determinations in paragraphs (a) through (c) of this section have been made.
(a)
(c) * * *
(2) Before the fabrication, testing, or modification of any package for the shipment of licensed material subject to this subpart, each certificate holder, or applicant for a Certificate of Compliance
(a) The licensee, certificate holder, and applicant for a Certificate of Compliance shall be responsible for the establishment and execution of the quality assurance program. The licensee, certificate holder, and applicant for a Certificate of Compliance may delegate to others, such as contractors, agents, or consultants, the work of establishing and executing the quality assurance program, or any part of the quality assurance program, but shall retain responsibility for the program. These activities include performing the functions associated with attaining quality objectives and the quality assurance functions.
(a) Each quality assurance program approval holder shall submit, in accordance with § 71.1(a), a description of a proposed change to its NRC-approved quality assurance program that will reduce commitments in the program description as approved by the NRC. The quality assurance program approval holder shall not implement the change before receiving NRC approval.
(1) The description of a proposed change to the NRC-approved quality assurance program must identify the change, the reason for the change, and the basis for concluding that the revised program incorporating the change continues to satisfy the applicable requirements of subpart H of this part.
(2) [Reserved]
(b) Each quality assurance program approval holder may change a previously approved quality assurance program without prior NRC approval, if the change does not reduce the commitments in the quality assurance program previously approved by the NRC. Changes to the quality assurance program that do not reduce the commitments shall be submitted to the NRC every 24 months, in accordance with § 71.1(a). In addition to quality assurance program changes involving administrative improvements and clarifications, spelling corrections, and non-substantive changes to punctuation or editorial items, the following changes are not considered reductions in commitment:
(1) The use of a quality assurance standard approved by the NRC that is more recent than the quality assurance standard in the certificate holder's or applicant's current quality assurance program at the time of the change;
(2) The use of generic organizational position titles that clearly denote the position function, supplemented as necessary by descriptive text, rather than specific titles, provided that there is no substantive change to either the functions of the position or reporting responsibilities;
(3) The use of generic organizational charts to indicate functional relationships, authorities, and responsibilities, or alternatively, the use of descriptive text, provided that there is no substantive change to the functional relationships, authorities, or responsibilities;
(4) The elimination of quality assurance program information that duplicates language in quality assurance regulatory guides and quality assurance standards to which the quality assurance program approval holder has committed to on record; and
(5) Organizational revisions that ensure that persons and organizations performing quality assurance functions continue to have the requisite authority and organizational freedom, including sufficient independence from cost and schedule when opposed to safety considerations.
(c) Each quality assurance program approval holder shall maintain records of quality assurance program changes.
The licensee, certificate holder, and applicant for a Certificate of Compliance shall maintain sufficient written records to describe the activities affecting quality. These records must include changes to the quality assurance program as required by § 71.106, the instructions, procedures, and drawings required by § 71.111 to prescribe quality assurance activities, and closely related specifications such as required qualifications of personnel, procedures, and equipment. The records must include the instructions or procedures that establish a records retention program that is consistent with applicable regulations and designates factors such as duration, location, and assigned responsibility. The licensee, certificate holder, and applicant for a Certificate of Compliance shall retain these records for 3 years beyond the date when the licensee, certificate holder, and applicant for a Certificate of Compliance last engage in the activity for which the quality assurance program was developed. If any portion of the quality assurance program, written procedures or instructions is superseded, the licensee, certificate holder, and applicant for a Certificate of Compliance shall retain the superseded material for 3 years after it is superseded.
The additions and revisions read as follows:
IV. * * *
a. For special form radioactive material, the maximum quantity transported in a Type A package is as follows:
b. For normal form radioactive material, the maximum quantity transported in a Type A package is as follows:
c. If the package contains both special and normal form radioactive material, the activity that may be transported in a Type A package is as follows:
d. Alternatively, the A
e. Alternatively, the A
f. The exempt activity concentration for mixtures of nuclides may be determined as follows:
g. The activity limit for an exempt consignment for mixtures of radionuclides may be determined as follows:
V. * * *
b. When the identity of each radionuclide is known but the individual activities of some of the radionuclides are not known, the radionuclides may be grouped and the lowest [A] (activity concentration for exempt material) or A (activity limit for exempt consignment) value, as appropriate, for the radionuclides in each group may be used in applying the formulas in paragraph IV of this appendix. Groups may be based on the total alpha activity and the total beta/gamma activity when these are known, using the lowest [A] or A values for the alpha emitters and beta/gamma emitters, respectively.
For the Nuclear Regulatory Commission.