| Page Range | 74673-74964 | |
| FR Document |
| Page and Subject | |
|---|---|
| 80 FR 74755 - Initiation of Antidumping and Countervailing Duty Administrative Reviews | |
| 80 FR 74754 - Application for Additional Production Authority; The Coleman Company, Inc.; Subzone 119I; (Textile-Based Personal Flotation Devices) Notice of Postponement of Public Hearing | |
| 80 FR 74822 - Sunshine Act Meeting | |
| 80 FR 74814 - Sunshine Act Meeting Notice | |
| 80 FR 74836 - Proposed Collection; Comment Request for Form 4970 | |
| 80 FR 74740 - Request for Information (RFI) Regarding Involving the Public in the Formulation of Forest Service Directives | |
| 80 FR 74764 - Certain Cold-Rolled Steel Flat Products From Brazil, the People's Republic of China, India, Japan, the Republic of Korea, the Russian Federation, and the United Kingdom: Postponement of Preliminary Determinations of Antidumping Duty Investigations | |
| 80 FR 74757 - Certain Oil Country Tubular Goods From Taiwan: Rescission of Antidumping Duty Administrative Review in Part; 2014-2015 | |
| 80 FR 74759 - Brass Sheet and Strip From Italy; Preliminary Results of Antidumping Duty Administrative Review; 2014-2015 | |
| 80 FR 74758 - Uncovered Innerspring Units from the People's Republic of China: Affirmative Final Determination of Circumvention of the Antidumping Duty Order | |
| 80 FR 74828 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order Approving a Proposed Rule Change Relating to the Active Specialized Quote Feed Port Fee | |
| 80 FR 74793 - Renewal of Agency Information Collection for Leases and Permits | |
| 80 FR 74755 - Call for Applications for the International Buyer Program Calendar Year 2017 | |
| 80 FR 74760 - Call for Applications for the International Buyer Program Select Service for Calendar Year 2017 | |
| 80 FR 74832 - Culturally Significant Objects Imported for Exhibition Determinations: “Nasreen Mohamedi” Exhibition | |
| 80 FR 74831 - Culturally Significant Objects Imported for Exhibition Determinations: “Everywhen: The Eternal Present in Indigenous Art from Australia” Exhibition | |
| 80 FR 74832 - Culturally Significant Objects Imported for Exhibition Determinations: “The World in Play: Luxury Cards, 1430-1540” Exhibition | |
| 80 FR 74832 - Determination by the Secretary of State Relating to Iran Sanctions | |
| 80 FR 74677 - General Allocation and Accounting Regulations Under Section 141; Remedial Actions for Tax-Exempt Bonds; Correction | |
| 80 FR 74678 - General Allocation and Accounting Regulations Under Section 141; Remedial Actions for Tax-Exempt Bonds; Correction | |
| 80 FR 74712 - Fisheries of the Northeastern United States; Blueline Tilefish Fishery; Secretarial Emergency Action | |
| 80 FR 74741 - Periodic Reporting | |
| 80 FR 74710 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 2015 Commercial Accountability Measure and Closure for South Atlantic Golden Tilefish Hook-and-Line Component | |
| 80 FR 74738 - Federal Policy for the Protection of Human Subjects, Extension of Public Comment Period | |
| 80 FR 74772 - Medicare Program; Announcement of the Advisory Panel on Hospital Outpatient Payment (HOP Panel) Meeting on March 14-15, 2016 | |
| 80 FR 74774 - Medicare Program; Town Hall Meeting on the FY 2017 Applications for New Medical Services and Technologies Add-On Payments | |
| 80 FR 74746 - Announcement of Competition under the America COMPETES, Reauthorization Act of 2010 | |
| 80 FR 74817 - Post-DOMA Survivor Annuitant Federal Employees Health Benefit Waiver Criteria | |
| 80 FR 74769 - Charter Renewal of Department of Defense Federal Advisory Committees | |
| 80 FR 74715 - Prevailing Rate Systems; Abolishment of the Newburgh, NY, Appropriated Fund Federal Wage System Wage Area | |
| 80 FR 74815 - Privacy Act of 1974; Routine Use Implementation; System of Records | |
| 80 FR 74673 - Prevailing Rate Systems; Redefinition of the Harrisburg, PA and Scranton-Wilkes-Barre, PA, Appropriated Fund Federal Wage System Wage Areas | |
| 80 FR 74694 - Defense Federal Acquisition Regulation Supplement; Technical Amendments | |
| 80 FR 74770 - Proposed Collection; Comment Request | |
| 80 FR 74792 - Revision of Agency Information Collection for the Bureau of Indian Education Tribal Education Department Grant Program | |
| 80 FR 74744 - Control Date for Trawl Groundfish Fisheries in the Aleutian Islands | |
| 80 FR 74797 - Outer Continental Shelf (OCS), Alaska Region, Beaufort Sea Planning Area, Liberty Development and Production Plan, Extension of Public Scoping Comment Period | |
| 80 FR 74797 - Cancellation of Oil and Gas Lease Sale 242 in the Beaufort Sea Planning Area on the Outer Continental Shelf (OCS) | |
| 80 FR 74796 - Cancellation of Oil and Gas Lease Sale 237 in the Chukchi Sea Planning Area on the Outer Continental Shelf (OCS) | |
| 80 FR 74765 - Endangered Species; File No. 18526 | |
| 80 FR 74776 - Psychopharmacologic Drugs Advisory Committee; Notice of Meeting | |
| 80 FR 74739 - Procedures for Completing Uniform Periodic Reports in Non-Small Business Cases Filed Under Chapter 11 of Title 11 | |
| 80 FR 74794 - Notice of Availability of the Copper Flat Copper Mine Draft Environmental Impact Statement, Sierra County, NM | |
| 80 FR 74818 - Public Input on the Triennial Update to the USGCRP Strategic Plan | |
| 80 FR 74765 - Mid-Atlantic Fishery Management Council (MAFMC); Public Meeting | |
| 80 FR 74765 - North Pacific Fishery Management Council; Public Meeting | |
| 80 FR 74772 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company | |
| 80 FR 74837 - Proposed Information Collection: VA Financial Services Center (VA-FSC) Vendor File Request Form | |
| 80 FR 74752 - Proposed Information Collection; Comment Request; 2016 National Survey of Children's Health | |
| 80 FR 74754 - Notice of Petitions by Firms for Determination of Eligibility To Apply for Trade Adjustment Assistance | |
| 80 FR 74763 - Export Trade Certificate of Review | |
| 80 FR 74762 - Meeting of the United States Travel and Tourism Advisory Board | |
| 80 FR 74762 - Meeting of the United States Manufacturing Council | |
| 80 FR 74799 - Certain Magnesia Carbon Bricks From China and Mexico; Scheduling of Expedited Five-Year Reviews | |
| 80 FR 74835 - Additional Designations, Foreign Narcotics Kingpin Designation Act | |
| 80 FR 74838 - Agency Information Collection (Application for Voluntary Service VA Form 10-7055 and Associated Internet Application) | |
| 80 FR 74715 - Open Licensing Requirement for Direct Grant Programs | |
| 80 FR 74791 - Low-Effect Habitat Conservation Plan for Seven Covered Species, Los Angeles Department of Water and Power Land, Inyo and Mono Counties, California | |
| 80 FR 74833 - Federal Highway Administration Revised Notice of Intent To Prepare a Tier 1 Environmental Impact Statement: Juneau, Sauk, and Columbia Counties, Wisconsin | |
| 80 FR 74798 - Certain Electronic Products, Including Products With Near Field Communication (“NFC”) System-Level Functionality and/or Battery Power-Up Functionality, Components Thereof, and Products Containing Same | |
| 80 FR 74766 - First Responder Network Authority; First Responder Network Authority Board Meetings | |
| 80 FR 74780 - Agency Information Collection Activities; Submission to OMB for Review and Approval; Public Comment Request | |
| 80 FR 74737 - Clarification of When Products Made or Derived From Tobacco Are Regulated as Drugs, Devices, or Combination Products; Amendments to Regulations Regarding “Intended Uses”; Reopening of the Comment Period | |
| 80 FR 74781 - Privacy Act of 1974; Department of Homeland Security U.S. Citizenship and Immigration Services-010 Asylum Information and Pre-Screening System of Records | |
| 80 FR 74811 - Notice of Intent To Grant Exclusive License | |
| 80 FR 74811 - Notice of Intent To Grant a Partially Exclusive Patent License | |
| 80 FR 74813 - Notice of Intent to Grant Exclusive Patent License | |
| 80 FR 74789 - Announcement of Funding Award for Fiscal Year 2015 Authority To Accept Unsolicited Proposals for Research Partnerships | |
| 80 FR 74788 - Announcement of Funding Award for Fiscal Year 2014 Research and Evaluation, Demonstrations and Data Analysis and Utilization | |
| 80 FR 74788 - 60-Day Notice of Proposed Information Collection: FHA-Insured Mortgage Loan Servicing Involving the Loss Mitigation Program | |
| 80 FR 74790 - 60-Day Notice of Proposed Information Collection: Housing Counseling Program | |
| 80 FR 74791 - 60-Day Notice of Proposed Information Collection: Revitalization Area Designation and Management | |
| 80 FR 74786 - Intent To Request Renewal From OMB of One Current Public Collection of Information: Certified Cargo Screening Program | |
| 80 FR 74780 - Meeting of the Presidential Advisory Council on HIV/AIDS | |
| 80 FR 74777 - National Vaccine Injury Compensation Program; List of Petitions Received | |
| 80 FR 74717 - Mitigation of Beyond-Design-Basis Events; Correction | |
| 80 FR 74771 - Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Pell for Students Who Are Incarcerated Experimental Site Initiative | |
| 80 FR 74800 - Daniel A. Glick, D.D.S.; Decision and Order | |
| 80 FR 74795 - National Register of Historic Places; Notification of Pending Nominations and Related Actions | |
| 80 FR 74813 - NASA Advisory Council; Science Committee; Planetary Protection Subcommittee; Meeting | |
| 80 FR 74814 - NASA Advisory Council; Science Committee; Heliophysics Subcommittee; Meeting | |
| 80 FR 74718 - Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 | |
| 80 FR 74831 - LaSalle Capital Group II-A, L.P.; Notice Seeking Exemption Under Section 312 of the Small Business Investment Act, Conflicts of Interest | |
| 80 FR 74819 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change Regarding the Acknowledgment of End-of-Day Net-Net Settlement Balances by Settling Banks | |
| 80 FR 74826 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating Alternative Primary Market Makers | |
| 80 FR 74822 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Schedule of Fees | |
| 80 FR 74829 - Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change To Amend Rule 804(g) | |
| 80 FR 74824 - Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing of Proposed Rule Change To Amend Rule 804(g) | |
| 80 FR 74678 - Transition Assistance Program (TAP) for Military Personnel | |
| 80 FR 74836 - Submission for OMB Review; Comment Request | |
| 80 FR 74742 - Petitions for Reconsideration of Action in Rulemaking Proceeding | |
| 80 FR 74695 - Prohibiting Coercion of Commercial Motor Vehicle Drivers | |
| 80 FR 74768 - Agency Information Collection Activities: Notice of Intent To Renew Collection Number 3038-0087, Reporting, Recordkeeping, and Daily Trading Records Requirements for Swap Dealers and Major Swap Participants | |
| 80 FR 74766 - Agency Information Collection Activities: Notice of Intent To Renew Collection Number 3038-0084, Regulations Establishing and Governing the Duties of Swap Dealers and Major Swap Participants | |
| 80 FR 74832 - Projects Rescinded for Consumptive Uses of Water | |
| 80 FR 74781 - National Center for Advancing Translational Sciences; Notice of Meeting | |
| 80 FR 74811 - Notice of Lodging of Proposed Consent Decree Under the Comprehensive Environmental Response, Compensation and Liability Act | |
| 80 FR 74818 - New Postal Product | |
| 80 FR 74720 - Airworthiness Directives; Embraer S.A. Airplanes | |
| 80 FR 74726 - Airworthiness Directives; The Boeing Company Airplanes | |
| 80 FR 74729 - Airworthiness Directives; Airbus Airplanes | |
| 80 FR 74731 - Airworthiness Directives; The Boeing Company Airplanes | |
| 80 FR 74723 - Airworthiness Directives; Airbus Airplanes | |
| 80 FR 74812 - Notice of Information Collection | |
| 80 FR 74711 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Shrimp Fishery of the Gulf of Mexico; Amendment 15 | |
| 80 FR 74743 - Pipeline Safety: Notice of Gas Pipeline Advisory Committee Meeting | |
| 80 FR 74835 - Publication of a General License Related to the Foreign Narcotics Kingpin Sanctions Program | |
| 80 FR 74834 - Notice of Intent To Grant a Buy America Waiver To the Illinois Department of Transportation for the Use of Sure Close Self-Closing Force Adjustable Gate Hinges | |
| 80 FR 74736 - Proposed Establishment of Class E Airspace; Clinton, AR | |
| 80 FR 74676 - Amendment of Class E Airspace for the Following New York Towns: Elmira, NY; Ithaca, NY; Poughkeepsie, NY | |
| 80 FR 74734 - Proposed Amendment of Class E Airspace; West Dover, VT | |
| 80 FR 74673 - Airworthiness Directives; Bombardier, Inc. Airplanes | |
| 80 FR 74740 - Proximity Detection Systems for Mobile Machines in Underground Mines | |
| 80 FR 74771 - Intent To Prepare a Draft Table Rock Lake Shoreline Management Plan Report and Environmental Impact Statement To Investigate Potential Significant Impacts, Either Positive or Negative, to Table Rock Lakes' Authorized Purposes of Flood Risk Management, Hydropower, Water Supply, Recreation, and Fish and Wildlife | |
| 80 FR 74722 - Airworthiness Directives; Rolls-Royce Deutschland Ltd & Co KG Turbofan Engines | |
| 80 FR 74797 - Agency Information Collection Activities Under OMB Review; Renewal of a Currently Approved Information Collection | |
| 80 FR 74926 - Total Loss-Absorbing Capacity, Long-Term Debt, and Clean Holding Company Requirements for Systemically Important U.S. Bank Holding Companies and Intermediate Holding Companies of Systemically Important Foreign Banking Organizations; Regulatory Capital Deduction for Investments in Certain Unsecured Debt of Systemically Important U.S. Bank Holding Companies | |
| 80 FR 74694 - Media Bureau Finalizes Reimbursement Form for Submission to OMB and Adopts Catalog of Expenses | |
| 80 FR 74840 - Margin and Capital Requirements for Covered Swap Entities | |
| 80 FR 74916 - Margin and Capital Requirements for Covered Swap Entities |
Food and Nutrition Service
Forest Service
Census Bureau
Economic Development Administration
First Responder Network Authority
Foreign-Trade Zones Board
International Trade Administration
National Oceanic and Atmospheric Administration
National Telecommunications and Information Administration
Defense Acquisition Regulations System
Engineers Corps
Centers for Medicare & Medicaid Services
Food and Drug Administration
Health Resources and Services Administration
National Institutes of Health
Transportation Security Administration
Fish and Wildlife Service
Indian Affairs Bureau
Land Management Bureau
National Park Service
Ocean Energy Management Bureau
Reclamation Bureau
Drug Enforcement Administration
Mine Safety and Health Administration
Federal Aviation Administration
Federal Highway Administration
Federal Motor Carrier Safety Administration
Federal Railroad Administration
Pipeline and Hazardous Materials Safety Administration
Comptroller of the Currency
Foreign Assets Control Office
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.thefederalregister.org and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions.
U.S. Office of Personnel Management.
Final rule.
The U.S. Office of Personnel Management (OPM) is issuing a final rule that would redefine the geographic boundaries of the Harrisburg, PA, and Scranton-Wilkes-Barre, PA, appropriated fund Federal Wage System (FWS) wage areas. The final rule will redefine Montour County, PA, from the Harrisburg wage area to the Scranton-Wilkes-Barre wage area. This change is based on a consensus recommendation of the Federal Prevailing Rate Advisory Committee (FPRAC) to best match the county proposed for redefinition to a nearby FWS survey area.
Madeline Gonzalez, by telephone at (202) 606-2858 or by email at
On July 31, 2015, OPM issued a proposed rule (80 FR 45616) to redefine Montour County, PA, from the Harrisburg, PA, wage area to the Scranton-Wilkes-Barre, PA, wage area.
FPRAC, the national labor-management committee responsible for advising OPM on matters concerning the pay of FWS employees, reviewed and recommended this change by consensus.
The proposed rule had a 30-day comment period, during which OPM received no comments.
I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will affect only Federal agencies and employees.
Administrative practice and procedure, Freedom of information, Government employees, Reporting and recordkeeping requirements, Wages.
Accordingly, the U.S. Office of Personnel Management amends 5 CFR part 532 as follows:
5 U.S.C. 5343, 5346; § 532.707 also issued under 5 U.S.C. 552.
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule; request for comments.
We are adopting a new airworthiness directive (AD) for certain Bombardier, Inc. Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes, CL-600-2C10 (Regional Jet Series 700, 701 & 702) airplanes, CL-600-2D15 (Regional Jet Series 705) airplanes, CL-600-2D24 (Regional Jet Series 900) airplanes, and CL-600-2E25 (Regional Jet Series 1000) airplanes. This AD requires repetitive detailed inspections of the cage assembly, window louver panel assemblies (WLPAs), and blowout panels (BOPs), and corrective action if necessary. This AD was prompted by reports of several
This AD becomes effective December 15, 2015.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of December 15, 2015.
We must receive comments on this AD by January 14, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email
You may examine the AD docket on the Internet at
Aziz Ahmed, Aerospace Engineer, Airframe and Mechanical Systems Branch, ANE-171, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7329; fax 516-794-5531.
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2015-28, dated October 21, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes, CL-600-2C10 (Regional Jet Series 700, 701 & 702) airplanes, CL-600-2D15 (Regional Jet Series 705) airplanes, CL-600-2D24 (Regional Jet Series 900) airplanes, and CL-600-2E25 (Regional Jet Series 1000) airplanes. The MCAI states:
Several cases of damaged decompression window louver panel assemblies (WLPAs) have been reported in-service. Subsequent review of in-service data also showed multiple reports of detached blowout panels (BOPs). Damaged or detached WLPAs or BOPs create openings in the cargo compartment.
The presence of unintended openings on the WLPAs and BOPs could delay smoke detection in the cargo compartment. In addition, the cargo compartment may not be able to maintain Halon concentration required for fire suppression. In the event of a cargo compartment fire, this condition could lead to an uncontrolled cargo compartment fire.
This [Canadian] AD mandates the repetitive inspection of the affected WLPAs and BOPs.
Required actions include repetitive detailed inspections for damaged and detached WLPAs and BOPs. Corrective actions include repair. You may examine the MCAI on the Internet at
Bombardier has issued the following service information:
• Bombardier Service Bulletin 601R-25-201, dated July 21, 2015.
• Bombardier Service Bulletin 670BA-25-100, dated July 21, 2015.
The service information describes procedures for repetitive detailed inspections for damage of the cage assembly, WLPAs, and BOPs, and repair and replacement of damaged parts. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of these same type designs.
An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because a detached WLPA or BOP could delay smoke detection in the cargo compartment, and in the event of a cargo compartment fire, this could lead to an uncontrolled cargo compartment fire. Therefore, we determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in fewer than 30 days.
This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We estimate that this AD affects 986 airplanes of U.S. registry.
We also estimate that it will take about 2 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $0 per product. Based on these figures, we estimate the cost of this AD on U.S. operators to be $167,620, or $170 per product.
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD becomes effective December 15, 2015.
None.
This AD applies to the airplanes, certificated in any category, identified in paragraphs (c)(1) through (c)(5) of this AD, configured with a Class C cargo compartment.
(1) Bombardier, Inc. Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes, serial numbers (S/Ns) 7003 and subsequent.
(2) Bombardier, Inc. Model CL-600-2C10 (Regional Jet Series 700, 701 & 702) airplanes, S/Ns 10002 and subsequent.
(3) Bombardier, Inc. Model CL-600-2D15 (Regional Jet Series 705) airplanes, S/Ns 15001 and subsequent.
(4) Bombardier, Inc. Model CL-600-2D24 (Regional Jet Series 900) airplanes, S/Ns 15001 and subsequent.
(5) Bombardier, Inc. Model CL-600-2E25 (Regional Jet Series 1000) airplanes, S/Ns 19001 and subsequent.
Air Transport Association (ATA) of America Code 25, Equipment/Furnishings.
This AD was prompted by reports of several cases of damaged or detached decompression WLPAs and BOPs. We are issuing this AD to detect and correct damaged and detached WLPAs and BOPs. A detached WLPA or BOP could delay smoke detection in the cargo compartment, and in the event of a cargo compartment fire, this could lead to an uncontrolled cargo compartment fire.
Comply with this AD within the compliance times specified, unless already done.
Within 100 flight hours after the effective date of this AD, do the actions in paragraph (g)(1) or (g)(2) of this AD, as applicable.
(1) For Model CL-600-2B19 (Regional Jet Series 100 & 440) airplanes: Do a detailed inspection of the cage assembly for damage (including bent and damaged vertical and horizontal guard rails), do a detailed inspection of the WLPAs to detect discrepancies (including dents, bends, and deformations, and inadequate clearances), and do all applicable corrective actions, in accordance with the Accomplishment Instructions of Bombardier Service Bulletin 601R-25-201, dated July 21, 2015, except as required by paragraph (h) of this AD. Do all applicable corrective actions before further flight. Repeat the inspections thereafter at intervals not to exceed 100 flight hours.
(2) For Model CL-600-2C10 (Regional Jet Series 700, 701 & 702) airplanes, CL-600-2D15 (Regional Jet Series 705) airplanes, CL-600-2D24 (Regional Jet Series 900) airplanes, and CL-600-2E25 (Regional Jet Series 1000) airplanes: Do a detailed inspection of the cage assembly to detect damage (including bent or deformed tubing and frame, broken joints), and do a detailed inspection of the WLPAs to detect damage (including bent support pins and louver panels; inadequate clearances; and missing, torn, or unbonded fire blocking fabric and foams), and do a detailed inspection of the BOPs to detect damage (including bends, dents, punctures, and deformations; inadequate sealing tape; and a loose or frayed jumper), and do all applicable corrective actions, in accordance with the Accomplishment Instructions of Bombardier Service Bulletin 670BA-25-100, dated July 21, 2015, except as required by paragraph (h) of this AD. All applicable corrective actions must be done before further flight. Repeat the inspections thereafter at intervals not to exceed 100 flight hours.
Where Bombardier Service Bulletin 601R-25-201, dated July 21, 2015; and Bombardier Service Bulletin 670BA-25-100, dated July 21, 2015, specify to contact Bombardier for disposition of certain conditions, before further flight, repair using a method approved by the Manager, New York ACO, ANE-170, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO).
The following provisions also apply to this AD:
(1)
(2)
Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF-2015-28, dated October 21, 2015, for related information. You may examine the MCAI on the Internet at
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Bombardier Service Bulletin 601R-25-201, dated July 21, 2015.
(ii) Bombardier Service Bulletin 670BA-25-100, dated July 21, 2015.
(3) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email
(4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule; technical amendment.
This action amends Class E Airspace at Elmira/Corning Regional Airport, Elmira, NY; Ithaca Tompkins Regional Airport, Ithaca, NY; and Duchess County Airport, Poughkeepsie, NY, by eliminating the Notice to Airmen (NOTAM) part time status of the Class E surface airspace designated as an extension at each airport. This action also updates the geographic coordinates of each airport to coincide with the FAA's database, and recognizes the airport name for Ithaca Tompkins Regional Airport. This is an administrative change to coincide with the FAA's aeronautical database.
Effective 0901 UTC, February 4, 2016. 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 7400.9Z, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
John Fornito, Operations Support Group, Eastern Service Center, Federal Aviation Administration, P.O. Box 20636, Atlanta, Georgia 30320; telephone (404) 305-6364.
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 the New York airports listed in this final rule.
In a review of the airspace, the FAA found the airspace description for Elmira/Corning Regional Airport, Elmira, NY, Ithaca Tompkins Regional Airport, Ithaca, NY, and Duchess County Airport, Poughkeepsie, NY, as published in FAA Order 7400.9Z, Airspace Designations and Reporting Points, does not match the FAA's charting information. This administrative change coincides with the FAA's aeronautical database for Class E Airspace Designated as an Extension to a Class D Surface Area.
Class E airspace designations are published in paragraphs 6004 of FAA Order 7400.9Z dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR part 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
This action amends Title 14 Code of Federal Regulations (14 CFR) Part 71 by eliminating the NOTAM information that reads “This Class E airspace area is effective during the specific dates and time established in advance by Notice to
This is an administrative change amending the description for the above New York airports, to be in concert with the FAAs aeronautical database, and does not affect the boundaries, or operating requirements of the airspace, therefore, notice and public procedure under 5 U.S.C. 553(b) are unnecessary.
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. It, therefore: (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 1050.1F, “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 the surface within 1.8 miles each side of the Elmira VOR/DME 057° radial extending from the 4.2-mile radius to the VOR/DME and within 1.8 miles each side of the Elmira/Corning Regional Airport ILS localizer northeast course extending from the 4.2-mile radius to 1.8 miles northeast of the ERINN OM and within 1.8 miles each side of the centerline of Runway 10 extended easterly from the 4.2-mile radius of the airport for 1.1 miles and within 1.8 miles each side of the centerline of Runway 28 extended westerly from the 4.2-mile radius for 3.7 miles.
That airspace extending upward from the surface from the 4-mile radius of the Tompkins Regional Airport to the 5.7-mile radius of the Tompkins Regional Airport clockwise from the 329° bearing to the 081° bearing from the airport, that airspace from the 4-mile radius of Tompkins County Airport to the 8.7-mile radius of the Tompkins Regional Airport extending clockwise from the 081° bearing to the 137° from the airport, that airspace from the 4-mile radius of Tompkins Regional Airport to the 6.6-mile radius of the Tompkins Regional Airport extending clockwise from the 137° bearing to the 170° bearing from the airport, that airspace from the 4-mile radius to the 5.7-mile radius of the Tompkins Regional Airport extending clockwise from the 170° bearing to the 196° bearing from the airport and that airspace within 2.7 miles each side of the Ithaca VOR/DME 305° radial extending from the 4-mile radius of Tompkins Regional Airport to 7.4 miles northwest of the Ithaca VOR/DME.
That airspace extending upward from the surface within 3.1 miles each side of the Kingston VORTAC 025° radial extending from the VORTAC to 8.3 miles northeast of the VORTAC and within 1.8 miles each side of the Kingston VORTAC 231° radial extending from the 4-mile radius to 9.2 miles southwest of the VORTAC and within 3.1 miles each side of the Kingston VORTAC 050° radial extending from the VORTAC to 9.2 miles northeast of the VORTAC.
Internal Revenue Service (IRS), Treasury.
Final regulations; correcting amendment.
This document contains corrections to final regulations (TD 9741) that were published in the
This correction is effective November 30, 2015 and applicable October 27, 2015.
Johanna Som de Cerff or Zoran Stojanovic at (202) 317-6980 (not a toll-free number).
The final regulations (TD 9741) that are the subject of this correction are under section 141 of the Internal Revenue Code.
As published, the final regulations (TD 9741) contains an error that may prove to be misleading and is in need of clarification.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is corrected by making the following correcting amendment:
26 U.S.C. 7805 * * *
(l) * * * (1)
Internal Revenue Service (IRS), Treasury.
Final regulations; correction.
This document contains corrections to final regulations (TD 9741) that were published in the
This correction is effective November 30, 2015 and applicable October 27, 2015.
Johanna Som de Cerff or Zoran Stojanovic at (202) 317-6980 (not a toll-free number).
The final regulations (TD 9741) that are the subject of this correction are under sections 141 of the Internal Revenue Code.
As published, the final regulations (TD 9741) contain errors that may prove to be misleading and are in need of clarification.
Accordingly, the final regulations (TD 9741), that are subject to FR Doc. 2015-27328, are corrected as follows:
1. On page 65641, in the preamble, third column, the second and third sentences of the first full paragraph, under paragraph heading “
2. On page 65642, in the preamble, first column, first sentence of the third full paragraph, under paragraph heading “
Under Secretary of Defense for Personnel and Readiness, DoD.
Interim final rule.
This rule establishes policy, assigns responsibilities, and prescribes procedures for administration of the DoD Transition Assistance Program (TAP). The goal of TAP is to prepare all eligible members of the Military Services for a transition to civilian life, including preparing them to meet Career Readiness Standards (CRS). The TAP provides information and training to ensure Service members leaving Active Duty and eligible Reserve Component Service members being released from active duty are prepared for their next step in life whether pursuing additional education, finding a job in the public or private sector, starting their own business or other form of self-employment, or returning to school or an existing job. Service members receive training to meet CRS through the Transition GPS (Goals, Plans, Success) curricula, including a core curricula and individual tracks focused on Accessing Higher Education, Career Technical Training, and Entrepreneurship.
All Service members who are separating, retiring, or being released from a period of 180 days or more of continuous Active Duty must complete all mandatory requirements of the Veterans Opportunity to Work (VOW) Act, which includes pre-separation counseling to develop an Individual Transition Plan (ITP) and identify their career planning needs; attend the Department of Veterans Affairs (VA) Benefits Briefings I and II to understand what VA benefits the Service member earned, how to apply for them, and leverage them for a positive economic outcome; and attend the Department of Labor Employment Workshop (DOLEW), which focuses on the mechanics of resume writing, networking, job search skills, interview skills, and labor market research.
You may submit comments, identified by docket number and/or Regulatory Information Number (RIN) number and title, by any of the following methods:
•
•
Ron Horne, 703-614-8641.
The DoD is committed to providing military personnel from across the Services access to the TAP. The TAP prepares all eligible members of the Military Services for a transition to civilian life; enables eligible Service members to meet the CRS as required by this rule; and is the overarching program that provides transition assistance, information, training, and services to eligible transitioning Service members to prepare them to be career ready when they transition back to civilian life.
Spouses of eligible Service members are entitled to the DOLEW, job placement counseling, DoD/VA-administered survivor information, financial planning assistance, transition plan assistance, VA-administered home loan services, housing assistance benefits information, and counseling on responsible borrowing practices. Dependents of eligible Service members are entitled to career change counseling and information on suicide prevention.
These revisions will:
• Institutionalize the implementation of the VOW Act of 2011,
• require mandatory participation in the Department of Labor (DOL) Employment Workshop (EW),
• implement the Transition GPS (Goals, Plans, Success) curriculum,
• require development of an Individual Transition Plan (ITP),
• enhance tracking of attendance at TAP events,
• implement of mandatory Career Readiness Standards (CRS) for separating Service members, and
• incorporate a CAPSTONE event to document transition readiness and reinforce Commanding Officer accountability and support for the needs of individual Service members.
This rule improves the process of conducting transition services for eligible separating Service members across the Military Services and establishes the data collection foundation to build short-, medium-, and long-term program outcomes.
In August 2011, President Obama announced his comprehensive plan to ensure America's Post 9/11 Veterans have the support they need and deserve when they leave the military, look for a job, and enter the civilian workforce. A key part of the President's plan was his call for a “career-ready military.” Specifically, he directed DoD and Department of Veterans Affairs (VA) to work closely with other federal agencies and the President's economic and domestic policy teams to lead a Veterans Employment Initiative Task Force to develop a new training and services delivery model to help strengthen the transition readiness of Service members from military to civilian life.Shortly thereafter, Congress passed and the President signed the “VOW to Hire Heroes Act of 2011,” Public Law 112-56, 201-265, 125 Stat. 715 (“VOW Act”), which included steps to improve the existing TAP for Service members. Among other things, the “VOW Act” made participation in several components of TAP mandatory for all Service members (except in certain limited circumstances).
The task force delivered its initial recommendations to the President in December 2011 which required implementation of procedures to document Service member participation, and to demonstrate Military Service compliance with 10 U.S.C. Chapter 58 requirements. The Veterans Opportunity to Work (VOW) Act of 2011 mandated transitioning Service members participation in receiving counseling and training on VA Benefits. VA developed VA Benefits I and II Briefings to meet this mandate. The VOW Act also mandated transitioning Service members to received counseling and informed of services regarding employment assistance. The Department of Labor revised it's curriculum to meet this mandate with the Department of Labor Employment Workshop. The VOW requirements have been codified in 10 U.S.C. Chapter 58 and attendance to all Transition GPS curricula is now documented.
The redesigned TAP was developed around four core recommendations:
Implementation of these recommendations transforms a Service member' experience during separating, retiring, demobilizing, or deactivating to make the most informed career decisions by equipping them with the tools they need to make a successful transition.
The rule discusses a redesigned program which implements, the transition-related provisions of the “VOW Act” and recommendations of the Task Force to offer a tailored curriculum providing Service members with useful and quality instruction with
Spouses of eligible Service members are entitled to the DOLEW, job placement counseling, DoD/VA-administered survivor information, financial planning assistance, transition plan assistance, VA-administered home loan services, housing assistance benefits information, and counseling on responsible borrowing practices. Dependents of eligible service members are entitled to career change counseling and information on suicide prevention.
As part of the regulatory process, DOD is required to develop a regulatory impact analysis (RIA) for rules with costs or benefits exceeding $100 annually. DOD estimates implementation of this interim rule for the Department will have a cost of approximately $100M or more annually starting in 2016. DoD assumes that the annual outlays will continue.
In President Obama's speech in August of 2011 at the Washington Navy Yard, he used the term `Reverse Boot Camp' to demonstrate his vision for a redesigned TAP to increase the preparedness of Service members to successfully transition from military service to civilian communities. The President's use of language initiated an interagency discussion on an approach to mirror the Military Services' “basic or initial entry training” programs. This approach would require the Military Services to devote approximately 9 to 13 weeks, depending on curriculum development, outcome measures, assessments and individual military readiness and cultural differences, to afford Service members the opportunity to use all aspects of a rigorous transition preparation program.
While no cost estimates were conducted, this approach was deemed both expensive and would jeopardize DoD's ability to maintain mission readiness. Approximately 200,000-250,000 Service members leave DOD each year. To concentrate on transition preparation during the last 9 to 13 weeks of an individual's military career would not be workable since mission readiness could not absorb the impact of the void. Additionally, there would be a an increased expense required to activate or mobilize Reserve Component or National Guard personnel for the nine to 13 weeks prior to transition. Finally, logistical challenges could result from Service members dealing with TAP requirements while deployed. For example, units scheduled to mobilize would be delayed because a returning unit could occupy facilities (such as billeting, classrooms, and training areas) that the deploying units needed to train and prepare for mobilization.
A second alternative considered was establishment of regional residential transition centers staffed by personnel from all Military Services, the Departments of VA, Labor (DoL), and Homeland Security (U.S. Coast Guard), the U.S. Small Business Administration (SBA), and the OPM. Transitioning Service members would be sent on temporary duty for a period of four to six weeks, 12 months prior to their separation or retirement date to receive transition services. Eligible Reserve Component Service members would be assigned to the centers as a continuation of their demobilization out-processing. The potential costs to build or modify existing facilities, or rent facilities that would meet regional residential transition center requirements, as well as costs for Service member travel to and from the regional centers, reduced the viability of this approach.
A third, less expensive option would have left the existing TAP program intact without increasing counselor and curriculum facilitation resources. This option would not have accountability systems and procedures to demonstrate compliance with the “VOW Act” that mandates preseparation counseling, attendance at the DOL's three day Employment Workshop (DOLEW), and attendance at two VA briefings. Due to increasing Veteran unemployment and homeless percentages at the time of the decision, and the rebalancing of the military force, this cost neutral approach would not have the outcome-based capability intended to develop career ready skills in transitioning Service members. This option, which would not have met the requirements of the law, would cost the Military Services approximately $70M versus the fiscal year 2013 (FY13) $122M for the implementation of the re-designed TAP.
The “VOW Act” mandated preseparation counseling, VA Benefits Briefings I and II, and the DOLEW and these components were implemented in November 2012. On the same day, the “VOW Act” requirements became mandatory; DoD published a policy to make CRS and Commanding Officer verification that Service members are meeting CRS, mandatory. “Vow Act” compliance and CRS must be met by all Service members after they have served 180 days in active duty status. Service members must attend Transition GPS (Goals, Plans, Success) curriculum modules that build career readiness if they cannot meet the CRS on their own. In cases where Service members receive a punitive or Under Other Than Honorable Conditions discharge, Commanding Officers have the discretion of determining participation in the other than mandatory Transition GPS curricula. By policy, all Service members who do not meet the CRS will receive a warm handover to DOL, VA, or other resources targeted at improving career readiness in the area where the standard was not met.
The entire Transition GPS curriculum is now available online through Joint Knowledge Online (JKO); however, Service members must attend preseparation counseling, VA briefings, and the DOLEW in person. All other curriculum can be accessed through the JKO virtual platform. The virtual curriculum (VC) was launched at the beginning of FY14. DoD expected a cost savings in FY14 due to use of the VC but the cost avoidance cannot be calculated, as VC utilization is appropriate on a Service member-by-Service member basis.
Further, resource requirements for DoD become more predictable when transition assistance is provided at pre-determined points throughout the MLC TAP model, mitigating the impacts of “surge” periods when large numbers of Service members separate, demobilize or deactivate. The FY13 cost to DoD to implement the TAP redesign was $122M and in FY14 DoD costs were $85M. The difference is attributed to both implementation costs of the updated program in FY13 and to efficiencies discovered as implementation was completed throughout FY14. These costs represent only the portion of the interagency program that is paid by the DoD. The cost covers Defense civilian and contracted staff (FTEs) salaries and benefits at 206 world-wide locations. Civilian and contract labor account for approximately 88% of total program costs in both fiscal years. The remaining costs include equipment, computers (purchase, maintenance and operations), Information Technology (IT) and architecture, data collection and sharing, Web site development, performance evaluation and assessments, curriculum development and modifications, materials (audio-visual, CDs, eNotebooks, handouts,
The DoD provides military spouses the statutory requirements of TAP as prescribed in Title 10, United States Code. Other elements of TAP, prescribed by DoD policy, are available to spouses if resources and space permits. Military spouses can attend the “brick and mortar” Transition GPS curriculum at no cost on a nearby military installation. They can also take the entire Transition GPS curriculum online, virtually, at any time, from anywhere with a computer or laptop for free.
Many of our Veteran and Military Service Organizations, employers and local communities provide transition support services to local installations. Installation Commanders are strongly encouraged to permit access to Veteran Service Organizations (VSOs) and Military Service Organizations (MSOs) to provide transition assistance-related events and activities in the United States and abroad at no cost to the government. Two memos signed by Secretary of Defense Chuck Hagel reinforce such access. The memos are effective within 60 days of the December 23 signing, and will remain in effect until the changes are codified within DoD.
The DoD is dependent upon other federal agencies to deliver the redesigned TAP to transitioning Service members. The VA, DOL, SBA, Department of Education (ED), and Office of Personnel Management (OPM) have proven to be invaluable partners in supporting the Transition GPS curriculum development and delivery, and in providing follow-on services required by a warm handover due to unmet CRS. These interagency partners strongly support TAP governance and performance measurement.
Although DoD cannot estimate the costs for its interagency partners, TAP provides the Service members with resources through the contributions of its interagency partners that should be identified as factors of total program cost. Transition assistance is a comprehensive interagency effort with contributions from every partner leveraged to provide support to the All-Volunteer Force as the Service members prepare to become Veterans. The interagency partners deliver the Transition GPS curriculum and one-on-one services across 206 military installations across the globe. DoD can only speak to TAP costs within the Defense fence line, but can discuss the value provided by interagency partners.
The DOL provides skilled facilitators that deliver the DOLEW, a mandatory element of the Transition GPS standardized curriculum. DOL's American Jobs Centers (AJCs) provide integral employment support to transitioning Service members and transitioned Veterans. The AJCs are identified as resources for the Service members during TAP, which may increase visits from the informed Service members. The AJCs also support warm handovers of Service members who have identified employment as a transition goal on their ITP but do not meet the CRS for employment. DOL also provides input to the TAP interagency working groups and governance boards, and is involved in the data collection, performance measurement, and standardization efforts, all of which represent costs to the organization.
The SBA provides the Transition GPS entrepreneurship track, Boots to Business, to educate transitioning Service members interested in starting their own business about the challenges small businesses face. Upon completing the Boots to Business track, the SBA allows Service members to access the SBA on-line entrepreneurship course, free of charge. The SBA then provides Service members the opportunity to be matched to a successful businessperson as a mentor. This is a tremendous commitment that must create additional costs for the SBA. The SBA offices continue to provide support to Veterans as they pursue business plan development or start up loans; provision of this support is in their charter, but the increased awareness provided through the Transition GPS curriculum is likely to increase the patronage and represent a cost to SBA. The SBA also provides input to the TAP interagency working groups and governance boards. The SBA is engaged with data collection and sharing efforts to determine program outcomes.
VA provides facilitators who deliver the mandatory VA Benefits Briefings I and II as part of the Transition GPS standardized curriculum required to meet “VOW Act” requirements. The VA facilitators also deliver the two-day track for Career Technical Training that provides instruction to Service members to discern the best choices of career technical training institutions, financial aid, best use of the Post 9/11 GI Bill, etc. Benefits counselors deliver one-on-one benefits counseling on installations, as space permits. As a primary resource for Veterans, VA ensures benefits counselors are able to accept warm handovers of transitioning Service members who do not meet CRS and require VA assistance post separation. The VA hosts a web portal for connectivity between employers and transitioning Service members, Veterans and their families. VA provides input to the TAP interagency working groups and governance boards, and is involved in the data collection and sharing efforts to determine program outcomes, all of which represent costs to the organization.
ED serves a unique and highly valued role in the interagency partnership by ensuring the entire curriculum, both in classroom and virtual platform delivery, is based on adult learning principles. Their consultative role, tapped daily by the interagency partners, is critical to a quality TAP. ED also provides input to the TAP interagency working groups and governance boards and keeps a keen eye toward meaningful TAP outcomes, all of which represent costs to the organization.
The OPM contributes federal employment information and resources to the DOLEW, and enables the connectivity between the VA's Web
The costs to DoD's interagency partners were not calculated; implementation of this rule was mandated by the “Vow Act” and costs for all parties are already incurred. The calculated costs to DoD and unmeasured costs to DoD's interagency partners provide significant resources to Service members resulting in benefits to the Nation.
The benefits of the redesigned TAP to the Service members are increased career readiness to obtain employment, start their own business or enter career technical training or an institution of higher learning at the point of separation from military service. The legacy, end-of-career TAP is replaced by pre-determined opportunities across the MLC for many transition-related activities to be completed during the normal course of business. Since a direct economic estimate of the value of TAP is difficult for DoD to demonstrate as it would require collection of information from military personnel after they become private citizens, the value of the TAP can be derived by demonstrating qualitatively how Service members value the program and then displaying some changes in economic variables that can be differentiated between Veterans who have access to TAP and non-Veterans who do not have access to the program.
According to a curriculum assessment completed at the end of each TAP module, transitioning Service members gave the TAP positive reviews on its usefulness for their job search:
The TAP also helps mitigate the adjustment costs associated with labor market transition. Military members must prepare for the adjustments associated with losing military benefits (
The early alignment of military skills with civilian workforce demands and deliberate planning for transition throughout a Service member's career sets the stage for a well-timed flow of Service members to our Nation's labor force. Employers state that transitioning Service members have critical job-related skills, competencies, and qualities including the ability to learn new skills, strong leadership qualities, flexibility to work well in teams or independently, ability to set and achieve goals, recognition of problems and implementation of solutions, and ability to persevere in the face of obstacles. However, application of these skills and attributes must be translated into employer friendly language. The TAP addresses these issues. The VA web portal supports providing private and public sector employers with a direct link to profiles and resumes of separating Service members where employers can recruit from this talent pipeline.
The rule benefits communities across the country. Civilian communities receive more educated, better-trained and more prepared citizens when separating Service members return to communities as Veterans. Service members learn to align their military skills with civilian employment opportunities, which enables the pool of highly trained, adaptable, transitioning Service members a more timely integration into the civilian workforce and local economies. Service members also learn through TAP about the rich suite of resources available to them from the interagency partners and have, for the asking, one-on-one appointments with interagency partner staff, who can provide assistance to Service members and their families both before and after the Service member leaves active duty. More specifically, the components of the mandatory CRS target deliberate planning for financial preparedness as well as employment, education, housing and transportation plans and, for those Service members with families, childcare, schools, and spouse employment. The DoD and interagency partners incorporated the warm handover requirement for any transitioning Service member who does not meet the CRS. The warm handover is meant to serve as an immediate bridge from DoD to the federal partners' staffs, which are committed to providing needed support, resources and services to Service members post separation in the communities to which the Service members are returning. The intention is to provide early intervention before Veterans encounter the challenges currently identified by some communities,
The Task Force established expectations for program performance measures and outcomes. The redesigned TAP Interagency Executive Council and Senior Steering Group laid the preliminary groundwork to measure
These measures set the stage for future long-term measures when transitioning Service members become Veterans. The DoD's TAP Information Technology (IT) architecture and data collection processes enable future data sharing with our Federal partners to show program effectiveness. The DoD requires the interagency support of its partners to further develop and collect data to define a relationship between TAP attendance, “VOW Act” compliance and CRS and long-term outcome measures,
The provisions of the Administrative Procedure Act (APA) 5 U.S.C. 553 requiring notice and public comment are inapplicable because this rule involves a military function of the United States (5 U.S.C. 553(a)(1)) since it addresses the training and transitioning of military members to civilian life. Nonetheless, DOD is providing the public with an opportunity to review and comment on this rule because it is being published to redesign the two decades-old program and make Post 9/11 transitioning Service members career ready. This redesign requires an unprecedented interagency commitment of staffing, programs, and resources across 206 military installations as well as a culture change within DoD. Timely and full execution of the redesign is of significant Congressional interest with three hearings already conducted and more scheduled in the coming months. In the last of four reports to the White House,
This rule is part of DoD's retrospective plan, completed in August 2011, under Executive Order 13563, “Improving Regulation and Regulatory Review.” DoD's full plan and updates can be accessed at
Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This interim final rule has been designated an “economically significant regulatory action,” under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB) under the requirements of these Executive Orders.
Under the Congressional Review Act, a major rule may not take effect until at least 60 days after submission to Congress of a report regarding the rule. A major rule is one that would have an annual effect on the economy of $100 million or more or have certain other impacts. This interim final rule is a major rule under the Congressional Review Act.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4) requires agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2014, that threshold is approximately $141 million. This rule will not mandate any requirements for State, local, or tribal governments, nor will it affect private sector costs.
The DoD certifies that this interim final rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. Therefore, the Regulatory Flexibility Act, as amended, does not require us to prepare a regulatory flexibility analysis.
It has been determined that this rule does not impose reporting or recordkeeping requirements under the Paperwork Reduction Act of 1980.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This interim final rule will not have a substantial effect on State and local governments.
Employment, Military personnel.
Accordingly 32 CFR part 88 is revised to read as follows:
10 U.S.C. Chapter 58.
This part establishes policy, assigns responsibilities, and prescribes procedures for administration of the DoD TAP.
This part:
(a) Applies to the Office of the Secretary of Defense (OSD), the Military Departments, the Office of the Chairman of the Joint Chiefs of Staff (CJCS) and the Joint Staff (JS), the Combatant Commands, the Office of the Inspector General of the Department of Defense, the Defense Agencies, the DoD Field Activities, and all other organizational entities within the DoD (referred to collectively in this part as the “DoD Components”).
(b) Does not apply to members of the Army and Air National Guard serving under 32 U.S.C. 101.
Unless otherwise noted, these terms and their definitions are for the purpose of this part.
(1) 18 to 24 years old;
(2) Completing first-term enlistments;
(3) Involuntarily separating due to force shaping; and/or
(4) Separating on short notice from military service.
It is DoD policy that:
(a) The TAP:
(1) Prepares all eligible members of the Military Services for a transition from Active Duty back to civilian life.
(2) Enables eligible Service members to fulfill the requirements of the VOW to Hire Heroes Act and meet CRS as required by this part.
(3) Is the overarching program that provides transition assistance, information, training, and services to eligible transitioning Service members to prepare them to be career ready when they separate, retire, or are released from active duty back to civilian life. The TAP consists of multiple elements, including: The Transition GPS curricula, the components of which are outlined in appendix E to part 88; policy and procedures; information technology (IT) infrastructure; research, studies and survey data; performance measures and outcomes; assessments; curricula development in both brick and mortar and virtual settings and modifications; CRS; accountability data; and resources required to implement transition assistance.
(b) Components are integrated throughout the eligible Service member's Military Life Cycle (MLC) TAP at key touch points. The Transition GPS component of TAP consists of curriculum, counseling, information, referral, and deliverables to enable
(c) This policy establishes a TAP interagency governance structure according to DoD Instruction 5105.18, “DoD Intergovernmental and Intragovernmental Committee Management Program” (available at
(a) Under the authority, direction, and control of the Under Secretary of Defense (Personnel and Readiness) (USD(P&R)), the Assistant Secretary of Defense for Manpower and Reserve Affairs Readiness and Force Management (ASD(M&RA)):
(1) Provides policy, direction, and oversight to the Transition to Veterans Program Office (TVPO);
(2) Provides oversight and governance for the TAP and serves as the DoD lead chair of the TAP EC on a rotational basis with DOL and the VA;
(3) Oversees TAP policy and programs, monitors compliance with TAP provisions, and provides guidance to DoD Component heads; and
(4) Coordinates with the CJCS to provide JS Senior Enlisted Advisor participation for the TAP EC and Senior Enlisted Advisor representation to the TAP SSG;
(b) Under the authority, direction, and control of USD(P&R)), the Assistant Secretary of Defense for Health Affairs (ASD(HA)):
(1) Ensures that the Defense Health Agency provides transitional medical and dental care information pursuant to 10 U.S.C. 1145 to the TVPO for incorporation into Pre-separation Counseling; and
(2) Provides representation to the TAP EC and SSG working groups, as necessary;
(c) Under the authority, direction, and control of the USD(P&R), the Assistant Secretary of Defense for Reserve Affairs (ASD(RA)):
(1) Helps the TVPO establish and publish guidance for participation in the TAP that is specific to eligible RC Service members as defined in law and policy;
(2) Coordinates with TVPO to integrate elements of Transition GPS, before the DD Form 214, “Certificate of Release from Active Duty,” August 20, 2009, into the Yellow Ribbon Reintegration Program in conjunction with the policy established in DoD Instruction 1342.28, “DoD Yellow Ribbon Reintegration Program (YRRP)” (available at
(3) Provides Executive Director, Family and Employer Programs Policy, Senior Executive Service (SES), representation to the TAP SSG; and
(4) Provides representation to the TAP EC and SSG working groups, as necessary.
(d) Under the authority, direction, and control of the (ASD (M&RA), the Deputy Assistant Secretary of Defense for Military Community and Family Policy (DASD(MC&FP)):
(1) Develops policy and programs in DoD Instruction 1342.22, “Military Family Readiness” (available at
(2) Coordinates with TVPO on the roles, responsibilities, and policies set out in DoD Instruction 1342.22. The roles include coordination with:
(i) Installation education officers that impact the delivery of the Transition GPS Accessing Higher Education track;
(ii) Certified financial counselors that impact the delivery of the Transition GPS Core Curricula Personal Financial Planning for Transition module;
(iii) TAP staff, in conjunction with Military Departments whose staff are functionally aligned with DASD(MC&FP), regarding the delivery of the Transition GPS components to enable eligible Service members to meet CRS;
(3) Provides policy regarding job placement counseling for the spouses of eligible transitioning Service members and career change counseling to Service members and dependents of eligible Service members in accordance with 10 U.S.C. Chapter 58; and
(4) Provides representation to the TAP EC and SSG working groups, as necessary.
(e) Under the authority, direction, and control of the (ASD(R&FM)), the Deputy Assistant Secretary of Defense for Military Personnel Policy (DASD(MPP)) provides:
(1) Information and updates on entitlements and policies affecting eligible Service members as defined in law and policy; and
(2) Representation to the TAP EC and SSG working groups, as necessary.
(f) Under the authority, direction, and control of the ASD(R&FM), the Deputy Assistant Secretary of Defense for Readiness (DASD(R)):
(1) Provides information and updates on entitlements and policies affecting eligible Service members as defined in law and policy;
(2) To the extent possible and where available, ensures DASD(R) programs and policies related to job training, employment skills training, apprenticeships, and internships complement those programs and policies that govern the TAP that fall under the purview of TVPO in conjunction with DoD Instruction 1322.29, “Job Training, Employment Skills Training, Apprenticeships, and Internships (JTEST-A1) for Eligible Service Members” (available at
(3) Coordinates private-sector credentialing, licensing, and training outreach, and collaborates with the TVPO to align transition preparation across the MLC TAP and facilitate the military talent pipeline from the Military Departments to the civilian work force; and
(4) Provides representation to the TAP EC and SSG working groups, as necessary;
(g) Under the authority, direction, and control of the USD(P&R), the Director, Department of Defense Human Resource Activity (DoDHRA) provides:
(1) Administrative support to TVPO, including human capital, funding, and logistics; and
(2) Representation to the TAP EC and SSG working groups, as necessary.
(h) Under the authority, direction, and control of the Director, DoDHRA, the Director, Defense Suicide Prevention Office (DSPO):
(1) Provides suicide prevention and resource information to TVPO for incorporation into Transition GPS programming for eligible Service members as defined in statute and policy pursuant to 10 U.S.C. Chapter 58;
(2) Coordinates with TVPO on the role, responsibilities, and training of Suicide Prevention Program Managers (SPPMs), in conjunction with the Military Departments as it relates to Transition GPS; and
(3) Provides representation to the TAP EC and SSG working groups, as necessary.
(i) Under the authority, direction, and control of the Director, DoDHRA, the Director, Defense Manpower Data Center (DMDC):
(1) Oversees implementation of the TAP data collection, data sharing, and IT portfolio management requirements as described in this section;
(2) Provides assistance to TVPO with the establishment of business processes for data collection, data sharing, web services, and cost sharing related to IT portfolio management requirements in this part;
(3) Provides representation to the TAP EC and SSG working groups, as necessary; and
(4) Provides program status updates, as determined by the TVPO, based on data housed within DMDC capabilities;
(j) Under the authority, direction, and control of the ASD(R&FM), the Director, TVPO:
(1) Coordinates TAP policies, programs, and delivery with the USD(P&R);
(2) Develops policy, strategic guidance, and program goals for the TAP and Transition GPS; and reviews, modifies, and reissues such guidance, as required;
(3) Oversees the Military Departments' implementation of TAP;
(4) Implements the requirements of the TAP governance bodies as defined by Interagency Statement of Intent, “Transition Assistance for Separating Service Members”;
(5) In conjunction with ASD(R&FM), supports and coordinates meetings and activities for TAP governance bodies, as defined in § 88.3;
(6) Serves as the DoD lead chair of the TAP SSG on a rotational basis with DOL and VA;
(7) Establishes processes to monitor compliance with statutory mandates and other performance management requirements, as appropriate;
(8) Establishes automated data collection processes through secure electronic data transfer, in conjunction with the Military Departments, partner agencies, and DMDC. (See paragraph (c) of appendix I to part 88);
(9) Before submission of operational execution plans, coordinates with the Military Departments and must receive approval from Director, TVPO, before final submission of operational execution plans, system modifications, or development of new systems that fall under DoD TAP data and information requirements.
(i) Implementation of any new IT system or capability; or
(ii) Revision to an existing system or capability of the Military Departments that support the TAP.
(10) Coordinates and collaborates with the interagency parties and other organizations, as appropriate, in accordance with a Memorandum of Understanding among the DoDVADOLEDDHS, SBA, and OPM “Transition Assistance Program for Separating Service Members” (available at
(11) Coordinates with DMDC to provide TVPO-approved web-based services to the Military Departments for electronic transmission of DD Form 2958, “Service Member's Individual Transition Plan Checklist” and DD Forms 2648 or 2648-1, “Pre-separation or Transition Counseling Checklist for Active Component (AC) Service Members” and “Transition Assistance Program (TAP) Checklist for Deactivating/Demobilizing National Guard and Reserve Service Members,” respectively;
(12) Establishes a performance management framework to determine current and future resourcing and requirements;
(13) Analyzes data to evaluate the overall performance of the TAP;
(14) Establishes, reviews, assesses, and evaluates the effectiveness of Transition GPS;
(15) Oversees and monitors the development, delivery, maintenance, modification, and quality assurance of the Transition GPS brick-and-mortar and virtual curricula, products, and CRS deliverables, in accordance with this paragraph and MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members.” Develops brick-and-mortar and virtual curricula for the components of Transition GPS that fall under the purview of DoD and coordinates with interagency partners on their respective curriculums;
(16) Coordinates with interagency parties, the Military Departments, and Joint Knowledge Online (JKO), on the methods, processes, and standards used to deliver Transition GPS brick-and-mortar and virtual curricula, products, and deliverables used within Transition GPS, in accordance with MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members” and this part;
(17) Monitors Transition GPS curricula delivery by TVPO and Military Departments by conducting evaluations and participant assessments;
(18) Updates DD Forms 2648, 2648-1 and 2958 in conjunction with the Military Departments, within 180 days of legislative changes that affect eligible Service members, as appropriate;
(19) Develops, maintains, standardizes, and oversees usage of the ITP at the appropriate time in an eligible Service member's MLC TAP in conjunction with Military Departments;
(20) Establishes and leads TAP Coordinating Council consisting of subject matter experts from the DoD Components, to formulate, review, and update TAP policies and programs. Collaborates and coordinates on the development of the Military Departments' implementation plans related to TAP. RC members appointed to the TAP Coordinating Council will be determined pursuant to guidance from the Director, TVPO and in consultation with the Military Departments;
(21) Designates the DoD lead for the EC Transition Assistance Working Group. Conducts outreach to private- and public-sector entities to improve transition preparation in order to keep transition services aligned to the needs of the civilian labor market; and
(22) Expands TAP services through online media and other cooperative outreach efforts to support eligible Service members and their spouses, as defined by statute and policy.
(k) The Secretaries of the Military Departments:
(1) Implement and administer TAP in accordance with this part;
(2) Oversee TAP for their respective AC and RC;
(3) Coordinate electronically with TVPO their implementation guidance pertaining to this part, before publication. A copy of the final implementing guidance will be provided to TVPO within 120 days from the publication date of this part. Future changes to TAP guidance will be forwarded to the TVPO within 30 days of issuance;
(4) Ensure the Inspector General (IG) of each Military Department, including their respective RC, conducts an inspection of TAP in accordance with established IG protocols;
(i) TAP IG inspection findings will be submitted biannually to the USD(P&R) no later than January 31 of the fiscal year following the previous inspection date.
(ii) The first TAP IG inspection findings will be submitted two full fiscal years from the effective date of this part.
(5) Internally resource TAP to meet the provisions as defined in law and policy;
(6) Ensure that eligible Service members receive the TVPO standardized Transition GPS components, develop a viable ITP, and meet CRS;
(7) Ensure that Service members who do not meet the CRS or do not have a viable ITP receive a warm handover, as defined in § 88.3, to the appropriate interagency party;
(8) Align, administer, and reinforce Transition GPS components and resources at appropriate key touch points throughout the MLC TAP of eligible Service members to ensure they are afforded the opportunity, time, and resources for career readiness preparation. At the separation, retirement, or release from active duty touch point all Service members must meet the CRS;
(9) Ensure Service member access to Transition GPS brick-and-mortar and virtual curricula;
(10) Provide the opportunity within the officer and enlisted evaluation systems to use the rate at which Service members within a command have met the CRS, as a performance criteria;
(11) In order to execute Transition GPS in accordance with MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members” and DoD 5500.07-R, “Joint Ethics Regulation (JER)” (available at
(12) Encourage installation commanders to permit properly vetted civilian employers to have access to transition assistance-related events and activities in the United States and abroad in accordance with MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members,” DoD 5500.07-R, and DoD Instruction 1344.07, at no cost to the U.S. Government. Access must be for the purpose of offering job opportunities, mentoring, internships, or apprenticeships leading to employment. Educational institution access will also be in accordance with DoD Instruction 1322.25, “Voluntary Education Program,” and DoD Instruction 1322.19, “Voluntary Education Program in Overseas Areas;”
(13) Strongly encourage installation commanders to permit access to VSOs and MSOs to transition assistance-related events and activities in the United States and abroad in accordance with MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members,” DoD 5500.07-R, and DoD Instruction 1344.07, at no cost to the U.S. Government. Access must be for the purpose of assisting Service members with the pre- and post-military disability claim process and transition resources and services;
(14) Assign the appropriate Departmental Deputy Assistant Secretary or Director to serve as a TAP SSG member (
(15) Provides representatives to the TAP EC working groups, as necessary.
(l) The Chief of the National Guard Bureau assigns the Director of Personnel, an SES, to serve as a TAP SSG member.
(m) In addition to the responsibilities in paragraph (k) of this section and in consultation with the Commandant of the U.S. Marine Corps (USMC), the Secretary of the Navy (SECNAV):
(1) Develops joint implementation instructions to ensure statutory compliance for all eligible transitioning USMC and U.S. Coast Guard (USCG), personnel whenever the Coast Guard operates as a service in the Navy pursuant to 10 U.S.C. 5033 and 14 U.S.C. 3.
(2) Assigns an SES member to serve as TAP SSG member.
(a)
(1) Perform these TAP operations and resource management functions:
(i) Develop requirements and budgets for the Program Objective Memorandum (POM); Future Year Defense Program (FYDP); and program budget reviews, as required to comply with TAP requirements. Coordinate with OSD TVPO for TAP resource advocacy throughout these cycles.
(ii) Establish program elements or accounting codes to separately and independently verify and review the monthly Military Department-funded execution data (
(iii) Identify and submit TAP-related issues at the general or flag officer and SES equivalent level to the TVPO in a timely manner so that TAP-related issues can go before the SSG for discussion and decision.
(2) Coordinate with TVPO on implementation of any new IT systems or capabilities and revisions to existing systems that support the TAP. TVPO will have final approval on any new IT systems and or modifications. TVPO approval will be obtained before the Military Departments implement any IT systems modifications or develop any new systems that support TAP. See paragraph (c) of appendix I to part 88.
(3) Use TVPO-selected standardized individual assessment tools.
(4) Ensure that Service members receive an individualized assessment, pursuant to this paragraph, of the various positions of civilian employment in the private sector for which members may be qualified as a result of the skills developed through MOC qualification, successful completion of resident training courses, attainment of military ranks or rates, or other military experiences.
(5) Develop, maintain, document, and oversee the IDP process.
(6) Inform and educate unit, command, and installation leadership on their responsibility to administer the TAP to ensure that eligible Service members meet the CRS before separation, retirement, or release from active duty.
(7) Identify the eligible population for Transition GPS services.
(8) Identify and provide qualified counselors and trained instructors to facilitate the Transition GPS core curricula and Accessing Higher Education track.
(9) Coordinate with DSPO SPPMs at the local installation level to provide information in support of the Transition GPS Core Curricula module on resilient transitions and to distribute suicide prevention information and resources pursuant to 10 U.S.C. Chapter 58 .
(10) Release eligible Service members during duty hours to complete the Transition GPS and exempt them from normal duty for the full 24-hour period of each workshop or briefing day and the 12 hours immediately preceding and following each workshop or briefing.
(11) Provide eligible Service members with the link to the TVPO web-based Transition GPS Participant Assessment and encourage them to complete it at the end of each Transition GPS brick-and-mortar and virtual curricula module
(12) Establish a process within the military personnel organizations of the Military Departments to receive a legible copy of the completed and authenticated DD Forms 2648 or 2648-1 from the TAP staff. The process will include a mechanism to verify transmission of the form to the eligible Service member's permanent official military personnel file.
(13) Maintain or establish permanent employment assistance centers at appropriate military installations pursuant to 10 U.S.C. 1143.
(14) Use appropriate assets at military installations and in the local community to enhance Transition GPS in accordance with DoD 5500.07-R and DoD Instruction 1344.07.
(15) Coordinate with the appropriate TAP interagency parties for scheduling and conducting the VA Benefits Briefings I and II and Career Technical Training track; DOLEW and SBA Entrepreneurship track in accordance with MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members.”
(16) Coordinate warm handovers and Capstone support with interagency parties.
(17) Provide classroom space. Classes cannot exceed 50 participants (facilitator-to-student ratio should be 1:50 per separate classroom). A minimum of 10 participants is required to conduct a class. Military Departments will provide classrooms, appropriate facilities, IT infrastructure, fully-functioning web access, equipment, including classroom computers or accommodation for personal computers to enable effective Transition GPS instruction and counseling in accordance with MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members;” provide adequate facilities and workspace for instruction and counseling as agreed to by interagency parties also in accordance with MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members.” Military Departments may request exceptions for classrooms of more than 50 or less than 10 participants on a case-by-case basis. Such requests will be handled by the local installation level staff with partner agencies.
(18) Provide reasonable accommodations that enable wounded, ill or injured recovering Service members to successfully complete TAP.
(b)
(2) Interagency parties, and their respective curriculas consist of:
(i) VA: Provides the VA Benefits Briefings I and II and Career Technical Training track.
(A) The VA hosts a web portal for connectivity between employers and transitioning Service members, Veterans and military spouses.
(B) The VA web portal supports providing private and public sector employers with a direct link to profiles of separating Service members.
(ii) DOL: Provides the DOLEW.
(iii) SBA: Provides the Entrepreneurship track.
(iv) OPM: In conjunction with DOL, reviews and provides federal job search curriculum content for use in the DOLEW.
(v) ED: Consultative reviews of curricula to ensure accuracy of content, employment of adult learning principles, and to enhance adult learning experiences.
(vi) DHS: Coordinates and plans for USCG participation in the TAP, in accordance with this paragraph. MOU among DoD, VA, DOL, ED, DHS, SBA, and OPM, “Transition Assistance Program for Separating Service Members,” and pursuant to 14 U.S.C. 13
(vii) DoD provides transition overview, resilient transitions, MOC Crosswalk, Financial Planning for Transition, ITP review, and Accessing Higher Education.
(c)
(A) Pre-separation or Transition Counseling.
(B) Transition GPS Core Curricula.
(C) Transition GPS Tracks.
(D) Capstone.
(ii) RC members may choose to decline pre-separation or transition counseling, using the DD Form 2648 or DD Form 2648-1, for each successive period of active duty under 10 U.S.C. 1142 consisting of 180 days or more of continuous active duty.
(iii) Eligible Service members may choose to participate in one or more of the individual Transition GPS tracks, if resources, capacity, and operational requirements allow, based on the Service member's interests and ability to meet the CRS and complete the track.
(iv) A minimum day requirement for Pre-separation or Transition Counseling does not apply to eligible Service members who are retiring or separating due to a disability.
(v) Administrative and punitive separations change the eligibility of Service member's participation as follows:
(A) Pre-separation or transition counseling will not be provided to a Service member who is being discharged or released before the completion of that member's first 180 continuous days or more on active duty pursuant to 10 U.S.C. 1142.
(B) All Service members shall participate in all mandatory components of Transition GPS. In cases where Service members receive a punitive or “Under Other Than Honorable Conditions” discharge, Commanders have the discretion to determine participation in the remaining Transition GPS curricula in consultation with interagency partners, as appropriate.
(2)
(ii) Pursuant to 10 U.S.C. 1142 spouses of eligible Service members are entitled to:
(A) Job placement counseling for spouses and career change counseling to dependents of eligible members in accordance with 10 U.S.C. 1142. See paragraph (d)(3) of § 88.5 for the spouse job placement counseling responsibilities of the DASD(MC&FP).
(B) DoD and VA administered survivor benefits information.
(C) DoD financial planning assistance, including information on budgeting, saving, credit, loans, and taxes.
(E) VA-benefits orientation, such as education, employment, home loan services, housing assistance benefits information, and responsible borrowing practices counseling.
(iii) Pursuant to 10 U.S.C. 1142, eligible Service members and their dependents are entitled to:
(A) Career change counseling.
(B) Information on suicide prevention resource availability following military separation, retirement, or release from active duty.
(iv) Pursuant to 10 U.S.C. 1145, eligible Service members and their dependents are entitled to transitional
(v) Unless prohibited by statute, spouses of eligible Service members are encouraged to participate in Transition GPS as resources and capacity allow. Participating spouses may have their attendance recorded in accordance with the privacy and information collection mandates and requirements of appendix I to part 88 and 32 CFR part 310.
(vi) Spouses or designated caregivers completing Pre-separation or Transition Counseling (using DD Forms 2648 or 2648-1) on behalf of an eligible recovering Service member will provide their Social Security Number for data collection purposes in accordance with this paragraph,10 U.S.C. 1142, DoD Instruction 1342.28 32 CFR part 310 and 14 U.S.C. 5033.
(d)
(1) Eligible Service members identified as part of the targeted population, as defined in § 88.3 of this part.
(2) Eligible Service members closest to their dates of separation, retirement, or release from active duty.
(3) Eligible Service members returning from overseas or assigned to remote or isolated and geographically dispersed locations.
(4) All other eligible Service members that do not fall into the categories addressed in paragraphs (a) through (c) of this section.
(5) Eligible Service members who have attended any previous Transition GPS component and who want to repeat a component, as resources and capacity allow.
(6) Spouses of eligible Service members, based on statute and policy, as resources and capacity allow.
(e)
(a) The CRS are defined as a set of common and specific activities and associated relevant deliverables (documentation within the last 12 months) that, when achieved, the Service member will be able to demonstrate that he or she is prepared to transition to effectively and pursue their personal post-separation higher education, career technical training, and civilian employment goals. General and flag officers are exempt from CRS, completion of the ITP, ITP Checklist, and Capstone.
(b) The CRS are tangible measures of a Service member's preparedness for higher education or direct entry into a civilian career. The tangible measures consist of:
(1)
(i) Completed the TVPO standardized ITP. The ITP must document the individual's personal employment; higher education; career technical training; or entrepreneurship goals, actions, and milestones ;
(ii) Completed the TVPO standardized 12-month post-separation budget;
(iii) Registered for VABenefits online account;
(iv) Completed the Continuum of Military Service Opportunity counseling (AC only);
(v) Evaluated the transferability of military skills to the civilian workforce and completed the TVPO standardized gap analysis provided during the MOC crosswalk;
(vi) Identified requirements and eligibility for certification, licensure, and apprenticeship in the Service member's desired potential career field;
(vii) Completed a standardized individual assessment tool, as determined by TVPO or the Military Departments, to identify personal interests and leanings that will enable informed decision-making regarding career selection;
(viii) Received a DOL Gold Card, as defined in § 88.3, for DOL American Job Centers; and
(ix) Completed a job application package, received a job offer letter, or provided proof of future employment. The job application package must include the Service member's private or public sector resume, personal and professional references, and at least two submitted job applications.
(2)
(i) Completed a standardized individual assessment tool, selected by the Military Departments, to assess aptitudes, interests, strengths, or skills used to inform a Service member's decisions about selecting higher education and career technical training toward a desired future career field;
(ii) Completed a comparison of higher education or career technical training institution options;
(iii) Completed an application or received acceptance letter from a higher education or career technical training institution and
(iv) Confirmed one-on-one counseling with a higher education or career technical training institution advisor via telephone, email, or letter.
(a)
(i) First permanent duty station for AC personnel or first home station for RC personnel during initial drilling weekends;
(ii) Reenlistment;
(iii) Promotion;
(iv) Deployment and redeployment or mobilization or activation; demobilization or deactivation;
(v) Change of duty station;
(vi) Major life events (
(vii) Retirement, separation or release from active duty.
(2) Transition GPS services may be made available to ineligible RC members during the MLC TAP as resources and capacity allow.
(b)
(2) Before participating in Pre-separation or Transition Counseling, eligible Service members will complete a standardized individual assessment tool, as determined by TVPO or the Military Departments, to identify personal interests and leanings that will enable informed decision-making regarding career selection.
(3) Before participating in the Transition GPS Core Curricula, eligible Service members will complete a standardized individual assessment tool, selected by the Military Departments or TVPO, to assess aptitudes, interests, strengths, or skills used to inform a Service member's decisions about selecting higher education and career technical training toward a desired future career field.
(4) Eligible RC component Service members, on completion of two or more mobilizations, must have a relevant standardized individual assessment.
(a)
(1) An appropriate legal representative or ethics official will brief eligible Service members on ethics pursuant to DoD 5500.07-R, to ensure they understand information on post government (military) employment counseling (restrictions on employment, imposed by statute and regulation). These briefings shall be conducted by the Military Services as appropriate.
(2) Eligible Service members will receive information from a career counselor or transition staff member on how to access and
(3) Eligible Service members who are voluntarily or involuntarily separated under any program initiated by a DoD instruction or directive, Congressional directive, Presidential executive order, or Military Department regulation, in order to ensure good order and discipline, shape the force, or draw down or realign forces, will be briefed by a career counselor or transition staff member on any special entitlements or benefits associated with these programs.
(4) Eligible Service members retained on active duty past their enlistment or reenlistment or contracts for purposes of mission essentiality, deployment continuity, or operational requirements, as determined by the Secretary concerned, will be briefed by a career counselor or transition staff member on any entitlements and benefits incurred during involuntary retention actions.
(5) Eligible Services members will be counseled and provided information or referrals, as requested, on all items listed on DD Forms 2648 or 2648-1 by the transition staff or command career counselors.
(b)
(1) For retirement purposes, will begin as soon as possible during the 24-month period preceding an anticipated retirement date but no later than 90 days before retirement; or
(2) For reasons other than retirement, will begin as soon as possible during the 12-month period preceding the anticipated date of separation but no later than 90 days before separation, retirement, or release from active duty; or.
(3) Will begin as soon as possible within the remaining period of service when:
(i) A retirement or other separation is unanticipated, and there are 90 or fewer days before separation, retirement, or release from active duty; or,
(ii) An eligible RC member is being demobilized or deactivated from active duty under circumstances in which operational requirements, as determined by the Secretary concerned, make the 90-day requirement unfeasible.
(4) Will not be provided to Service members who are discharged or released before completing their first 180 continuous days or more on active duty, as defined by 10 U.S.C. 1142. This limitation does not apply in the case of Service members who retire or separate for a disability.
(c)
(1) Use of commissary and exchange stores during the two-year period starting on the date of involuntary separation, pursuant to 10 U.S.C. 1146;
(2) Transitional medical and dental health care that will be available for 180 days beginning on the first day after the date of involuntary separation, pursuant to 10 U.S.C. 1145;
(3) Extended use of military family housing, subject to overseas Status of Forces Agreements, for up to 180 days after separation on a space-available basis and potential rental charges, pursuant to 10 U.S.C. 1147, the Secretary, shall require a reasonable rental charge for the continued use of military family housing under paragraph (a) of this appendix, except that such Secretary may waive all or any portion of such charge in any case of hardship;
(4) Overseas relocation assistance, including computerized job relocation assistance and job search information, pursuant to 10 U.S.C. 1148;
(5) Preference in hiring by non-appropriated fund instrumentalities, pursuant to 10 U.S.C. 1143; and
(6) Excess leave for a period not in excess of 30 days or permissive temporary duty for a period not in excess of 10 days for the purpose of carrying out necessary relocation activities, pursuant to 10 U.S.C. 1149.
(d)
(2) In accordance with 32 CFR part 310, privacy information contained within these forms will be maintained based on the System of Records Notification pertaining to these forms.
(3) All items on the applicable DD Forms 2648 or 2648-1 will be addressed during Pre-separation or Transition Counseling.
(4) Pre-separation or Transition Counseling checklist data will be submitted electronically to DMDC through the DMDC web-based service or TVPO-approved systems.
(a)
(2) Eligible Service members will document on the IDP the actions they must take to achieve their military and post-transition career goals and meet the CRS before separation, retirement, or release from active duty.
(3) Commanders, or commanders' designees, will ensure eligible Service members develop, update, and maintain the IDP at key touch points throughout the MLC TAP, in accordance with Military Department regulations and procedures.
(4) The IDP should be initiated in accordance with Military Departments regulations, but no later than 180 days after arrival at the first permanent active duty station for AC members or first home station for RC members during their initial drilling weekends.
(5) On the eligible Service member's decision to separate or retire or on notification of involuntary separation, the IDP will migrate into the ITP.
(b)
(2) The ITP is a step-by-step plan derived from the eligible Service member's IDP.
(3) Eligible Service members are required to document their post-military personal and professional goals and objectives on the ITP.
(4) The ITP is an evolving document that is reviewed, modified, and verified throughout transition preparation.
(5) ITP responses serve as potential triggers for further action by the eligible Service member to connect to the appropriate interagency party or subject matter expert for assistance.
(6) During the ITP review and verification processes, eligible Service members must produce evidence of the deliverables that meet the CRS before separation, retirement, or release from active duty.
(c)
(2) If it is determined that the CRS or a viable ITP have not been achieved, then the ITP checklist will document confirmation of a warm handover to partner agencies and or other appropriate agencies.
(3) During the ITP review and verification processes, eligible Service members must produce deliverables to serve as evidence that they are prepared to meet the CRS before separation, retirement, or release from active duty.
(4) ITP Checklist data will be submitted electronically to DMDC through the DMDC web-based service or a TVPO-approved system.
(5) TAP staff will explain to eligible Service members during Pre-separation or Transition Counseling how the ITP and Pre-separation or Transition Counseling checklists work together to provide the Service member with a plan for meeting the CRS.
(2) Changes, as needed, to the standardized Transition GPS brick-and-mortar or virtual curricula, services, and learning objectives must be approved by TVPO for implementation across all Military Departments.
(3) The following Transition GPS components require mandatory participation unless Service members are exempt:
(i) Pre-separation or Transition Counseling is mandatory. See appendix C to part 88 for Pre-separation or Transition Counseling requirements.
(ii) VA Benefits Briefings I and II are mandatory.
(iii) Capstone is mandatory. See appendix H to part 88 for Capstone requirements.
(4) Participation in the DOLEW is mandatory, unless exempt. See appendix F to part 88 for specific DOLEW exemptions.
(5) Except for the components designated as mandatory, participation in Transition GPS tracks are based on proof of the Service member's ability to meet the associated CRS.
(6) Transition GPS consist of these components:
(i)
(ii)
(A) Transition Overview;
(B) Resilient Transitions;
(C) MOC Crosswalk;
(D) Personal Financial Planning for Transition;
(E) VA Benefits Briefings I and II, to be conducted pursuant to 10 U.S.C. 1142. Completion of this subcomponent is mandatory;
(F) DOLEW, to be conducted pursuant to 10 U.S.C. 1144. Completion of this subcomponent is mandatory, unless exempt. See appendix F to part 88 for DOLEW exemption eligibility; and
(G) ITP Review.
(iii)
(B) The outcome of completed tracks will be documented in the Service member's ITP and on the ITP checklist, as applicable.
(C) Eligible Service members may participate in one or more, if resource availability and operational requirements allow, of the following Transition GPS tracks:
(
(
(
(
(
(
(
(
(
(
(
(iv)
(B) Capstone provides an opportunity for eligible Service members to have attainment of the CRS verified by the commander or his or her designee.
(C) At Capstone, if the Service member cannot meet the CRS before transition, the commander or his or her designee confirms and documents a warm handover to appropriate interagency parties, or local resources. If in the judgement of the Commander or commander's designee, it is determined that the Service member does not meet CRS or does not have a viable ITP, then he or she must confirm that a warm handover takes place with the appropriate interagency parties, as needed.
(b)
(2) Commanders will:
(i) Ensure eligible Service members are afforded the opportunity, resources, and time to meet the CRS before separation, retirement, or release from active duty.
(ii) Be fully engaged throughout the MLC TAP in enabling Service members the opportunity, resources, and time to meet and attain the CRS and comply with statutory mandates before separation, retirement, or release from active duty.
(iii) Verify that eligible Service members have met the CRS and have a viable ITP during Capstone and ensure that members who did not meet the CRS or do not have a viable ITP receive a warm handover to the appropriate interagency parties or local resources.
(iv) Ensure Transition GPS components are delivered at key touch points throughout the MLC TAP.
(v) Ensure development and maintenance of the IDP throughout the MLC TAP and afford Service members the opportunity, resources and time to meet the CRS.
(c)
(1) In the case of an anticipated retirement, the components of Transition GPS not yet completed will begin as soon as possible during the 24-month period before the retirement date;
(2) In the case of a separation other than a retirement, the components of Transition GPS not yet completed will begin as soon as possible during the 12-month period before the anticipated discharge date;
(3) The incomplete components of Transition GPS will begin no later than 90 days before separation, retirement, or release from active duty except in those cases where statute determines specific timelines;
(4) In the case that there is a retirement or an unanticipated separation, and there are 89 days or fewer before discharge or release from active duty, the components of Transition GPS not yet completed will begin as soon as possible within the remaining period of service or the effective date on the DD 214, and the Service member must meet all requirements; and
(5) Transition GPS will begin as soon as possible within the remaining period of service when:
(i) An eligible RC member is being released from active duty under circumstances in which operational requirements, as determined by the Secretary concerned, make the prescribed timeline unfeasible; or
(ii) There are 90 or fewer days before the anticipated release from active duty.
(a) The only exemptions to eligible Service member participation in the DOLEW portion of the Transition GPS Core Curricula are:
(1) Eligible Service members retiring after 20 or more years of qualifying military service.
(2) Eligible Service members who, after serving their first 180 continuous days or more on active duty, pursuant to 10 U.S.C. 1142 meet at least one of the following criteria:
(i) Are able to provide documented evidence of civilian employment; or.
(ii) Are able to provide documented acceptance into an accredited career technical training, undergraduate, or graduate degree program; or.
(iii) Have specialized skills which, due to unavoidable circumstances, are needed to support a unit on orders scheduled to deploy within 60 days. The first commander in the eligible Service members' chain of command, with authority pursuant to 10 U.S.C. chapter 47, also known and referred to as the Uniform Code of Military Justice (UCMJ), must certify on the DD Form 2958 any such request for exemption from the DOLEW. A make-up plan must accompany the postponement certification.
(iv) Eligible recovering Service members who are separating, retiring, or being released from active duty who are enrolled in the Education and Employment Initiative, or similar transition program designed to secure
(b) TAP staff will document on the DD Form 2958 the decision of eligible Service members who qualify for an exemption and elect not to participate in the DOLEW.
(c) Eligible RC Service members who have previously participated in the DOLEW may request an exemption.
(d) Eligible Service members who qualify for an exemption may still elect to participate in the DOLEW.
(a) DoD Components and Military Departments, in conjunction with JKO, DHS, VA, DOL, OPM, SBA and other appropriate interagency parties, must leverage the capabilities of web-based adult learning to ensure the transitioning force complies with statutory mandates to meet the CRS before separation, retirement, or release from active duty.
(b) As provided by TVPO or JKO, the virtual curricula provides an alternative delivery of Transition GPS to enable compliance with statutory mandates and attainment of the CRS as set by this Appendix. Those who can use the virtual curricula include:
(1) Eligible Service members whose duty locations are in remote or isolated geographic areas.
(2) Eligible Service members who are undergoing short-notice separation, as defined in the § 88.3 and pursuant to 10 U.S.C. chapter 59, and cannot access brick-and-mortar curricula in a timely manner.
(3) Spouses of eligible Service members, as resources and capacity allow.
(c) A Virtual Curricula must:
(1) Be easily accessible by eligible Service members through JKO;
(2) Be approved in design, look, color, etc., by the Director of TVPO in consultation with the Military Departments and partner agencies;
(3) Include interactive technology tools to monitor Service member participation in the training and knowledge gained;
(4) Include module materials and activities that engage participants, support diverse learning styles, foster frequent interaction, and encourage meaningful communication and collaboration between the participants and instructors;
(5) Include a data-capture feature or interface with the TVPO and DMDC-provided web service or process to ensure Service members receive credit for successfully completing the curricula;
(6) Ensure Virtual Curricula is compliant with section 508 of the Rehabilitation Act of 1973 as amended, 29 U.S.C 792.
(d) The virtual curricula's educational effectiveness and teaching and learning process will be assessed through an evaluation process that may include Service members' knowledge gain, retention, and satisfaction. TVPO will evaluate assessments in collaboration with the Military Departments and partner agencies.
(e) Intended learning outcomes will be reviewed regularly to ensure clarity, utility, and appropriateness.
(f) Documented procedures will be used to assure that security of personally identifiable information (PII) is protected in the conduct of assessments and evaluations and in the dissemination of results in accordance with 32 CFR part 310 and 14 U.S.C. 5033.
(g) Changes to the DoD virtual curricula will be approved by TVPO for implementation across all Military Departments.
(a)
(1)
(i) The review will be conducted by:
(A) A TAP staff member or career counselor for eligible Service members in the rank of O-5 or below.
(B) The first Commander with UCMJ authority in the chain of command, or his or her designee, for eligible Service members in the rank of O-6 and above.
(ii) If during the review a Service member is determined to be incapable of meeting the CRS or has gaps in the ITP, the TAP staff will introduce the member to the necessary resources to assist him or her in becoming career ready. Resources include remedial skills building via the Transition GPS curricula, one-on-one assistance from TAP staff, and assistance from installation or local community resources.
(iii) Service members will document the point of contact name, phone number, and email address of remedial resources on the ITP.
(2)
(i) In cases where Service members are still not able to meet the CRS during Capstone verification, the Commander or his or her designee will initiate a warm handover to appropriate partner agencies or local resources for post-separation support in the community where the Service member plans to relocate; and
(ii) The Commander or his or her designee will confirm the warm handover has occurred by documenting it on the DD Form 2958.
(3)
(b)
(2) Capstone will be completed no later than 90 days preceding an anticipated separation, retirement, or release from active duty for eligible Service members.
(3) Exceptions to this timeline are:
(i) In the case of eligible AC Service members with an unanticipated separation of 89 days or fewer before discharge or release from active duty, Capstone will begin no later than the date of separation as reflected on the DD Form 214.
(ii) In the case of eligible RC members release from active duty, in which operational requirements, as determined by the Secretary concerned, make the prescribed timeline unfeasible, Capstone will begin no later than the date of release from active duty as reflected on the DD Form 214.
(a)
(1) DD Forms 2648 or 2648-1;
(2) Transition Overview;
(3) Resilient Transitions;
(4) MOC Crosswalk;
(5) Personal Financial Planning for Transition;
(6) VA Benefits Briefings I and II;
(7) DOLEW;
(8) ITP Review;
(9) Tracks;
(10) ITP Checklist; and
(11) Participant Assessment.
(b)
(2) TVPO will oversee and coordinate sharing requirements and authorities for DoD TAP data with interagency parties, as applicable.
(3) DMDC will process, store, host, and maintain data and coordinate data sharing on request that meets established DoD information assurance standards in accordance with this appendix and 32 CFR part 310.
(4) Each organization requesting TAP data sharing will prepare a business case to support the purpose and type of data requested from other parties.
(i) The business case will clearly articulate how the requested data enables the parties to meet their mission and better serve Service members and veterans.
(ii) The business case will be submitted to TVPO for review and approval.
(iii) Approved business cases will be submitted to DMDC to set up business processes and cost sharing arrangements.
(5) To ensure protection of PII and privacy:
(i) The DoD Components and interagency parties will share Service member information in accordance with 32 CFR part 310 and requirements for collecting, sharing, storing, and maintaining PII. They will meet the need, if required, to establish a system of records notification; and
(ii) All official procedures for safeguarding and retaining PII will be followed as established in 32 CFR part 310.
(c)
(2) TAP data will be shared in a standard form for the enterprise to facilitate compliance verification and to measure effectiveness of the program.
Federal Communications Commission.
Final action; requirements and procedures.
In this document, the Media Bureau adopts the following a final catalog of expenses; a procedure whereby reimbursement payments will be disbursed via the agency's internal vendor payment system; a procedural requirement that the Reimbursement Form, with supporting cost documentation, must be submitted each time an entity makes a request for reimbursement from the Fund; and a decision that cost documentation, as well as the name, address, and other identifying information pertaining to vendors, will not be made publicly available.
November 30, 2015.
A copy of any comments on the Paperwork Reduction Act information collection requirements contained herein should be submitted to Cathy Williams, Federal Communications Commission, 445 12th Street SW., Washington, DC 20554, or by email to
Pamela Gallant, Policy Division, Media Bureau, FCC, 202-418-0614 or email
This is a summary of the Commission's document, DA 15-1238; GN Docket No. 12-268, released October 30, 2015. 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:
The Media Bureau adopts the final catalog of expenses, embedded in FCC Form 2100, Schedule 399, to be used by broadcasters and MVPDs seeking reimbursement from the TV Broadcaster Relocation Fund following the Incentive Auction. The costs included in the catalog are not intended to be an exhaustive list of reimbursable expenses, but rather represent those expenses that relocated broadcasters and MVPDs will most commonly incur as a result of the channel repack. Entities can submit expenses not listed in the catalog using the “other” catch-all categories found throughout the catalog. The Commission will send FCC Form 2100, Schedule 399 to the Office of Management and Budget for final approval of the information collection requirement contained therein under the Paperwork Reduction Act. The final version of the Reimbursement Form, FCC Form 2100, Schedule 399 (Reimbursement Form or Form), including the embedded expense catalog, will be submitted to the Office of Management and Budget for approval under the Paperwork Reduction Act.
In addition, the Media Bureau adopts a process for making payments from the TV Broadcaster Relocation Fund via the Commission's internal vendor payment system, rather than requiring recipients to establish individual accounts with the U.S. Treasury, as had previously been announced. The Media Bureau found that this change would mitigate against waste, fraud and abuse by saving Commission resources and providing the agency with more control over the creation of payment accounts.
The Media Bureau also adopts a process wherein a broadcaster or MVPD must submit information on the Reimbursement Form, with supporting cost documentation, each time it makes a request for reimbursement from the Fund, not only at the beginning and end of the reimbursement period.
Finally, after seeking comment on which data points, if any, should be considered confidential or nor subject to public disclosure, the Media Bureau concludes that cost documentation submitted by entities seeking reimbursement for actual costs (for example, invoices), as well as the name, address, and other identifying information pertaining to the vendor providing equipment or service to a specific broadcaster or MVPD, will not be made publicly available.
The Commission will send a copy of this document in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act,
Defense Acquisition Regulations System, Department of Defense (DoD).
Final rule.
DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to provide needed editorial changes.
Effective November 30, 2015.
Ms. Jennifer L. Hawes, Defense Acquisition
This final rule amends the DFARS as follows:
1. Directs contracting officers to additional DFARS Procedures, Guidance, and Information (PGI) by adding references at—
• DFARS 217.500(b) to PGI 217.502-1;
• DFARS 217.502-1(a)(1) and (b)(1) to PGI 217.502-1(a)(1) and (b)(1), respectively; and
• DFARS 239.7603 to PGI 239.7603.
2. Makes conforming changes at DFARS 239.7604, 252.239-7009, and 252.239-7010.
Government procurement.
Therefore, 48 CFR parts 217, 239, and 252 are amended as follows:
41 U.S.C. 1303 and 48 CFR chapter 1.
(b) A contracting activity from one DoD Component may provide acquisition assistance to deployed DoD units or personnel from another DoD Component. See PGI 217.502-1 for guidance and procedures.
(a)
(b)
Follow the procedures relating to cloud computing at PGI 239.7603.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Final rule.
FMCSA adopts regulations that prohibit motor carriers, shippers, receivers, or transportation intermediaries from coercing drivers to operate commercial motor vehicles (CMVs) in violation of certain provisions of the Federal Motor Carrier Safety Regulations (FMCSRs)—including drivers' hours-of-service limits; the commercial driver's license (CDL) regulations; drug and alcohol testing rules; and the Hazardous Materials Regulations (HMRs). In addition, the rule prohibits anyone who operates a CMV in interstate commerce from coercing a driver to violate the commercial regulations. This rule includes procedures for drivers to report incidents of coercion to FMCSA, establishes rules of practice that the Agency will follow in response to reports of coercion, and describes penalties that may be imposed on entities found to have coerced drivers. This rulemaking is authorized by section 32911 of the Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Motor Carrier Safety Act of 1984 (MCSA), as amended.
This final rule is effective January 29, 2016.
Petitions for Reconsideration of this final rule must be submitted to FMCSA Administrator no later than December 30, 2015.
For access to docket FMCSA-2012-0377 to read background documents and comments received, go to
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to
Mr. Charles Medalen, Regulatory Affairs Division, Office of Chief Counsel, (202) 493-0349. FMCSA office hours are from 9 a.m. to 5 p.m., Monday through Friday, except Federal holidays.
Congress required FMCSA to ensure that the regulations adopted pursuant to the MCSA, as amended by MAP-21, do not result in coercion of drivers by motor carriers, shippers, receivers, or transportation intermediaries to operate CMVs in violation of certain provisions of the FMCSRs and the HMRs.
The major provisions of this rule include prohibitions of coercion, procedures for drivers to report incidents of coercion to FMCSA, and rules of practice that the Agency will follow in response to reports of coercion.
The FMCSA believes that this rule will not have an economically significant impact. The motor carriers, shippers, receivers, freight forwarders, brokers and transportation intermediaries that previously engaged in acts of coercion against truck or bus drivers will incur compliance costs to operate in accordance with the regulations, and they will lose whatever economic benefit coercion provided; however, the cost of compliance with existing regulations has already been captured in the analysis supporting the implementation of those regulations, so we do not consider them here. There will be safety benefits from increased compliance with the regulations and driver health benefits if HOS violations decrease. In the absence of coercion, the drivers will conduct their safety-sensitive work in a manner consistent with the applicable Federal regulations. During the four-year period from 2009 through 2012, OSHA determined that 253 whistleblower complaints from CMV drivers had merit. In the same period, FMCSA validated 20 allegations of motor carrier coercion of drivers that were filed with DOT's OIG. This is an average of 68.25 acts of coercion per year during the four-year period. The Agency estimates that the cost of eliminating this level of coercion would be less than the $100 million threshold required for economic significance under E.O. 12866.
This rule is based on the authority of MCSA [49 U.S.C. 31136(a)], as amended by MAP-21 [Pub. L. 112-141, section 32911, 126 Stat. 405, 818, July 6, 2012] and on 49 U.S.C. 13301(a), as amended by the ICC Termination Act of 1995 [Pub. L. 104-88, 109 Stat. 803, December 29, 1995].
The 1984 Act confers on DOT authority to regulate drivers, motor carriers, and vehicle equipment. The 1984 Act stated that at a minimum, the regulations shall ensure that—(1) commercial motor vehicles are maintained, equipped, loaded, and operated safely; (2) the responsibilities imposed on operators of commercial motor vehicles do not impair their ability to operate the vehicles safely; (3) the physical condition of operators of commercial motor vehicles is adequate to enable them to operate the vehicles safely; and (4) the operation of commercial motor vehicles does not have a deleterious effect on the physical condition of the operators [49 U.S.C. 31136(a)].
Section 32911 of MAP-21 enacted a fifth requirement,
The 1984 Act also includes more general authority to “(10) perform other acts the Secretary considers appropriate” [49 U.S.C. 31133(a)(10)].
This rule includes two separate prohibitions. One prohibits motor carriers, shippers, receivers, or transportation intermediaries from coercing drivers to violate regulations based on section 31136 (which is the authority for many parts of the FMCSRs), 49 U.S.C. chapter 313 (the authority for the commercial driver's license (CDL) and drug and alcohol regulations), and 49 U.S.C. chapter 51 (the authority for the HMRs). This is required by 49 U.S.C. 31136(a)(5).
A second provision prohibits entities that operate CMVs in interstate commerce from coercing drivers to violate the commercial regulations. As explained more fully below, this provision is based on the broad general authority of 49 U.S.C. 31136(a)(1)-(4), especially paragraphs (a)(1) and (2). Banning coercion to violate the safety-related commercial regulations is well within the scope of section 31136(a)(1)-(4). Applying the same ban to commercial provisions that are not immediately related to safety is nonetheless consistent with the goals of section 31136 and will help to inhibit the growth of a culture of indifference to regulatory compliance, a culture known to contribute to unsafe CMV operations. Banning coercion to violate the commercial regulations is also within the broad authority transferred from the former ICC to prescribe regulations to carry out Part B of Subtitle IV of Title 49, United States Code (49 U.S.C. 13301(a)). This prohibition applies to operators of CMVs, which are mainly motor carriers, but not to shippers, receivers, or transportation intermediaries, since they are not subject to section 31136(a)(1)-(4) or section 13301.
Together, these two provisions cover most kinds of coercion drivers might encounter.
This rule also adopts procedures for drivers to report coercion and rules of practice the Agency will follow in addressing such reports.
FMCSA believes the reduction of regulatory violations caused by coercion will prove conducive to improved driver health and well-being, consistent with the objectives of section 31136(a)(2)-(4).
Before prescribing any regulations, FMCSA must consider their “costs and benefits” [49 U.S.C. 31136(c)(2)(A) and 31502(d)]. Those factors are discussed in this rule.
Section 32911 of MAP-21 is the most recent example of Congress' recognition of the important role the public plays in highway safety. In the 1980s, Congress implemented new financial responsibility requirements for motor carriers of property and passengers to encourage the insurance industry to exercise greater scrutiny over the operations of motor carriers as one method to improve safety oversight (section 30 of the Motor Carrier Act of 1980 (Pub. L. 96-296) and section 18 of the Bus Regulatory Reform Act of 1982 (Pub. L. 97-261)).
Section 32911 of MAP-21 represents a similar congressional decision to expand the reach of motor carrier safety regulations from the supply side (the drivers and carriers traditionally regulated by the Federal government) to the demand side—the shippers, receivers, brokers, freight forwarders, travel groups and others that hire motor carriers to provide transportation and
Economic pressure in the motor carrier industry affects commercial drivers in ways that can adversely affect safety. For years, drivers have voiced concerns that other parties in the logistics chain are frequently indifferent to the operational limits imposed on them by the FMCSRs. Allegations of coercion were submitted in the docket for the Agency's 2010-2011 HOS rulemaking.
Although sec. 32911 of MAP-21 amended 49 U.S.C. 31136(a), it did not amend the jurisdictional definitions in 49 U.S.C. 31132, which specify the reach of FMCSA's authority to regulate motor carriers, drivers, and CMVs. Thus, it appears that Congress did not intend to apply all of the FMCSRs to shippers, receivers, and transportation intermediaries that are not now subject to those requirements. (Motor carriers, of course, have always been subject to the FMCSRs.) Instead, sec. 32911 prohibited these entities from coercing drivers to violate most of the FMCSRs. This necessarily confers upon FMCSA the jurisdiction over shippers, receivers, and transportation intermediaries necessary to enforce that prohibition.
Although MAP-21 did not address coercion to violate the commercial regulations that the Agency inherited in the ICC Termination Act of 1995, FMCSA is adopting a rule in order to ensure that there is no significant gap in the applicability of the coercion prohibition. As discussed above in the Legal Basis section, the MCSA gives the Agency broad authority to ensure that CMVs are maintained, equipped, loaded, and operated safely, and that the responsibilities imposed on drivers do not impair their ability to operate CMVs safely [49 U.S.C. 31136(a)(1)-(2)]. Some of the commercial regulations have effects related to safety. Designation of a process agent under 49 CFR part 366 ensures that parties injured in a CMV crash can easily serve legal documents on the carrier operating the CMV, wherever the location of its corporate offices. Registration as a for-hire motor carrier under 49 CFR part 365, or as a broker under 49 CFR part 371, ensures that an applicant has met the minimum standards for safe and responsible operations. Coercion of drivers to violate requirements such as these could have an effect on their ability to operate CMVs safely,
The minimum requirement to obtain FMCSA authority to operate as a for-hire motor carrier, freight forwarder, or broker under 49 U.S.C. 13902, 13903, or 13904, respectively, is willingness and ability to comply with “this part and the applicable regulations of the Secretary . . . .” Among those “applicable regulations” are this rule's ban on coercing drivers to violate the commercial regulations. For-hire motor carriers are subject to an even more explicit requirement to observe “any safety regulations imposed by the Secretary” [49 U.S.C. 13902(a)(1)(B)(i)], including § 390.6(a)(2). Moreover, independent of MAP-21, FMCSA has statutory authority under 49 U.S.C. 13301(a), formerly vested in the ICC, to prescribe regulations to carry out chapter 139 and the rest of Part B of Subtitle IV of Title 49. The prohibition on coercing drivers to violate the commercial regulations is within the scope of this authority.
Because both of the coercion prohibitions described above are based on 49 U.S.C. 31136(a), codified in subchapter III of chapter 311, violations of those rules would be subject to the civil penalties in 49 U.S.C. 521(b)(2)(A), which provides that any person who is determined by the Secretary, after notice and opportunity for a hearing, to have committed an act that is a violation of the regulations issued by the Secretary under subchapter III of chapter 311 (except sections 31138 and 31139
However, pursuant to the Debt Collection Improvement Act of 1996 [Pub. L. 104-134, title III, chapter 10, sec. 31001(s), 110 Stat. 1321-373], the maximum inflation-adjusted civil penalty per offense is $16,000 (49 CFR part 386, App. B, Paragraph (a)(3)).
On May 13, 2014, the Agency published a notice of proposed rulemaking (NPRM) (79 FR 27265) to implement the MAP-21 prohibition of coercion.
Between May 13 and September 4, 2014, 94 submissions were posted to the docket. One of the submissions was a duplicate,
• One Federal agency: OSHA.
• Six motor carriers: Kimberly Arnold, Louisiana Transport, Inc., Mason/Dixon Lines, Inc., Schneider National, Inc., Wayne Yoder, one anonymous company, and the Motor Carrier Coalition comprised of 12 additional motor carriers.
• Ten industry associations: American Trucking Associations (ATA), Association of Independent Property Brokers & Agents (AIPBA), Institute of Makers of Explosives (IME), National Customs Brokers and Forwarders Association of America, Inc.(NCBFAA), National Grain and Feed Association (NGFA), National Industrial Transportation League (NIT League), National Shippers Strategic Transportation Council, Inc. (NASSTRAC), Owner-Operator Independent Drivers Association, Inc. (OOIDA), Snack Food Association, and Transportation Intermediaries Association (TIA).
• Two advocacy organizations: Advocates for Highway and Auto Safety (Advocates) and Road Safe America.
• One labor union: Transportation Trades Department, AFL-CIO (TTD).
• One transportation intermediary: Armada.
• One commercial carrier consultant: Richard Young; and
• 67 individuals including 15 who self-identified as drivers and 2 owner operators.
Fifteen commenters, including two safety advocacy groups, two trade associations, a driver, an owner-operator, a union, OSHA, and seven individuals, expressed their general
Eighteen commenters, including nine individuals, seven trade associations and two drivers expressed their general disapproval of the NPRM. Many of these commenters stated that they agree with FMCSA that CMV drivers should not be coerced into violating any laws or regulations; however, they believe the requirements proposed in the NPRM will lead to unintended consequences. Several commenters stated there is no need for this regulation because existing regulations already prohibit coercion. Three trade associations contend that the NPRM misapplies the legal doctrine of
These comments are discussed in detail below under the appropriate subject heading.
OSHA commented that “coercion is broader than just threats related to loss of work, future business, or other economic opportunities. Coercion and coercive tactics may also include threats of violence, demotion, reduction of pay, and withdrawal or reduction of benefits, or any action that is capable of dissuading a reasonable employee from engaging in whistleblowing activity.” OSHA therefore recommended that the proposed definition of coercion, which referred to “a threat . . . to withhold, or the actual withholding of, current or future business, employment, or work opportunities from a driver . . .” be amended to refer to “a threat . . . to take or permit any adverse employment action against a driver . . .”
NCBFAA pointed out that if a shipper, receiver, or transportation intermediary discovered an “HOS issue—which would likely only be the case because the driver happened to say something about it—any decision to refuse to tender the shipment could be construed as violating the proposed regulation. For then, it would be knowingly `withholding . . . work opportunities from a driver' when it `knew' the driver was unable to lawfully handle the load. In that case, because the motor carrier elected to dispatch a driver that could not lawfully handle the load, the cargo would not be able to move until such time as the driver in question was again able to operate the equipment.” “The NCBFAA believes that where a shipper or transportation intermediary learns that a driver may not haul a load because he/she does not have the available hours, it should be able to freely advise the trucker of the situation so it can provide another driver who does have available hours to complete the haul in a timely manner. Alternatively, the shipper/transportation intermediary should be able to use another carrier entirely, particularly one that is sufficiently responsible and knowledgeable about the status of its drivers.”
TIA made the same point. “Read literally, the definition would now make it a violation for a shipper or transportation intermediary to refuse a load to a driver if it `knew or should have known' that the driver was about to exceed or already had exceeded the HOS regulations. Yet, the shipper or transportation intermediary could not properly request that the driver perform the transportation, as it would then be both `coercing' the driver and aiding and abetting the HOS violation. So, if a driver
NIT League offered a similar comment. “If a shipper attempts to confirm a delivery appointment with the driver, does that equate to directing `a driver to complete a run in a certain time'? It may not in the mind of the shipper but what if the driver has a different interpretation? If the driver objects to meeting that appointment due to HOS rules and the shipper gives the load to another carrier who can timely make the delivery, does that loss of business equate to coercion? What if the driver associates the selection of an alternative carrier with its objection but the shipper simply needed to meet its delivery requirements? The answers to these questions are far from clear. . . . [T]he League suggests that FMCSA modify its proposal to require the driver to inform the shipper of the potential safety violation at the time he/she lodges the objection and to promptly record the alleged coercion event. Specifically, the League suggests that FMCSA require a driver who is concerned about violating a safety rule to take the following steps
ATA also recommended “that the rule require a driver alleging coercion to make the objection at a time contemporaneous with the incident in a writing that identifies the regulation(s) that would be violated if the driver operated the CMV.”
FMCSA has revised and clarified the NPRM's definition of “coercion.” Readers may find it helpful to keep in mind the new definition (see § 390.5) as they review the Agency's response to specific comments.
Although the language proposed by OSHA is similar to that used in the NPRM, FMCSA agrees that OSHA's recommendation would clarify the intended scope of the definition. The Agency has therefore included the phrase “take or permit any adverse employment action,” which has the added benefit of resolving other concerns about the definition.
The NCBFAA, TIA, and NIT League comments correctly identified an unintended consequence of the proposed definition of “coercion.” Obviously, a shipper or transportation intermediary should not be liable for withholding a load from a driver who has stated that he or she could not make the trip without violating the FMCSRs. In that situation, both the driver and the shipper or transportation intermediary are acting appropriately. The Agency has therefore amended the reference to the withholding of “current or future business, employment, or work opportunities” by striking the reference to “current or future” business and adding the phrase “take or permit any adverse employment action.” The revised definition thus allows the shipper or transportation intermediary to take either of the actions that NCBFAA proposed without violating the rule,
The removal of the word “current” resolves most of the TIA's and NIT League's concerns. There is no coercion to violate the FMCSRs when a shipper gives a load to another carrier after the original driver states that he or she cannot meet the requested delivery schedule without an HOS or other violation. On the contrary; that change of carriers is an attempt to ensure that no such regulatory violation occurs.
The Agency has also revised the definition of “coercion” to require the driver to identify “at least generally” the rules that he or she would have to violate in the course of the delivery. FMCSA is not requiring drivers to “identify the specific FMCSA regulation that will be violated,” as the NIT League and ATA requested. The FMCSRs are complex and drivers cannot be expected to have full command of regulatory citations. Nonetheless, the driver must be able to identify the problem clearly enough to enable FMCSA personnel to determine that it falls within a requirement or prohibition of the Agency's regulations. It will be sufficient, for example, if the driver indicates that he or she objects to a particular trip because of an HOS problem (“they told me to keep driving even when I hit 11 hours”), a maintenance issue (“the last inspection certificate was 3 years old”), or bad tires (“there was no tread on the front tires; I could see the ply in a couple of places”).
Similarly, the Agency will not require the driver to record his objection in “a contemporaneous writing.” On the other hand, if the shipper or transportation intermediary attempts to coerce the driver to take the load after hearing the objection, it would be in the driver's best interests to document that attempt as soon as practicable.
Many of the commenters believe shippers would have to adopt extensive and burdensome procedures to comply with the proposed rule. NASSTRAC wrote that “[t]he aspect of the proposed rules that will cost the most (far more than the zero dollars FMCSA projects), and which is most contrary to established law, is the `duty to inquire.' . . . It remains the case that every shipper would have to discuss HOS status for every scheduled shipment with every driver.”
The TIA commented that “[t]he NPRM would place the shipper and transportation intermediary into the role of employee management having to ask about hours of service availability.”
NGFA noted that “[i]n current operations, a shipper or receiver . . . does not check a driver's hours-of-service (HOS) log or inspect the driver's commercial motor vehicle—and it could be argued that the shipper or receiver does not have a duty or even a right to do so—if the driver is employed by another company. . . . Even if drivers and their employers are fully cooperative in this respect, the resulting burden and added costs for shippers and receivers would be tremendous.”
The NIT League objected to “FMCSA's apparent intent to impose a duty on the shipper or receiver to inquire as to a for-hire driver's compliance with the HOS rules.”
Schneider National, on the other hand, wrote that “[i]f we understand FMCSA's proposal correctly, exposure for a claim of coercion is triggered by an
Schneider National and IME are correct. This final rule does not require shippers, receivers, and transportation intermediaries (unlike motor carriers) to monitor a driver's compliance with the HOS rules or other regulations. As the preamble to the NPRM stated, a shipper, receiver, or transportation intermediary “may commit coercion if it fails to heed a driver's
Nevertheless, because many shippers, receivers, and transportation intermediaries believe that, in order to avoid potential liability, they must inquire about HOS compliance, and perhaps document all of their interactions with drivers, the Agency has amended the definition of “coercion” to make clear that the driver has an affirmative obligation to inform the motor carrier, shipper, receiver, or transportation intermediary when he or she cannot make the requested trip without violating one or more of the regulations listed in the definition. Motor carriers, shippers, receivers, and transportation intermediaries cannot commit coercion under the final rule unless and until they have been put on notice by the driver that he or she cannot meet the proposed delivery schedule without violating the HOS limits or other regulatory requirements. The purpose of that notice is, of course, to ensure that the driver is
The NPRM proposed to apply the prohibition on coercion not only to
ATA agreed with the Coalition's comments and urged the Agency “to clarify that, for purposes of the definition of `coercion' and proposed section 390.6, a motor carrier's agents, officers or representatives only include anyone who is authorized to act on behalf of a motor carrier. In the instance where an independent contracting entity engaged in the act of coercion against one of its drivers, only that entity should be liable under proposed section 390.6—not the motor carrier to whom the equipment and driver are leased.”
Schneider National commented that it “utilizes the services of approximately 2,000 independent contractors including a number of fleet owners. As such, Schneider shares the concerns raised in such comments relative to the use of terms `agents,' `officers' and `representatives' used in conjunction with the term `motor carrier' in § 390.6(a)(2), and adopts their comments as filed. . . . [S]imilar issues may arise in the context of brokerage operations. Consider, for example, a motor carrier contracted by a broker with respect to a particular shipment. In the normal circumstance, the broker would arrange for the transportation on a schedule which can be accomplished consistent with the hours of service regulations, provided the involved motor carrier has an available driver with appropriate `hours'. The broker would not normally be privy to the motor carrier's driver/load assignment process. Under this circumstance, is the motor carrier, by virtue of the typical broker/carrier arrangement, an `agent' or `representative' of the broker such that the broker would be liable under the proposed rule for any motor carrier violation? The use of the terms `agent', `officers' and `representatives' might suggest that liability in the foregoing circumstances could be attributed to the broker. Such a result would be inequitable.”
The issues raised by these comments were resolved by Congress in the MCSA of 1984. The prohibition on coercion is codified in the amended version of that statute at 49 U.S.C. 31136(a)(5). For purposes of the MCSA, “ `employee' means an operator of a commercial motor vehicle (including an independent contractor when operating a commercial motor vehicle), a mechanic, a freight handler, or an individual not an employer, who—(A) directly affects commercial motor vehicle safety in the course of employment; and (B) is not an employee of the United States Government, a State, or a political subdivision of a State acting in the course of the employment by the Government, a State, or a political subdivision of a State” [49 U.S.C. 31132(2)].
Independent owner operators employed by a motor carrier are statutorily defined as employees of that carrier for purpose of the FMCSRs, including this final rule. In the hypothetical situation described by the Coalition, the independent owner operator who owns John Doe Trucking is an employee of ABC Transportation. Any attempt by John Doe Trucking to coerce one of its drivers is therefore an attempt by ABC Transportation, through one of its employees, to coerce one of its drivers.
FMCSA published regulatory guidance on this issue on April 4, 1997 [62 FR 16370, 16407]:
Brokers, however, are not employees of a motor carrier, nor are motor carriers agents or representatives of brokers. In a normal arms-length transaction, the broker deals with a motor carrier, not an individual driver. The motor carrier has an obligation to comply with the FMCSRs and thus to assign a driver who has sufficient hours to complete the trip on the schedule outlined by the broker and to provide equipment that meets applicable standards. Any coercion that occurred would typically be committed by the motor carrier that employed the driver. However, as TIA pointed out, a State court has held that where a broker contracted with a motor carrier but in fact exercised direct control over the driver, that broker was liable for a tort committed by the driver [
Many commenters objected to the NPRM's assertion that the “knew or should have known” standard in the definition of coercion “is essentially a restatement of the common law principle of `respondeat superior,' which holds the `master' (employer) liable for the acts of his `servant' (employee).” Schneider National offered a brief critique that captures the general reaction: “FMCSA should retract its discussion on respondeat superior and make clear that it is basing the rulemaking on MAP-21. At the very least, it need[s to] make clear that its regulations are limited to dealing with the issue of possible driver coercion and such regulations or any enforcement actions thereunder are not a re-characterization of the employment relationship generally. Absent this, those against whom an enforcement action is brought may have greatly enhanced incentive to fully litigate every citation, unduly burdening FMCSA's enforcement effectiveness.”
FMCSA agrees with Schneider National's comment. This final rule is based on the authority of 49 U.S.C. 31136(a)(5). The discussion of “respondeat superior” in the NPRM was not intended to make shippers, receivers, and transportation intermediaries vicariously liable, because Congress made them directly liable through section 32911 of MAP-21. FMCSA emphasizes that any evidence gathered in response to a written complaint by a driver would point to specific individuals and that persons at higher levels in the organization would not necessarily be implicated.
In any case, the revised definition of coercion adopted in this final rule eliminates the “knew or should have known” standard by emphasizing more strongly the driver's duty to object as a predicate for any subsequent allegation of coercion.
NASSTRAC objected to FMCSA's intent to “penalize unsuccessful coercion,
Drivers of CMVs are required to comply with all applicable regulatory standards. Those who resist coercion do not lose the benefit of this rule. The act of coercion is complete when the attempt is made; it does not require success. If Congress had wished to impose limits on the common understanding of coercion, it would have said so in 49 U.S.C. 31136(a)(5). Coercion does, however, require some kind of threat; merely asking a driver to make a trip that would violate a regulation would not constitute coercion. If the driver refused to make such a trip, a further discussion of his or her response and related issues might or might not cross the line into coercion. The answer would depend on the substance of the conversation and the existence of a threat, explicit or implied, to make the driver pay an economic price for refusing to violate an FMCSA regulation.
Two trade associations, ATA and NITL, Advocates, Mr. Wayne Yoder, who is a carrier, and four anonymous individuals commented on who should bear the burden to prove coercion. Among these commenters, ATA and two individuals argued that the driver should bear the burden of proof in coercion cases. The individuals said it must be the driver's responsibility because only the driver controls the information on his logs.
On the other hand, Advocates stated that “once a complaint is determined by FMCSA to meet the substantive criteria outlined in Section 386.12(e) of the NPRM a prima facie showing of coercion has been made under the proposed regulations. As such, the burden of proof should shift to the alleged offender to demonstrate that there was a valid reason for the actions in dispute as is the current legal framework applied in cases alleging employment discrimination in violation of Title VII of the Civil Rights Act of 1964.”
A carrier and three individuals (Mr. Nick Scarabello and two anonymous people) noted the driver is not well positioned to provide evidence of coercion. The carrier responding to the NPRM stated that a motor carrier is better able to provide evidence by way of rate agreements, contracts, orders, or bills of lading from the customer, but the driver has no way of printing or saving messages sent via company-owned and installed communication devices. An anonymous individual suggested that trucking companies should be required to record all phone conversations with drivers as a way to prevent or provide evidence of coercion. A commenter stated after a driver files a report of an incident, FMCSA should request written transcripts of the conversation and supporting documents. An anonymous commenter wrote that “if you don't put the burden of proof on the carrier or dispatcher[,] then it's the driver[']s word against the company and the driver still ends up being punished.”
OOIDA stated that FMCSA places the enforcement burden on drivers to prove a violation of the law that results in the issuance of penalties and fines for the government. OOIDA argued FMCSA should take the lead in coercion enforcement activities instead of placing the responsibility to initiate and prove incidents of coercion upon those least able to deal with the problem directly, the target of the coercion.
ATA and the NIT League recommended that the Agency adopt a standard of “clear and convincing evidence,” rather than “preponderance of the evidence.” The NIT League argued that this standard is appropriate because of the significant consequences associated with a violation of the coercion prohibition, which include potential monetary penalties and suspension or revocation of the registration of an offender. Conversely, OOIDA stated FMCSA should not weaken the rule by adopting an evidentiary standard that exceeds the standard for determining other safety violations.
When imposing a civil penalty for coercion, the government has the burden of proof. The driver, however, is typically the only person in a position to provide the critical evidence needed to sustain the action against a carrier, shipper, receiver, or transportation intermediary. The NPRM simply acknowledged this reality. While it may sometimes be difficult for the driver to provide relevant evidence, as OOIDA and others argued, there is no realistic alternative. The Agency will not require motor carriers to record all phone conversations and other communications with drivers, a far-reaching requirement which was not proposed for public comment in the NPRM. FMCSA will investigate timely complaints that meet the standards outlined in § 386.12 and may be able to locate or generate additional information, but the driver must supply the essential facts.
There is no good reason to adopt a “clear and convincing” evidentiary standard for coercion cases when the “preponderance” standard is used for all other motor carrier enforcement actions. The potential penalties applicable to a violation of 49 U.S.C. 31136(a)(5) and this rule's implementing regulations are the same as those applicable to a violation of 49 U.S.C. 31136(a)(1)-(4) and the implementing FMCSRs.
Title VII of the Civil Rights Act of 1964 prohibits certain employers from discriminating against employees on the basis of race, color, religion, sex, or national origin. There is nothing in MAP-21 to indicate that Congress intended to make CMV drivers who are subject to coercion a protected class in the same sense as individuals subject to
NASSTRAC commented that “FMCSA has asserted that state and local governments would be unaffected, as would Indian Tribal Governments. However, Indian Tribal Governments, and state and local governments (and federal government entities) are shippers and receivers of freight transported by CMVs. The Department of Defense ships and receives large volumes every year.
TIA provided a similar comment: “TIA urges the Agency . . . to clearly define the scope of this rule to include the Department of Defense (DOD), the General Services Administration (GSA), Port Terminal Operators, and all other applicable entities that contract with motor carriers to haul their specific goods along the transportation supply-chain.”
The MAP-21 prohibition on coercion amended 49 U.S.C. 31136(a), a provision originally enacted by the MCSA. Under the MCSA, the term “employer” “(A) means a person engaged in a business affecting interstate commerce that owns or leases a commercial motor vehicle in connection with that business, or assigns an employee to operate it; but (B)
OSHA recommended that the proposed 60-day filing deadline be extended to 180 days. “The 60-day filing period for the anti-coercion rule would greatly limit the ability of DOT to act on valid complaints of coercive activity that drivers have timely filed under the STAA [
OSHA recommended “tolling of the filing deadline, in case there are delays in transferring the allegation to the appropriate Division Administration.” Similarly, the Advocates wrote that “[v]ictims of coercion should not be time-barred from seeking an appropriate remedy under the law for the failure of FMCSA to promptly request further information or transfer the complaint to the appropriate Division Administrator.”
The NIT League, on the other hand, wrote that “because the allegations of coercion will often involve verbal communications at freight pick-up locations, . . . it will be critical for complaints to be filed promptly and for the accused party to be provided with prompt notice of the complaint. This would help ensure that any internal investigation of the driver's allegations either by the driver's employer or the alleged coercer can be conducted expeditiously, any relevant evidence can be preserved, and witnesses can be interviewed before memories fade. Thus, the NIT League suggests that the time period for drivers to file complaints be reduced to 30 days and that any party accused of coercion be served with the complaint upon its filing with FMCSA.”
OSHA regulations (29 CFR 1978.100
OSHA commented that “the proposed requirement that the complaint be `non-frivolous' is overly vague and should be eliminated. The current proposed requirement of `non-frivolity' would allow for enormous amounts of discretion across FMCSA Divisions. Gross discretion will undoubtedly lead to regional disparities in the enforcement of the provision and severely limit the overall effectiveness of the provision.”
The NIT League suggested that the Agency clarify the criteria that will be used in evaluating reported incidents of coercion. IME expressed concern over the burden imposed on carriers, shippers, receivers, and transportation intermediaries to defend against driver complaints. IME argued that the proposed rule is, “by its very nature, . . . fraught with subjectivity. In order to avoid or defend against complaints of coercion, carriers, shippers and receivers will be compelled to memorialize every significant interaction they have with drivers.”
The MCSA includes the following: “(a) Investigating complaints.—The Secretary of Transportation shall conduct a timely investigation of a nonfrivolous written complaint alleging that a substantial violation of a regulation prescribed under this subchapter is occurring or has occurred within the prior 60 days” [49 U.S.C. 31143(a)]. The “nonfrivolous” standard has been used in 49 CFR 386.12(b) for many years without the adverse consequences OSHA predicted, and the Agency believes its use in 49 CFR 386.12(e)(2) will be comparably straightforward and effective.
FMCSA does not agree with commenters' assessment of the burden involved in defending against driver complaints. The “subjectivity” that IME feared has been virtually eliminated by the revised definition adopted in this final rule, which requires the driver to state explicitly that he or she cannot deliver the load without violating the
Advocates argued that the Agency should suspend the operating authority of motor carriers found to have committed coercion, rather than just issue “meaningless fines.” Coercion involving private carriers should be reported to the relevant States “so that the state licensing authority may take the appropriate action as well as have a complete record of the entities they are responsible for monitoring.” Advocates noted that an $11,000 fine (since increased to $16,000) “pales in comparison to the $250,000 punitive fine that can be levied against a company by the Department of Labor under the Surface Transportation Assistance Act (STAA) after a finding that a driver was dismissed for refusing to compromise a health or safety standard.”
An individual commenter, Jim Duvall, wrote that “Any fine or monetary penalty should directly benefit the driver(s) harmed in the action.”
Three commenters stated that the final rule should impose penalties against drivers who make false claims of coercion. One commenter said there should be a penalty for drivers who make false accusations because they either refuse to take responsibility for their own failure to properly calculate their hours or knowingly violate the HOS rules because they do not want to “miss the load.” Two other individuals stated that there should be penalties for drivers who are disgruntled and file baseless coercion complaints to get back at their employer. AIPBA noted that the imposition of significant penalties against drivers who are found to have falsely accused a broker will deter “such improper and fraudulent conduct by unscrupulous drivers.”
FMCSA will take aggressive action when a violation of the prohibition against coercion can be substantiated. This action will include civil penalties consistent with the regulations, and may include initiation of a proceeding to revoke the operating authority of a for-hire motor carrier. Under 49 U.S.C. 13905, a carrier that engages in willful non-compliance with an Agency regulation or order may have its operating authority revoked. FMCSA's policy on revocation was set forth in a notice published on August 2, 2012 (77 FR 46147). The Agency agrees that coercion is the type of violation that may fall into this category.
Some commenters appear to regard a coercion allegation that cannot be substantiated as a false accusation. That is not necessarily true. Despite its best efforts, FMCSA may not be able adequately to document some allegations that are in fact correct. In any case, neither section 32911 of MAP-21 nor the Agency's general civil penalty statute authorizes penalties against drivers who make false accusations of coercion.
As for Mr. Duvall's recommendation, “All penalties and fines collected under this section shall be deposited into the Highway Trust Fund (other than the Mass Transit Account)” in the U.S. Treasury [49 U.S.C. 521(b)(10)]. The Agency cannot pay drivers the civil penalties it collects for incidents of coercion. And unlike OSHA, FMCSA has no authority to require the violator to compensate the driver for injuries he or she has suffered.
ATA argued that a violation of proposed § 390.6, which prohibits coercion, should not necessarily be classified as an acute violation in Appendix B, section VII of Part 385, as proposed in the NPRM. Instead, coercion should be acute, critical, or neither, depending on the classification of the regulation the driver was coerced to violate.
FMCSA agrees that a carrier's safety fitness should be determined on the basis of the regulations it violates or coerces a driver to violate. In other words, coercion itself should not be treated as acute (or critical). The final rule therefore eliminates the NPRM's proposed amendments to Appendix B of 49 CFR part 385. This is consistent with the Agency's practice of limiting acute and critical classifications to regulations which, if violated, are likely to increase the risk of crashes. Because FMCSA currently has no data showing a link between coercion and crashes, it seems appropriate not to classify coercion as acute. If new data or further analysis shows such a link, the Agency may revisit this decision. As indicated above, however, FMCSA will impose significant penalties when reports of coercion can be proved.
NASSTRAC described a hypothetical situation where Shipper A hires Carrier B to deliver a load on a reasonable schedule. However, when Carrier B's driver arrives to pick up the load, he tells Shipper A that he has to go off duty in a few hours under the HOS regulations, making it impossible to meet Shipper A's delivery schedule. “Shipper A says in frustration, `That's the last time I use Carrier B.' Is Shipper A subject to a penalty of up to $11,000 just for saying those words, even if no safety violation occurs? How many penalties could Shipper A face if it makes no more use of Carrier B?”
ATA urged “FMCSA to consider amending the proposed definition in section 390.5 to cover not only the driver as the target of withholding or coercion, respectively, but also his/her employer.”
NASSTRAC has described a normal and completely legal business response to inadequate service. Shipper A has not coerced the driver to violate the HOS rules, nor has it coerced Carrier B to put pressure on the driver to violate the rules. It has simply decided not to use a carrier that does not dispatch drivers who can meet the agreed upon delivery schedule.
Section 32911 of MAP-21 applies only to the coercion of drivers, not to the coercion of motor carriers. Under 49 U.S.C. 31136(a)(5), the Agency's regulations must ensure that “(5) an
FMCSA is required by 49 U.S.C. 31143(b) to keep the identity of a complainant confidential unless “disclosure is necessary to prosecute a violation.” Because a party accused of coercion cannot defend itself without knowing the name of the accuser, and when and where the alleged incident occurred, the driver's identity cannot be confidential. Retaliation for reporting incidents that, for whatever reason cannot be substantiated, is not covered by this rule. OSHA, however, may be able to provide relief.
The Agency could not act on such a far-reaching and controversial proposal without first publishing it for notice and comment. The NPRM proposed no such requirement, and it is not included in this final rule.
Negative reports about a driver by a motor carrier could constitute “adverse employment actions” prohibited by this final rule. However, there would be significant evidentiary obstacles to making a coercion case in these situations. A late pickup or delivery may not have been caused by unrealistic demands the driver was coerced to meet. Bad planning on the part of the driver or carrier, unexpected traffic congestion, or other factors could also explain some delays. Tracing reports of “insubordination” back to the driver's refusal to be coerced would inevitably involve a detailed examination of one or more incidents and conflicting accounts of the reason for the alleged insubordination. While FMCSA will review all reported incidents, the Agency cannot take action against a carrier for coercion unless there is evidence that an unfavorable report on a driver was motivated by a desire to punish the driver for refusal to be coerced.
While the situation OOIDA described involving a signature or receipt was not discussed in the NPRM, withholding a delivery receipt might be used to coerce a driver to violate the FMCSRs. A receiver that forces a driver to leave its premises is not threatening the driver with an adverse employment action; it is asserting its right as a property owner to control access to the property.
Fourteen commenters raised issues beyond the scope of this rulemaking, involving lack of adequate parking; detention time and detention pay; and various HOS provisions. Because none of these issues was related to coercion of drivers to violate FMCSA regulations, the Agency will not comment on them in this document.
Section 386.1, “Scope of the rules in this part,” is amended by adding a new paragraph (c) referring to the filing and handling of coercion complaints under new § 386.12(e).
The NPRM's § 386.12(e) is called “Complaint of coercion.” The procedures to file and handle coercion complaints outlined in the NPRM have been revised. The complaint must be filed within 90 days after the event with the Agency's on-line National Consumer Complaint Database (
Section 390.3(a) is amended to include a reference to the coercion provisions in § 386.12(e) and § 390.6, and describe the applicability of those provisions.
Section 390.5 is amended to add definitions of “Coerce or coercion,” “Receiver or consignee,” “Shipper,” and “Transportation intermediary.” The definitions of “Receiver or consignee,” “Shipper,” and “Transportation intermediary” make these entities
Section 390.6(a)(1) is added to prohibit motor carriers, shippers, receivers, or transportation intermediaries, or the agents, officers, or representatives of such entities, from coercing drivers to operate CMVs in violation of 49 CFR parts 171-173, 177-180, 380-383, or 390-399, or §§ 385.415 or 385.421. These parts correspond to the statutory language in 49 U.S.C. 31136(a)(5). Parts 171-173 and 177-180 are the HMRs applicable to highway transportation promulgated under 49 U.S.C. chapter 51. Parts 382-383 are the commercial driver's license (CDL) and drug and alcohol testing regulations promulgated under 49 U.S.C. chapter 313. Parts 390-399 are those portions of the FMCSRs promulgated under the authority (partial or complete) of 49 U.S.C. 31136(a). The other parts or sections listed are based on one or more of the statutes referenced in 49 U.S.C. 31136(a)(5).
Section 390.6(a)(2) is added to prohibit operators of CMVs or their agents, officers, or representatives, from coercing drivers to violate 49 CFR parts 356, 360, or 365-379. This subsection is based on the authority of 49 U.S.C. 31136(a)(1)-(4) and 49 U.S.C. 13301(a).
Section 390.6(b) describes the procedures for a driver to file a complaint of coercion with FMCSA.
FMCSA has determined that this rule is a significant regulatory action under E. O. 12866 (58 FR 51735, October 4, 1993), as supplemented by E. O. 13563 (76 FR 3821, January 21, 2011), and significant within the meaning of the DOT regulatory policies and procedures (44 FR 11034, February 26, 1979). The estimated economic costs of the rule will not exceed the $100 million annual threshold (as explained below).
The 1982 STAA includes whistleblower protections for motor carrier employees (49 U.S.C. 31105). OSHA, which administers the complaint process created by section 31105, received 1,158 complaints from CMV drivers between FY 2009 and FY 2012.
Some unknown portion of the 253 complaints filed with OSHA during that period almost certainly dealt with coercion or similar actions. Even if all of them were coercion-related, this number—combined with the 20 substantiated complaints filed with the OIG—remains small compared to the total population of CMV drivers. Section 31105, however, applies only to employers (basically motor carriers) while this rule will also cover shippers, receivers, and transportation intermediaries. The Agency is unable to estimate the number of coercion allegations it may receive, whether triggered by actions of motor carriers or other entities made subject to this rule by MAP-21.
In view of the small number of coercion-related complaints filed with OSHA and DOT's OIG, the aggregate economic value to motor carriers of these coercion-related incidents is likely to be low. Therefore, the cost to carriers of eliminating those incidents—assuming the rule has that effect—and incurring the higher costs of compliance, would also be low; however, the cost of compliance with existing regulations has already been captured in the analysis supporting the implementation of those regulations, so we do not consider them here. We believe that the application of this rule to shippers, receivers, brokers, freight forwarders, and other transportation intermediaries will not significantly increase the number of coercion complaints, since drivers generally have more frequent and direct contacts with their employers than with these other parties. In addition, even though the rule applies to a larger population, FMCSA also notes that the rule should have a deterrent effect on entities considering coercion.
The roughly 68 annual complaints noted above is the only available estimate of coercion in the trucking industry now. This rule would be expected to reduce the amount of coercion that takes place, but there is no available measure of the effectiveness of the rule. The relatively low number of complaints suggests that the overall economic impact will be less than the $100 million threshold of economic significance under E.O. 12866.
If coercion creates situations where CMVs are operated in an unsafe manner, then there are consequences for safety and driver health risks. By forcing drivers to operate mechanically unsafe CMVs or drive beyond their allowed hours, coercion increases the risk of crashes. Reduction of these behaviors because of this rule would generate a safety benefit. Additionally, the operation of CMVs beyond HOS limits has been shown to have negative consequences for driver health. A reduction of this practice would create an improvement in driver health. The Agency lacks data to quantify the safety or health benefits attributable to the rule.
This rule, as an enforcement measure, would impose compliance costs on carriers and on other business entities utilizing the motor carrier industry. If drivers now operate CMVs in violation of HOS rules, or if coercion had caused drivers to operate their CMV even
Drivers alleging coercion will have to provide a written statement describing the incident along with evidence to support their charges. This total paperwork burden is difficult to estimate but is not likely to be very large. Similarly the Agency believes that the investigation of those reports will not have a large cost.
The Agency does not believe that the benefits and costs of this rule would create a large economic impact. The safety benefits and compliance costs are likely to be very small based on the small number of expected cases each year. Therefore, the Agency believes that the rule will not be economically significant.
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601
Under the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 857), the rule is not expected to have a significant economic impact on a substantial number of small entities. As indicated above, OSHA found merit in only 253 complaints filed by CMV drivers over a 4-year period, or about 63 per year. Even if all of the complaints were classified as coercion-related, that number would be very small when compared to the size of the driver population and motor carrier industry.
The Small Business Administration (SBA) classifies businesses according to the average annual receipts. The SBA defines a “small entity” in the motor carrier industry [
Table 1 presents a breakdown of FMCSA's revenue estimates for the populations in various categories. By SBA standards, the vast majority of all businesses in the motor carrier and related industries are “small entities.” Although general freight transportation arrangement firms fall under the $15 million threshold, there is an exception for “non-vessel household goods forwarders.”
This rule does not affect industry productivity by requiring new documentation, affecting labor productivity or availability, or increasing expenditures on maintenance or new equipment. The fines, which are the only impact (unless the carrier's operating authority is suspended or revoked), can be avoided by not coercing drivers into violating existing regulations. Furthermore, by regulation, the Agency's fines are usually subject to a maximum financial penalty limit of 2 percent of a firm's gross revenue. For the vast majority of small firms, a fine at this level would not be “significant” in the sense that it would jeopardize the viability of the firm.
The table below excludes shippers and receivers subject to the prohibition on coercion, a group which is a large portion of the entire U.S. population, because anyone who sends or receives a package would be considered a shipper or receiver. However, compliance with the prohibition on coercion of drivers is not expected to have significant economic impact on many of them. Consequently, because they are not expected to be in a position to coerce a driver, I certify that the action will not have a significant economic impact on a substantial number of small entities.
In accordance with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, FMCSA wants to assist small entities in understanding this rule so that they can better evaluate its effects on themselves and participate in the rulemaking initiative. If the rule affects your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult the FMCSA point of contact, Mr. Charles Medalen, listed in the
Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the SBA's Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of FMCSA, call 1-888-REG-FAIR (1-888-734-3247). DOT has a policy ensuring the rights of small entities to regulatory enforcement fairness and an explicit policy against retaliation for exercising these rights.
This rule will not impose an unfunded Federal mandate, as defined by the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532,
A rulemaking has implications for Federalism under section 1(a) of E.O. 13132 if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on State or local governments. FMCSA analyzed this action in accordance with E.O. 13132. This rule does not preempt or modify any provision of State law, impose substantial direct unreimbursed compliance costs on any State, or diminish the power of any State to enforce its own laws. FMCSA has determined that this rule will not have substantial direct costs on or for States nor will it limit the policymaking discretion of States. Accordingly, this rulemaking does not have Federalism implications.
This rule meets applicable standards in sections 3(a) and 3(b) (2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, Apr. 23, 1997), requires agencies issuing “economically significant” rules, if the regulation also concerns an environmental health or safety risk that an agency has reason to believe may disproportionately affect children, to include an evaluation of the regulation's environmental health and safety effects on children. The Agency determined this rule is not economically significant. Therefore, no analysis of the impacts on children is required. In any event, the Agency does not anticipate that this regulatory action could in any respect present an environmental or safety risk that could disproportionately affect children.
FMCSA reviewed this rule in accordance with E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, and has determined it will not effect a taking of private property or otherwise have takings implications.
FMCSA conducted a privacy impact assessment (PIA) of this rule as required by section 522(a)(5) of division H of the FY 2005 Omnibus Appropriations Act, Public Law 108-447, 118 Stat. 3268 (Dec. 8, 2004). The assessment considered impacts of the final rule on the privacy of information in an identifiable form and related matters. The final rule will impact the handling of personally identifiable information (PII). FMCSA has evaluated the risks and effects the rulemaking might have on collecting, storing, and sharing PII and has evaluated protections and alternative information handling processes in developing the final rule in order to mitigate potential privacy risks.
For the purposes of both transparency and efficiency, the privacy analysis conforms to the DOT standard Privacy Impact Assessment (PIA) and will be published on the DOT Web site at
As required by the Privacy Act, FMCSA and the Department will publish, with request for comment, a revised system of records notice (SORN) that will cover the collection of information that is affected by this final rule. Since coercion complaints will be stored in the National Consumer Complaint Database (NCCDB), the SORN for the NCCDB (DOT/FMCSA 004—National Consumer Complaint Database (NCCDB)—75 FR 27051—May 13, 2010) will be revised to reflect the new collection of information and published in the
The privacy risks and effects associated with the cases resulting from this rule are not unique and have previously been addressed by the enforcement case file storage requirements in the Electronic Document Management System (EDMS) PIA posted on June 6, 2006 and the DOT/FMCSA 005—Electronic Document Management System SORN (71 FR 35727) published on June 21, 2006.
The regulations implementing E.O. 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this program.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501
FMCSA analyzed this rule in accordance with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321
In addition to the NEPA requirements to examine impacts on air quality, the Clean Air Act (CAA) as amended (42 U.S.C. 7401
FMCSA evaluated the environmental effects of this rule in accordance with Executive Order 12898 and determined that there are no environmental justice issues associated with its provisions nor is there any collective environmental impact resulting from its promulgation. Environmental justice issues would be raised if there were a “disproportionate” and “high and adverse impact” on minority or low-income populations. None of the alternatives analyzed in the Agency's EA, discussed under National Environmental Policy Act, would result in high and adverse environmental impacts.
FMCSA has analyzed this rule under E.O. 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The Agency has determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, it does not require a Statement of Energy Effects under E.O. 13211.
This rule does not have tribal implications under E.O. 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards (
Administrative practice and procedures, Brokers, Freight forwarders, Hazardous materials transportation, Highway safety, Motor carriers, Motor vehicle safety, Penalties.
Highway safety, Intermodal transportation, Motor carriers, Motor vehicle safety, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, FMCSA amends parts 386 and 390 in 49 CFR chapter III, subchapter B, as follows:
49 U.S.C. 113, chapters 5, 51, 59, 131-141, 145-149, 311, 313, and 315; Sec. 204, Pub. L. 104-88, 109 Stat. 803, 941 (49 U.S.C. 701 note); Sec. 217, Pub. L. 105-159, 113 Stat. 1748, 1767; Sec. 206, Pub. L.
(a) Except as indicated in paragraph (c) of this section, the rules in this part govern proceedings before the Assistant Administrator, who also acts as the Chief Safety Officer of the Federal Motor Carrier Safety Administration (FMCSA), under applicable provisions of the Federal Motor Carrier Safety Regulations (FMCSRs) (49 CFR parts 350-399), including the commercial regulations (49 CFR parts 360-379), and the Hazardous Materials Regulations (49 CFR parts 171-180).
(c) The rules in § 386.12(e) govern the filing by a driver and the handling by the appropriate Division Administrator of complaints of coercion in violation of § 390.6 of this subchapter.
(d) [Reserved]
(e)
(i) The driver's name, address, and telephone number;
(ii) The name and address of the person allegedly coercing the driver;
(iii) The provisions of the regulations that the driver alleges he or she was coerced to violate; and
(iv) A concise but complete statement of the facts relied upon to substantiate each allegation of coercion, including the date of each alleged violation.
(2)
(i) If the Division Administrator determines that the complaint is non-frivolous and meets the requirements of paragraph (e)(1) of this section, he/she shall investigate the complaint. The complaining driver shall be timely notified of findings resulting from such investigation. The Division Administrator shall not be required to conduct separate investigations of duplicative complaints.
(ii) If the Division Administrator determines the complaint is frivolous or does not meet the requirements of paragraph (e)(1) of this section, he/she shall dismiss the complaint and notify the driver in writing of the reasons for such dismissal.
(3)
49 U.S.C. 504, 508, 31132, 31133, 31136, 31144, 31151, 31502; sec. 114, Pub. L. 103-311, 108 Stat. 1673, 1677-1678; sec. 212, 217, 229, Pub. L. 106-159, 113 Stat. 1748, 1766, 1767; sec. 229, Pub. L. 106-159 (as transferred by sec. 4114 and amended by secs. 4130-4132, Pub. L. 109-59, 119 Stat. 1144, 1726, 1743-1744), sec. 4136, Pub. L. 109-59, 119 Stat. 1144, 1745; and 49 CFR 1.81, 1.81a and 1.87.
(a)(1) The rules in subchapter B of this chapter are applicable to all employers, employees, and commercial motor vehicles that transport property or passengers in interstate commerce.
(2) The rules in 49 CFR 386.12(e) and 390.6 prohibiting the coercion of drivers of commercial motor vehicles operating in interstate commerce:
(i) To violate certain safety regulations are applicable to all motor carriers, shippers, receivers, and transportation intermediaries; and
(ii) To violate certain commercial regulations are applicable to all operators of commercial motor vehicles.
(1) A threat by a motor carrier, shipper, receiver, or transportation intermediary, or their respective agents, officers or representatives, to withhold business, employment or work opportunities from, or to take or permit any adverse employment action against, a driver in order to induce the driver to operate a commercial motor vehicle under conditions which the driver stated would require him or her to violate one or more of the regulations, which the driver identified at least generally, that are codified at 49 CFR parts 171-173, 177-180, 380-383, or 390-399, or §§ 385.415 or 385.421, or the actual withholding of business, employment, or work opportunities or the actual taking or permitting of any adverse employment action to punish a driver for having refused to engage in such operation of a commercial motor vehicle; or
(2) A threat by a motor carrier, or its agents, officers or representatives, to withhold business, employment or work opportunities or to take or permit any adverse employment action against a driver in order to induce the driver to operate a commercial motor vehicle under conditions which the driver stated would require a violation of one or more of the regulations, which the driver identified at least generally, that are codified at 49 CFR parts 356, 360, or 365-379, or the actual withholding of business, employment or work opportunities or the actual taking or permitting of any adverse employment action to punish a driver for refusing to engage in such operation of a commercial motor vehicle.
(a)
(2) A motor carrier or its agents, officers, or representatives, may not coerce a driver of a commercial motor vehicle to operate such vehicle in violation of 49 CFR parts 356, 360, or 365-379.
(b)
(2) A complaint under paragraph (b)(1) of this section shall describe the action that the driver claims constitutes coercion and identify the regulation the driver was coerced to violate.
(3) A complaint under paragraph (b)(1) of this section may include any supporting evidence that will assist the Division Administrator in determining the merits of the complaint.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS implements accountability measures for the commercial hook-and-line component for golden tilefish in the exclusive economic zone (EEZ) of the South Atlantic. NMFS projects commercial hook-and-line landings for golden tilefish will reach the hook-and-line component's commercial annual catch limit (ACL) on December 8, 2015. Therefore, NMFS closes the commercial hook-and-line component for golden tilefish in the South Atlantic EEZ on December 8, 2015, and it will remain closed until the start of the next fishing year on January 1, 2016. This closure is necessary to protect the golden tilefish resource.
This rule is effective 12:01 a.m., local time, December 8, 2015, until 12:01 a.m., local time, January 1, 2016.
Mary Vara, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
The snapper-grouper fishery of the South Atlantic includes golden tilefish and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.
On April 23, 2013, NMFS published a final rule for Amendment 18B to the FMP (78 FR 23858). Amendment 18B to the FMP established a longline endorsement program for the commercial golden tilefish component of the snapper-grouper fishery and allocated the commercial golden tilefish ACL among two gear types, the longline and hook-and-line components.
The commercial ACL (equivalent to the commercial quota) for the hook-and-line component for golden tilefish in the South Atlantic is 135,324 lb (61,382 kg), gutted weight, for the current fishing year, January 1 through December 31, 2015, as specified in 50 CFR 622.190(a)(2)(ii).
Under 50 CFR 622.193(a)(1)(i), NMFS is required to close the commercial hook-and-line component for golden tilefish when the hook-and-line component's commercial ACL has been reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS has determined that the commercial ACL for the hook-and-line component for golden tilefish in the South Atlantic will be reached by December 8, 2015. Accordingly, the commercial hook-and-line component for South Atlantic golden tilefish is closed effective 12:01 a.m., local time, December 8, 2015, until 12:01 a.m., local time, January 1, 2016.
The commercial longline component for South Atlantic golden tilefish closed on February 19, 2015, for the remainder of the fishing year, until 12:01 a.m., local time, January 1, 2016 (80 FR 8559, February 18, 2015). Furthermore, recreational harvest for golden tilefish closed on August 11, 2015, for the remainder of the fishing year, until 12:01 a.m., local time, January 1, 2016 (80 FR 48041, August 11, 2015). Therefore, because the commercial longline component and the recreational sector are already closed, and NMFS is closing the commercial hook-and-line component through this temporary rule, all fishing for South Atlantic golden tilefish is closed effective 12:01 a.m., local time, December 8, 2015, until 12:01 a.m., local time, January 1, 2016.
The operator of a vessel with a valid Federal commercial vessel permit for South Atlantic snapper-grouper having golden tilefish on board must have landed and bartered, traded, or sold such golden tilefish prior to 12:01 a.m., local time, December 8, 2015. During the closure, the sale or purchase of golden tilefish taken from the EEZ is prohibited. The prohibition on sale or purchase does not apply to the sale or purchase of golden tilefish that were harvested by hook-and-line, landed ashore, and sold prior to 12:01 a.m., local time, December 8, 2015, and were held in cold storage by a dealer or processor. For a person on board a vessel for which a Federal commercial or charter vessel/headboat permit for the South Atlantic snapper-grouper fishery has been issued, the sale and purchase provisions of the commercial closure for
The Regional Administrator, Southeast Region, NMFS, has determined this temporary rule is necessary for the conservation and management of South Atlantic golden tilefish and is consistent with the Magnuson-Stevens Act and other applicable laws.
This action is taken under 50 CFR 622.193(a)(1) and is exempt from review under Executive Order 12866.
These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.
This action responds to the best scientific information available. The Assistant Administrator for Fisheries, NOAA (AA), finds that the need to immediately implement this action to close the commercial hook-and-line component for golden tilefish constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), as such procedures are unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule itself has been subject to notice and comment, and all that remains is to notify the public of the closure. Such procedures are contrary to the public interest because the capacity of the fishing fleet allows for rapid harvest of the commercial ACL for the hook-and-line component, and there is a need to immediately implement this action to protect golden tilefish. Prior notice and opportunity for public comment would require time and could potentially result in a harvest well in excess of the established commercial ACL for the hook-and-line component.
For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
NMFS issues regulations to implement Amendment 15 to the Fishery Management Plan for the Shrimp Fishery of the Gulf of Mexico (FMP), as prepared and submitted by the Gulf of Mexico (Gulf) Fishery Management Council (Council). This final rule revises the FMP framework procedures to streamline the process for changing certain regulations affecting the shrimp fishery. Additionally, Amendment 15 implements changes to the FMP that revise the maximum sustainable yield (MSY), overfishing threshold, and overfished threshold definitions and values for three species of penaeid shrimp. The purpose of this rule and Amendment 15 is to streamline the management process for Gulf shrimp stocks and to revise criteria for determining the overfished and overfishing status of each penaeid shrimp stock using the best available science.
This rule is effective December 30, 2015.
Electronic copies of Amendment 15, which includes an environmental assessment, a Regulatory Flexibility Act analysis, and a regulatory impact review, may be obtained from the Southeast Regional Office Web site at
Susan Gerhart, telephone: 727-824-5305, or email:
The shrimp fishery in the Gulf is managed under the FMP. The FMP was prepared by the Council and implemented through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
On August 12, 2015, NMFS published a notice of availability for Amendment 15 and requested public comment (80 FR 48285). On August 25, NMFS published a proposed rule for Amendment 15 and requested public comment (80 FR 51523). The proposed rule and Amendment 15 outline the rationale for the actions contained in this final rule. A summary of the actions implemented by Amendment 15 and this final rule is provided below.
This final rule revises the FMP framework procedures at 50 CFR 622.60(a) and (b) to allow for modification of accountability measures under the standard documentation process of the open framework procedure. Also, this final rule removes outdated terminology from the regulations, such as “total allowable catch,” and removes the phrase “transfer at sea provisions” from the list of framework procedures because this phrase was inadvertently included in the final rule for the Generic Annual Catch Limits and Accountability Measures Amendment (76 FR 82044, December 29, 2011). The transfer at sea text was never intended by the Council to be included in the list of framework procedures when they were revised in 2011, but were included as a result of an error by NMFS during that rulemaking.
Amendment 15 also contains actions that are not being codified in the regulations, but guide the Council and NMFS in establishing other management measures, which are codified. Amendment 15 revises the MSY, the overfishing threshold, and the overfished threshold definitions and values for penaeid shrimp stocks (brown, white, and pink shrimp).
The criteria and values for MSY, the overfishing threshold, and the overfished threshold for penaeid shrimp were established in Amendment 13 to the FMP (71 FR 56039, September 26, 2006). Historically, Gulf penaeid shrimp stocks were assessed with a virtual population analysis (VPA), which reported output in terms of number of parents. However, the 2007 pink shrimp stock assessment VPA incorrectly determined that pink shrimp were undergoing overfishing because the model could not accommodate low effort. In 2009, NMFS stock assessment analysts determined that the stock synthesis model was the best choice for modeling Gulf shrimp populations.
No substantive comments were received on either Amendment 15 or the proposed rule. One comment was received from a Federal agency that stated that it had no comment on the proposed rule or on Amendment 15.
The Regional Administrator, Southeast Region, NMFS has determined that this final rule is consistent with Amendment 15, the FMP, the Magnuson-Stevens Act, and other applicable law. This final rule has been determined to be not significant for purposes of Executive Order 12866.
The Magnuson-Stevens Act provides the statutory basis for this rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, record-keeping, or other compliance requirements are introduced by this final rule.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this rule would not have a significant economic impact on a substantial number of small entities. The factual basis for this determination was published in the proposed rule and is not repeated here. No comments were received regarding the certification and NMFS has not received any new information that would affect its determination. As a result, a final regulatory flexibility analysis is not required and none was prepared.
Fisheries, Fishing, Gulf of Mexico, Shrimp.
For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:
16 U.S.C. 1801
(a)
(b)
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; emergency action extended.
This rule extends emergency permitting and possession limit regulations for the blueline tilefish fishery in waters north of the Virginia/North Carolina border that were implemented on June 4, 2015. This extension is necessary to continue to constrain fishing effort on the blueline tilefish stock while a long-term management plan is developed. The rule is expected to reduce fishing mortality and help ensure the long-term sustainability of the stock.
The expiration date of the emergency rule published on June 4, 2016 (80 FR 31864) is extended through June 3, 2016.
Copies the Environmental Assessment and Regulatory Impact Review (EA/RIR) and other supporting documents for this emergency action are available from John K. Bullard, Regional Administrator, NMFS, Greater Atlantic Regional Fisheries Office, 55 Great Republic Drive, Gloucester, MA, 01930. The EA/RIR is also accessible via the Internet at:
Tobey Curtis, Fishery Policy Analyst, (978) 281-9273.
This temporary final rule extends emergency permitting and possession limit regulations for the blueline tilefish (
Section 305(c) of the Magnuson-Stevens Act allows for the extension of an emergency action, which is otherwise effective for up to 180 days, for up to another 186 days, provided that certain criteria are met: (1) The public has had an opportunity to comment on the emergency regulation; and (2) in the case of a Council recommendation for emergency action, the Council is actively developing an fishery management plan (FMP) amendment or regulations to address the emergency on a permanent basis. NMFS accepted public comment on the initial emergency measures in the final rule through July 6, 2015; comments and responses are summarized below. The Mid-Atlantic and South Atlantic Fishery Management Councils are both working on long-term management measures for blueline tilefish along the Atlantic coast. The Mid-Atlantic Council has initiated an amendment to its Golden Tilefish FMP to add blueline tilefish fishery management measures to that FMP and manage the stock within its jurisdiction. Final action on that amendment is expected to occur at the Council's February 2016 meeting so that rulemaking may be completed before this temporary extension expires. This extension does not change the measures already in place. NMFS is not accepting additional public comment on this extension, and has determined that all the necessary criteria have been met and, therefore, is extending these emergency measures.
This temporary final rule extends the following management measures for blueline tilefish in the Greater Atlantic Region:
1. A requirement for commercial or charter/party vessels landing blueline tilefish in the Northeast region (
2. A commercial possession limit of 300 lb (136 kg) whole weight per trip; and
3. A recreational possession limit of seven blueline tilefish per person, per trip.
None of these management measures modify the existing possession regulations for golden tilefish, or any other species.
In addition to the efforts being made by the Mid-Atlantic Council, the South Atlantic Council is considering revisions to its Snapper Grouper FMP to modify blueline tilefish management measures that may or may not affect the Mid-Atlantic Council's management of this stock. Questions remain on potential stock structure of the species throughout its distribution and there is considerable uncertainty in the data and projections in the most recent benchmark stock assessment that are currently being explored. It is expected that the long-term management of blueline tilefish fisheries will be improved once these scientific and policy issues are resolved. These extended emergency measures will continue to protect blueline tilefish in the Greater Atlantic Region while allowing the Councils more time to finalize their work.
We received numerous public comments prior to implementation of the emergency action, primarily from fishermen who were opposed to overly-restrictive possession limits on blueline tilefish. Overall, the concerns raised in these comments were addressed by the management measures that we implemented. We received three comments during the original rule's comment period, and these are summarized below.
The Regional Administrator, Greater Atlantic Region, NMFS, has determined that the emergency measures extended by this temporary rule are necessary for the conservation and management of the blueline tilefish fishery and are consistent with the Magnuson-Stevens Act and other applicable law.
Under 5 U.S.C. 553(d)(1), the Assistant Administrator for Fisheries finds good cause to waive the 30-day delayed effectiveness of this action. Because the extension of these emergency measures contains regulations already in place, it is contrary to public interest to allow them to expire. As described more fully in the original emergency action (80 FR 31864; June 4, 2015), the reasons justifying promulgation of the rule on an emergency basis make a delay in effectiveness contrary to the public interest. The possession limits implemented for recreational and commercial blueline tilefish vessels fishing in Federal waters north of the Virgina/North Carolina border are needed to constrain fishing mortality on the stock that would otherwise be unregulated. To provide protection for blueline tilefish, and to allow additional
This action is being taken pursuant to the emergency provision of the Magnuson-Stevens Act and is exempt from OMB review.
This rule is exempt from the otherwise applicable requirement of the Regulatory Flexibility Act to prepare a regulatory flexibility analysis because the rule is issued without opportunity for prior public comment.
16 U.S.C. 1801
Office of the Secretary, Department of Education.
Notice of proposed rulemaking; extension of comment period.
On November 3, 2015, we published in the
The comment period for the notice of proposed rulemaking that published on November 3, 2015 (80 FR 67672), is extended. We must receive your comments on or before December 18, 2015.
Submit your comments through the Federal eRulemaking Portal or via U.S. mail, commercial delivery, or hand delivery. We will not accept comments submitted by fax or by email or those submitted after the comment period. To ensure that we do not receive duplicate copies, please submit your comments only once. In addition, please include the Docket ID at the top of your comments.
•
•
Sharon Leu, U.S. Department of Education, 400 Maryland Avenue SW., room 6W252, Washington, DC 20202-5900. Telephone: 202-453-5646 or email:
If you use a telecommunications device for the deaf or a text telephone, call the Federal Relay Service, toll free, at 1-800-877-8339.
You may also access documents of the Department published in the
U.S. Office of Personnel Management.
Proposed rule with request for comments.
The U.S. Office of Personnel Management (OPM) is issuing a proposed rule that would abolish the Newburgh, New York, appropriated fund Federal Wage System (FWS) wage area and redefine Orange County, NY, to the New York, NY, survey area; Dutchess County, NY, to the New York area of application; Delaware and Ulster Counties, NY, to the Albany-Schenectady-Troy, NY, area of application; and Sullivan County, NY, to the Scranton-Wilkes-Barre, Pennsylvania, area of application. These changes are based on a recent consensus recommendation of the Federal Prevailing Rate Advisory Committee (FPRAC) to best match the counties proposed for redefinition to nearby FWS survey areas.
We must receive comments on or before December 30, 2015.
You may submit comments, identified by “RIN 3206-AN26,” using any of the following methods:
Madeline Gonzalez, by telephone at (202) 606-2838 or by email at
OPM is issuing a proposed rule that would abolish the Newburgh, NY, appropriated fund FWS wage area and redefine the geographic boundaries of the New York, NY; Albany-Schenectady-Troy, NY; and Scranton-Wilkes-Barre, PA, appropriated fund FWS wage areas. The proposed rule would redefine Orange County, NY, to the New York survey area; Dutchess County, NY, to the New York area of application; Delaware and Ulster Counties, NY, to the Albany-Schenectady-Troy area of application; and Sullivan County, NY, to the Scranton-Wilkes-Barre area of application.
The Newburgh wage area is presently composed of three survey counties (Dutchess, Orange, and Ulster Counties) and two area of application counties (Delaware and Sullivan Counties).
Under section 5343 of title 5, United States Code, OPM is responsible for defining wage areas following the regulatory criteria under section 532.211 of title 5, Code of Federal Regulations. Under the regulatory criteria, OPM considers the following factors when defining FWS wage area boundaries:
(i) Distance, transportation facilities, and geographic features;
(ii) Commuting patterns; and
(iii) Similarities in overall population, employment, and the kinds and sizes of private industrial establishments.
The Office of Management and Budget defines Metropolitan Statistical Areas (MSAs) and maintains and updates the definitions of MSA boundaries following each decennial census. OMB's 2013 definitions of MSAs added Dutchess and Orange Counties to the New York-Newark-Jersey City, NY-NJ-PA MSA. The New York-Newark-Jersey City is now split between the Newburgh and New York wage areas. OPM regulations at 5 CFR 532.211 do not permit splitting MSAs for the purpose of defining a wage area, except in very unusual circumstances.
Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, and Union Counties, NJ; Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, and Westchester Counties, NY; and Pike County, PA, comprise the New York-Newark-Jersey City, NY-NJ-PA MSA. The New York-Newark-Jersey City MSA contains parts of the Newburgh and New York FWS wage areas. Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Somerset, and Union Counties, NJ, and Bronx, Kings, Nassau, New York, Queens, Suffolk, and Westchester Counties, NY, are part of the New York survey area. Hunterdon, Monmouth, Ocean (excluding the Fort Dix Military Reservation), and Sussex Counties, NJ; Putnam, Richmond, and Rockland Counties, NY; and Pike County, PA, are part of the New York area of application. Dutchess and Orange Counties, NY, are part of the Newburgh survey area.
There now appear to be no unusual circumstances for Dutchess and Orange Counties to be split from the majority of the counties of the New York-Newark-Jersey City MSA. Therefore, OPM proposes to redefine Dutchess and Orange Counties to the New York wage area. Because Orange County has a large FWS workforce of 800 employees, it would be redefined to the New York survey area. With only 39 FWS employees, Dutchess County would be redefined to the New York area of application.
With the redefinition of Dutchess and Orange Counties to the New York wage area, the Newburgh wage area would no longer be a viable wage area and would be abolished. Its remaining constituent counties would be redefined to a neighboring wage area.
In selecting a wage area to which Delaware County should be redefined, the distance criterion favors the Albany-Schenectady-Troy wage area. The commuting patterns criterion slightly favors the New York wage area. The overall population and employment and the kinds and sizes of private industrial establishments criterion does not favor one wage area more than another. Based on these findings, OPM is proposing to redefine Delaware County as an area of application county to the Albany-Schenectady-Troy wage area.
In selecting a wage area to which Sullivan County would be redefined, the distance criterion favors the Scranton-Wilkes-Barre wage area. The commuting patterns criterion favors the New York wage area. The overall population and employment and the kinds and sizes of private industrial establishments criterion does not favor one wage area more than another. Based on these findings, OPM is proposing to redefine Sullivan County as an area of application to the Scranton-Wilkes-Barre area of application.
In selecting a wage area to which Ulster County would be redefined, the distance criterion favors the Albany-Schenectady-Troy wage area. The commuting patterns criterion favors the New York wage area. The overall population and employment and the kinds and sizes of private industrial establishments criterion does not favor one wage area more than another. Based on these findings, OPM is proposing to redefine Ulster County as an area of application county to the Albany-Schenectady-Troy wage area.
The Federal Prevailing Rate Advisory Committee (FPRAC), the statutory national labor-management committee responsible for advising OPM on matters affecting the pay of FWS employees, recommended these changes by consensus. These changes would be effective on the first day of the first applicable pay period beginning on or after 30 days following publication of the final regulations.
I certify that these regulations would not have a significant economic impact on a substantial number of small entities because they would affect only Federal agencies and employees.
Administrative practice and procedure, Freedom of information, Government employees, Reporting and recordkeeping requirements, Wages.
Accordingly, OPM is proposing to amend 5 CFR part 532 as follows:
5 U.S.C. 5343, 5346; § 532.707 also issued under 5 U.S.C. 552.
Nuclear Regulatory Commission.
Proposed rule; correction.
The U.S. Nuclear Regulatory Commission (NRC) is correcting a proposed rule that it published in the
The correction is effective November 30, 2015.
Please refer to Docket ID NRC-2014-0240 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.
Timothy Reed, Office of Nuclear Reactor Regulation, telephone: 301-415-1462, email:
In the FR on November 13, 2015, in FR Doc. 2015-28589, on page 70640, in the first column, the third paragraph, the ninth line, correct “NRC-2012-0059” to read “NRC-2014-0240.”
For the Nuclear Regulatory Commission.
Office of the Comptroller of the Currency (“OCC”), Treasury; Board of Governors of the Federal Reserve System (“Board”); and Federal Deposit Insurance Corporation (“FDIC”).
Notice of outreach meeting.
The OCC, Board, and FDIC (together “we” or “Agencies”) announce the sixth and final outreach meeting on the Agencies' interagency process to review their regulations under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (“EGRPRA”).
An outreach meeting will be held in the Washington, DC area at the FDIC's L. William Seidman Center at Virginia Square in Arlington, Virginia, on Wednesday December 2, 2015, beginning at 9:00 a.m. Eastern Standard Time (EST). Online registrations will be accepted through November 30, 2015, or until all seats are filled, whichever is earlier. If seats are available after the close of online registration, individuals may register in person at the L. William Seidman Center on the day of the meeting.
The Agencies will hold the December 2, 2015, outreach meeting at the FDIC's L. William Seidman Center at Virginia Square, 3501 Fairfax Drive, Arlington, VA 22226. Live video of this meeting will be streamed at:
In addition, to enhance participation, interested persons anywhere in the country will have the opportunity to view and participate in the meeting online using their computers. Members of the public watching online will be able to submit written comments at any time during the meeting using the text chat feature. In addition to the online option, a toll-free telephone number (800) 857-9751 (Participant passcode: 6040376) is available for members of the public who would like only to listen to the meeting, and who may choose later to submit written comments. Information regarding these additional participation options is described in the meeting details section for the Washington, DC area meeting at:
Any interested individual may submit comments through the EGRPRA Web site during open comment periods at:
The OCC encourages commenters to submit comments through the Federal eRulemaking Portal, Regulations.gov, in accordance with the previous paragraph. Alternatively, comments may be emailed to
In general, the OCC will enter all comments received into the docket and publish them without change on Regulations.gov. Comments received, including attachments and other supporting materials, as well as any business or personal information you provide, such as your name and address, email address, or phone number, are part of the public record and subject to public disclosure. Therefore, please do not include any information with your comment or supporting materials that you consider confidential or inappropriate for public disclosure.
You may inspect and photocopy in person all comments received by the OCC at 400 7th Street SW., Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect or photocopy comments. You may make an appointment by calling (202) 649-6700 or, for persons who are deaf or hard of hearing, TTY (202) 649-5597. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to a security screening.
The Board encourages commenters to submit comments regarding the Board's regulations by any of the following methods:
• Agency Web site:
• Federal eRulemaking Portal, in accordance with the directions above.
• Email:
• FAX: (202) 452-3819.
• Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.
In general, the Board will enter all comments received into the docket and publish them without change on the Board's public Web site,
You may inspect and photocopy in person all comments received by the Board in Room 3515, 1801 K Street NW. (between 18th and 19th Street NW.), Washington, DC 20006, between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the Board requires that visitors make an appointment to inspect comments. You may make an appointment by calling (202) 452-3000. Upon arrival, visitors will be required to
The FDIC encourages commenters to submit comments through the Federal eRulemaking Portal, “Regulations.gov,” in accordance with the directions above. Alternatively, you may submit comments by any of the following methods:
•
•
•
•
The FDIC will post all comments received to
OCC: Heidi M. Thomas, Special Counsel, (202) 649-5490; for persons who are deaf or hard of hearing, TTY (202) 649-5597.
Board: Kevin Wilson, Financial Analyst, (202) 452-2362; Claudia Von Pervieux, Counsel (202) 452-2552; for persons who are deaf or hard of hearing, TTY (202) 263-4869.
FDIC: Ruth R. Amberg, Assistant General Counsel, (202) 898-3736; for persons who are deaf or hard of hearing, TTY 1-800-925-4618.
EGRPRA
The final outreach meeting will be held on December 2, 2015, in the Washington, DC area at the FDIC's L. William Seidman Center at Virginia Square in Arlington, Virginia, and will be streamed live at:
Comments made by panelists, audience members, and online participants at this meeting will be reflected in the public comment file. Audience members who do not wish to comment orally may submit written comments at the meeting. As noted above, any interested person may submit comments through the EGRPRA Web site during open comment periods at:
All participants attending in person should register for the Washington, DC area outreach meeting at:
We note that the meeting will be video-recorded and publicly webcast in order to increase education and outreach. By participating in person at the meeting, you consent to appear in such recordings.
Section 2222 of EGRPRA directs the Agencies, along with the Council, to conduct a review of their regulations not less frequently than once every ten years to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions. In conducting this review, the Agencies are required to categorize their regulations by type and, at regular intervals, provide notice and solicit public comment on categories of regulations, requesting commenters to identify areas of regulations that are outdated, unnecessary, or unduly burdensome. The statute requires the Agencies to publish in the
For purposes of this review, the Agencies have grouped our regulations into 12 categories: Applications and Reporting; Banking Operations; Capital; Community Reinvestment Act; Consumer Protection; Directors, Officers and Employees; International Operations; Money Laundering; Powers and Activities; Rules of Procedure; Safety and Soundness; and Securities. On June 4, 2014, we published a
By order of the Board of Governors of the Federal Reserve System, November 19, 2015.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all Embraer S.A. Model ERJ 170 airplanes; and all Embraer S.A. Model ERJ 190-100 STD, -100 LR, -100 IGW, -200 STD, -200 LR, and -200 IGW airplanes. This proposed AD was prompted by reports of cracks in certain engine low-stage bleed check valves. This proposed AD would require replacing the air management system (AMS) controller operation program of the AMS controller processor boards, and replacement of the current low-stage bleed check valve and associated seals. We are proposing this AD to prevent failure of the low-stage bleed check valve, which could result in dual engine in-flight shutdown.
We must receive comments on this proposed AD by January 14, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this proposed AD, contact Embraer S.A., Technical Publications Section (PC 060), Av. Brigadeiro Faria Lima, 2170-Putim-12227-901 São Jose dos Campos-SP-BRASIL; telephone +55 12 3927-5852 or +55 12 3309-0732; fax +55 12 3927-7546; email
You may examine the AD docket on the Internet at
Ana Martinez Hueto, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1622; fax 425-227-1149.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
The Agência Nacional de Aviação Civil (ANAC), which is the aviation authority for Brazil, has issued Brazilian Airworthiness Directive 2015-02-02, dated March 6, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for Embraer S.A. Model ERJ 190-100 STD, -100 LR, -100 IGW, -200 STD, -200 LR, and -200 IGW airplanes. The MCAI states:
This [Brazilian] AD was prompted by reports of cracks in some engine low-stage bleed check valves having part number (P[/]N) 1001447-6. Further analysis has determined that if a new (zero hour) low-stage bleed check valve P/N 1001447-6 is installed in an airplane already equipped with the Air Management System (AMS) controller processor boards containing the AMS Controller Operational Program version Black Label 13, or a later version, premature cracking on the petals of the low-stage bleed check valve is not expected to occur. We are issuing this [Brazilian] AD to prevent the possibility of a dual engine in-flight shutdown due to low-stage bleed check valve failure.
The required action is replacement of the AMS controller operation program of the AMS controller processor boards, and replacement of the low-stage bleed check valves and associated seals. You may examine the MCAI in the AD docket on the Internet at
Embraer has issued Service Bulletin 190-36-0023, Revision 03, dated September 24, 2014, which describes procedures for replacing the engine low-stage bleed check valves. Embraer has also issued Service Bulletin 190-21-0041, Revision 02, dated July 30, 2013, which describe procedures for replacing the AMS controller operation program of the AMS controller processor boards. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The applicability of paragraph (g) of this proposed AD is limited to airplanes identified in Embraer Service Bulletin 190-21-0041, Revision 02, dated July 30, 2013. The MCAI did not include this limitation. We have included this limitation because Model ERJ 190 airplanes with serial number (S/N) 19000587, S/N 19000589, S/N 19000593 and subsequent have a modification incorporated at the factory equivalent to the modification required by this AD.
Also, this proposed AD includes all Embraer S.A. Model ERJ 170-100 LR, -100 STD, -100 SE, and -100 SU airplanes; and Model ERJ 170-200 LR, -200 SU, and -200 STD airplanes, because of an additional proposed requirement in paragraph (j)(1) of this AD, which is related to installation of used low-stage bleed check valves having P/N 001447-6 on Model ERJ 170 airplanes. ANAC is considering future rulemaking to include a similar requirement.
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
We estimate that this proposed AD affects 197 airplanes of U.S. registry.
We also estimate that it would take about 4 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $638 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $192,666, or $978 per product.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 14, 2016.
None.
This AD applies to the airplanes identified in paragraphs (c)(1) and (c)(2) of this AD, certificated in any category.
(1) All Embraer S.A. Model ERJ 170-100 LR, -100 STD, -100 SE, and -100 SU airplanes; and Model ERJ 170-200 LR, -200 SU, and -200 STD airplanes.
(2) All Embraer S.A. Model ERJ 190-100 STD, -100 LR, -100 IGW, -200 STD, -200 LR, and -200 IGW airplanes.
Air Transport Association (ATA) of America Code 36, Pneumatic.
This AD was prompted by reports of cracks in certain engine low-stage bleed check valves. We are issuing this AD to prevent failure of the low-stage bleed check valve, which could result in dual engine in-flight shutdown.
Comply with this AD within the compliance times specified, unless already done.
For Embraer S.A. Model ERJ 190 airplanes identified in Embraer Service Bulletin 190-21-0041, Revision 02, dated July 30, 2013, within 3 months after the effective date of this AD, replace the Hamilton Sundstrand air management system (AMS) controller operation program of the AMS controller processor boards, as specified in paragraph (g)(1) or (g)(2) of this AD.
(1) Replace with a new, improved program, in accordance with the Accomplishment Instructions of Embraer Service Bulletin 190-21-0041, Revision 02, dated July 30, 2013.
(2) Replace with a version of the Hamilton Sundstrand AMS controller operation program approved after August 31, 2012, using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; Agência Nacional de Aviação Civil (ANAC); or ANAC's authorized Designee.
For Embraer S.A. Model ERJ 190 airplanes identified in Embraer Service Bulletin 190-21-0041, Revision 02, dated July 30, 2013, within 3 months after the effective date of this AD, and after accomplishment of the actions required by paragraph (g) of this AD: Replace the check valve and associated seals of the left-hand and right-hand engine bleed system with a check valve identified in paragraph (i) of this AD, and new seals, in accordance with the Accomplishment Instructions of Embraer Service Bulletin 190-36-0023, Revision 03, dated September 24, 2014.
When complying with paragraph (h) of this AD, the low-stage bleed check valves having P/N 1001447-6, and associated seals, are replaced with new ones (zero-hour). Low-stage bleed check valves having P/N 1001447-6 that can be demonstrated with logged hours only on ERJ-170 aircraft and/or on ERJ-190 aircraft equipped with the AMS Controller Operational Program version Black Label 13, or a later version, can be used instead of new ones (zero-hour).
(1) For Model ERJ 170-100 STD, -100 LR, -100SU, -100SE, -200 STD, -200 LR, and -200 SU airplanes: No person may install on any airplane a low-stage bleed check valve having P/N 1001447-6 that was installed on any Model ERJ 190-100 STD, -100 LR, -100 IGW, -200 STD, -200 LR, or -200 IGW airplane, any serial number except 190-00587, 190-00589, and 190-00593 and subsequent, prior to accomplishment of paragraph (g) of this AD.
(2) For Model ERJ 190-100 STD, -100 LR, -100IGW, -200 STD, -200 LR, and -200 IGW airplanes: No person may install on any airplane on which the actions of paragraph (g) of this AD have been done, a low-stage bleed check valve having P/N 1001447-6 that was previously installed on any Model ERJ 190-100 STD, -100 LR, -100 IGW, -200 STD, -200 LR, or -200 IGW airplane, any serial number except 190-00587, 190-00589, 190-00593 and subsequent, prior to accomplishment of paragraph (g) of this AD.
(1) This paragraph provides credit for actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using the service information identified in paragraph (k)(1)(i) or (k)(1)(ii) of this AD. This service information is not incorporated by reference in this AD.
(i) Embraer Service Bulletin 190-21-0041, dated September 27, 2012.
(ii) Embraer Service Bulletin 190-21-0041, Revision 01, dated December 20, 2012.
(2) This paragraph provides credit for actions required by paragraph (h) of this AD, if those actions were performed before the effective date of this AD using the service information identified in paragraph (k)(2)(i), (k)(2)(ii), or (k)(2)(iii) of this AD. This service information is not incorporated by reference in this AD.
(i) Embraer Service Bulletin 190-36-0023, dated July 22, 2013.
(ii) Embraer Service Bulletin 190-36-0023, Revision 01, dated September 3, 2013.
(iii) Embraer Service Bulletin 190-36-0023, Revision 02, dated April 30, 2014.
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Brazilian Airworthiness Directive 2015-02-02, dated March 6, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD, contact Embraer S.A., Technical Publications Section (PC 060), Av. Brigadeiro Faria Lima, 2170 - Putim - 12227-901 São Jose dos Campos - SP - BRASIL; telephone +55 12 3927-5852 or +55 12 3309-0732; fax +55 12 3927-7546; email
Federal Aviation Administration (FAA), DOT.
Proposed rule; withdrawal.
The FAA is withdrawing a notice of proposed rulemaking (NPRM). The NPRM proposed a new airworthiness directive (AD) that had applied to all Rolls-Royce Deutschland Ltd & Co KG (RRD) Tay 650-15 and Tay 651-54 turbofan engines. The proposed action would have required reducing the cyclic life limits for certain high-pressure turbine (HPT) disks. Accordingly, we withdraw the proposed rule.
The proposed rule published in the
Philip Haberlen, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803; phone: 781-238-7770; fax: 781-238-7199; email:
The FAA proposed to amend 14 CFR part 39 with
Since we issued the NPRM (80 FR 32315, June 8, 2015), additional information became available after the public comment period closed on August 7, 2015.
Upon further consideration, we hereby withdraw the proposed rule because we will propose to supersede AD 2006-18-14 (71 FR 52988, September 8, 2006).
Withdrawal of the NPRM (80 FR 32315, June 8, 2015) constitutes only such action, and does not preclude the agency from issuing another notice in the future, nor does it commit the agency to any course of action in the future.
Since this action only withdraws a notice of proposed rulemaking, it is neither a proposed nor a final rule. Therefore, Executive Order 12866, the Regulatory Flexibility Act, or DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979) do not cover this withdrawal.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, the notice of proposed rulemaking, Docket No. FAA-2015-1014; Directorate Identifier 2015-NE-14-AD, published in the
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all Airbus Model A318-111 and -112 airplanes; Model A319-111, -112, -113, -114, and -115 airplanes; Model A320-211, -212, and -214 airplanes; and Model A321-111, -112, -211, -212, and -213 airplanes. This proposed AD was prompted by an evaluation by the design approval holder (DAH) indicating that the forward engine mounts are subject to widespread fatigue damage (WFD). This proposed AD would require repetitive detailed inspections of the right and left forward engine mounts, and corrective action if necessary. These inspections are required by AD 2015-05-02. This proposed AD would reduce the compliance times for those inspections. We are proposing this AD to detect and correct fatigue cracking in the forward engine mounts, which could result in reduced structural integrity of the airplane and could lead to in-flight loss of an engine, possibly resulting in reduced controllability of the airplane.
We must receive comments on this proposed AD by January 14, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
• Federal eRulemaking Portal: Go to
• Fax: 202-493-2251.
• Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.
• Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
For service information identified in this proposed AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
You may examine the AD docket on the Internet at
Sanjay Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1405; fax 425-227-1149.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
Structural fatigue damage is progressive. It begins as minute cracks, and those cracks grow under the action of repeated stresses. This can happen because of normal operational conditions and design attributes, or
The FAA's WFD final rule (75 FR 69746, November 15, 2010) became effective on January 14, 2011. The WFD rule requires certain actions to prevent structural failure due to WFD throughout the operational life of certain existing transport category airplanes and all of these airplanes that will be certificated in the future. For existing and future airplanes subject to the WFD rule, the rule requires that DAHs establish a limit of validity (LOV) of the engineering data that support the structural maintenance program. Operators affected by the WFD rule may not fly an airplane beyond its LOV, unless an extended LOV is approved.
The WFD rule (75 FR 69746, November 15, 2010) does not require identifying and developing maintenance actions if the DAHs can show that such actions are not necessary to prevent WFD before the airplane reaches the LOV. Many LOVs, however, do depend on accomplishment of future maintenance actions. As stated in the WFD rule, any maintenance actions necessary to reach the LOV will be mandated by airworthiness directives through separate rulemaking actions.
In the context of WFD, this action is necessary to enable DAHs to propose LOVs that allow operators the longest operational lives for their airplanes, and still ensure that WFD will not occur. This approach allows for an implementation strategy that provides flexibility to DAHs in determining the timing of service information development (with FAA approval), while providing operators with certainty regarding the LOV applicable to their airplanes.
Failure of a forward engine mount could lead to in-flight loss of an engine, possibly resulting in reduced controllability of the airplane.
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0038, dated March 4, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A318-111 and -112 airplanes; Model A319-111, -112, -113, -114, and -115 airplanes; Model A320-211, -212, and -214 airplanes; and Model A321- 111, -112, -211, -212, and -213 airplanes. The MCAI states:
During a A320 Extended Service Goal (ESG) residual fatigue test, in which new loads were used, taking into account the results of the 2006 fleet survey, the CFM56-5A/5B forward engine mount experienced a failure before reaching the threshold/interval for the detailed inspection of that forward engine mount, as identified in Airbus A318/A319/A320/A321 Airworthiness Limitations Section (ALS) Part 2 (hereafter referred to in this [EASA] AD as `the ALS') task 712111-01. In case of total loss of the primary load path, the current maintenance requirements do not ensure the design integrity of the remaining structure.
This condition, if not corrected, could lead to in-flight loss of an engine, possibly resulting in reduced control of the aeroplane and injury to persons on the ground.
For the reasons described above, this [EASA] AD requires implementation of a reduced threshold and interval for the detailed inspections (DET) of the forward engine mount on both right hand (RH) and left hand (LH) sides, as specified in the ALS, task 712111-01.
Once further investigations and test are completed, the threshold and interval of the ALS task 712111-01 will likely be modified accordingly.
Required actions include repair of discrepancies (cracks) found during the inspection. You may examine the MCAI in the AD docket on the Internet at
AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23, 2015), which is applicable to all Airbus Model A318, A319, A320, and A321 series airplanes, requires revising the maintenance or inspection program, as applicable, to incorporate certain Airworthiness Limitation Items. Paragraph (n)(2) of AD 2015-05-02 requires incorporating Part 2-Damage-Tolerant Airworthiness Limitation Items (DT ALI), of the Airbus A318/A319/A320/A321 ALS, Revision 02, dated May 28, 2013. AD 2015-05-02 corresponds to EASA AD 2013-0147, dated July 16, 2013. We considered the fleet size that would be affected by superseding AD 2015-05-02, and the consequent workload associated with revising maintenance record entries, and determined that this proposed AD should not supersede AD 2015-05-02.
Although this proposed AD would not supersede AD 2015-05-02, paragraph (g) of this proposed AD would terminate the initial and repetitive inspections for the corresponding inspections in paragraph (n)(2) of AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23, 2015), for Airbus Airworthiness Limitation Tasks 712111-01-1, 712111-01-2, 712111-01-3, and 71211-01-4, “Detailed Inspection of Forward Engine Mount Installation.”
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of these same type designs.
We consider this proposed AD interim action. Once further investigations and tests are completed, the initial compliance time and repetitive intervals for Airbus Airworthiness Limitation Tasks 712111-01-1, 712111-01-2, 712111-01-3, and 712111-01-4, “Detailed Inspection of Forward Engine Mount Installation,” could be revised and we might consider further rulemaking at that time.
We estimate that this proposed AD affects 940 airplanes of U.S. registry.
We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $79,900, or $85 per product.
We have received no definitive data that would enable us to provide cost estimates for the on-condition parts cost specified in this AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 14, 2016.
This AD affects AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23, 2015).
This AD applies to the Airbus airplanes, certificated in any category, identified in paragraphs (c)(1), (c)(2), (c)(3), and (c)(4) of this AD.
(1) Model A318-111 and -112 airplanes.
(2) Model A319-111, -112, -113, -114, and -115 airplanes.
(3) Model A320-211, -212, and -214 airplanes.
(4) Model A321-111, -112, -211, -212, and -213 airplanes.
Air Transport Association (ATA) of America Code 05, Periodic Inspections.
This AD was prompted by an evaluation by the design approval holder indicating that the forward engine mounts are subject to widespread fatigue damage. We are issuing this AD to detect and correct fatigue cracking in the forward engine mounts, which could result in reduced structural integrity of the airplane and could lead to in-flight loss of an engine, possibly resulting in reduced controllability of the airplane.
Comply with this AD within the compliance times specified, unless already done.
At the latest of the times specified in paragraphs (g)(1), (g)(2), and (g)(3) of this AD: Do a detailed inspection of the left and right forward engine mounts for discrepancies (cracking), using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA. Repeat the inspection thereafter at intervals not to exceed 800 flight cycles.
Note 1 to paragraphs (g) and (h) of this AD: Guidance for the inspection and engine mount replacement can be found in Task 712111-210-040 of the Airbus A318/A319/A320/A321 Maintenance Manual.
(1) Within 800 flight cycles since the first flight of the airplane.
(2) Within 800 flight cycles since the most recent detailed inspection specified in Airbus Airworthiness Limitation Tasks 712111-01-1, 712111-01-2, 712111-01-3, or 712111-01-4, “Detailed Inspection of Forward Engine Mount Installation,” as applicable.
(3) Within 800 flight cycles after the effective date of this AD.
If any discrepancy (cracking) is found during any inspection required by paragraph (g) of this AD: Before further flight, replace the affected forward engine mount with a serviceable part, using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).
Replacement of a forward engine mount does not constitute terminating action for the repetitive inspections required by paragraph (g) of this AD.
Accomplishment of the inspections required by paragraph (g) of this AD terminates the initial and repetitive inspections specified in paragraph (n)(2) of AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23, 2015), for Airbus Airworthiness Limitation Tasks 712111-01-1, 712111-01-2, 712111-01-3, and 712111-01-4, “Detailed Inspection of Forward Engine Mount Installation.”
The following provisions also apply to this AD:
(2)
Special flight permits, as described in Section 21.197 and Section 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199), are not allowed.
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2015-0038, dated March 4, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all The Boeing Company Model 737-600, -700, -700C, -800, -900, and -900ER series airplanes. This proposed AD was prompted by reports of a manufacturing oversight, in which a supplier omitted the required protective finish on certain bushings installed in the rear spar upper chord on horizontal stabilizers, which could lead to galvanic corrosion and consequent cracking of the rear spar upper chord. This proposed AD would require an inspection or records check to determine if affected horizontal stabilizers are installed, related investigative actions, and for affected horizontal stabilizers, repetitive inspections for any crack of the horizontal stabilizer rear spar upper chord, and corrective action if necessary. We are proposing this AD to detect and correct cracking of the rear spar upper chord, which can result in the failure of the upper chord and consequent departure of the horizontal stabilizer from the airplane, which can lead to loss of continued safe flight and landing.
We must receive comments on this proposed AD by January 14, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone: 206-544-5000, extension 1; fax: 206-766-5680; Internet:
You may examine the AD docket on the Internet at
Jason Deutschman, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6595; fax: 425-917-6590; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We received reports of a manufacturing oversight, in which the required protective finish (zinc-nickel alloy plate or cadmium plate) was omitted on the 182A1508-4/-5/-6 bushings (in line with the terminal fitting holes) installed in the rear spar upper chord on horizontal stabilizers with certain serial numbers. This issue was discovered after production of the affected stabilizers.
The 182A1508-4/-5/-6 bushings are made from aluminum-nickel-bronze. Installing these bushings, without the required protective finish, into the 2024-T3511 aluminum horizontal stabilizer rear spar upper chord can lead to galvanic corrosion between the dissimilar metals. Bushings with galvanic corrosion, if not corrected, can lead to cracking of the rear spar upper chord, which can result in the failure of the upper chord and consequent departure of the horizontal stabilizer from the airplane, which can lead to loss of continued safe flight and landing.
We reviewed Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015. The service information describes procedures for an inspection or records review to determine if affected horizontal stabilizers are installed,
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.”
The phrase “related investigative actions” is used in this proposed AD. “Related investigative actions” are follow-on actions that (1) are related to the primary action, and (2) further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.
The phrase “corrective actions” is used in this proposed AD. “Corrective actions” are actions that correct or address any condition found. Corrective actions in an AD could include, for example, repairs.
Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, specifies to contact the manufacturer for instructions on how to repair certain conditions, but this proposed AD would require repairing those conditions in one of the following ways:
• In accordance with a method that we approve; or
• Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.
The FAA worked in conjunction with industry, under the Airworthiness Directive Implementation Aviation Rulemaking Committee (ARC), to enhance the AD system. One enhancement was a new process for annotating which steps in the service information are required for compliance with an AD. Differentiating these steps from other tasks in the service information is expected to improve an owner's/operator's understanding of crucial AD requirements and help provide consistent judgment in AD compliance. The steps identified as Required for Compliance (RC) in any service information identified previously have a direct effect on detecting, preventing, resolving, or eliminating an identified unsafe condition.
For service information that contains steps that are labeled as RC, the following provisions apply: (1) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD, and an AMOC is required for any deviations to RC steps, including substeps and identified figures; and (2) steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.
We estimate that this proposed AD affects 1,397 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any necessary inspections that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need these inspections:
According to the manufacturer, some of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.
We have received no definitive data that would enable us to provide cost estimates for the on-condition repairs specified in this proposed AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 14, 2016.
None.
This AD applies to all The Boeing Company Model 737-600, -700, -700C, -800, -900, and 900ER series airplanes, certificated in any category.
Air Transport Association (ATA) of America Code 55, Stabilizers.
This AD was prompted by reports of a manufacturing oversight, in which a supplier omitted the required protective finish on certain bushings installed in the rear spar upper chord on horizontal stabilizers, which could lead to galvanic corrosion and consequent cracking of the rear spar upper chord. We are issuing this AD to detect and correct cracking of the rear spar upper chord, which can result in the failure of the upper chord and consequent departure of the horizontal stabilizer from the airplane, which can lead to loss of continued safe flight and landing.
Comply with this AD within the compliance times specified, unless already done.
(1) Except as specified in paragraph (h)(1) of this AD, within the compliance time identified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, do the actions specified in paragraph (g)(1)(i) or (g)(1)(ii) of this AD.
(i) Do a records check to determine if an affected horizontal stabilizer is installed and if any horizontal stabilizer has been exchanged, and do all applicable related investigative actions, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015. Affected horizontal stabilizers are identified in the Accomplishment Instructions of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015.
(ii) Do an inspection of the horizontal stabilizer identification plate to determine if any affected horizontal stabilizer is installed, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015. Affected horizontal stabilizers are identified in the Accomplishment Instructions of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015.
(2) If, during any action required by paragraph (g)(1)(i) or (g)(1)(ii) of this AD, any affected horizontal stabilizer is found: Except as specified in paragraph (h)(1) of this AD, within the compliance time identified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, do a high frequency eddy current (HFEC) inspection for any crack of the horizontal stabilizer rear spar upper chord and do all applicable corrective actions, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, except as required by paragraph (h)(2) of this AD. Repeat the inspection thereafter at intervals identified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015.
(1) Where Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, specifies a compliance time “after the original issue date of this service bulletin,” this AD requires compliance within the specified compliance time after the effective date of this AD.
(2) If any cracking is found during any inspection required by this AD, and Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, specifies to contact Boeing for appropriate action: Before further flight, repair using a method approved in accordance with the procedures specified in paragraph (j) of this AD.
As of the effective date of this AD, no person may install a horizontal stabilizer on any airplane, except as specified in paragraphs (i)(1) and (i)(2) of this AD.
(1) A horizontal stabilizer may be installed if the part is inspected in accordance with “Part 2: Horizontal Stabilizer Identification Plate Inspection” of the Accomplishments Instructions of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, and no affected serial number is found.
(2) A horizontal stabilizer may be installed if the part is inspected in accordance with “Part 2: Horizontal Stabilizer Identification Plate Inspection” of the Accomplishments Instructions of Boeing Alert Service Bulletin 737-55A1097, dated July 1, 2015, and an affected serial number is found, provided the actions specified in paragraphs (i)(2)(i) and (i)(2)(ii) of this AD are done, as applicable.
(i) An initial HFEC inspection specified in paragraph (g)(2) of this AD is done before further flight and thereafter repetitive HFEC inspections specified in paragraph (g)(2) of this AD are done within the compliance times specified in paragraph (g)(2) of this AD.
(ii) All applicable corrective actions are done before further flight as required by paragraph (h)(2) of this AD.
(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (k) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet
(4) For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (j)(4)(i) and (j)(4)(ii) of this AD apply.
(i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. An AMOC is required for any deviations to RC steps, including substeps and identified figures.
(ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.
(1) For more information about this AD, contact Jason Deutschman, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle ACO, 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6595; fax: 425-917-6590; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P. O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone: 206-544-5000, extension 1; fax: 206-766-5680; Internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Airbus Model A318, A319, A320, and A321 series airplanes. This proposed AD was prompted by reports of cracking of the aft fixed fairing (AFF) of the pylons due to fatigue damage of the structure. This proposed AD would require repetitive inspections for damage and cracking of the AFF of the pylons, and repair if necessary. We are proposing this AD to detect and correct damage and cracking of the AFF of the pylons, which could result in detachment of a pylon and consequent reduced structural integrity of the airplane.
We must receive comments on this proposed AD by January 14, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
• Federal eRulemaking Portal: Go to
• Fax: (202) 493-2251.
• Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.
• Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
For service information identified in this proposed AD, contact Airbus, Airworthiness Office—EAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
You may examine the AD docket on the Internet at
Sanjay Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1405; fax 425-227-1149.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0154, dated July 2, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus Model A318, A319, A320, and A321 series airplanes. The MCAI states:
On aeroplanes equipped with post-mod 33844 CFM pylons, several operators have reported cracks on the Aft Fixed Fairing (AFF). After material analysis, it appears that the pylon AFF structure, especially on this configuration, is subject to fatigue constraint damage which could lead to pylon AFF cracks.
Further to these findings, Airbus released Alert Operators Transmission (AOT) A54N002-12 which provides instructions to inspect the pylon AFF, applicable only to aeroplanes incorporating Airbus production mod 33844 on CFM pylons. More recently, Airbus issued Service Bulletin (SB) A320-54-1027, superseding AOT A54N002-12.
This condition, if not detected and corrected, could lead to detachment of a pylon AFF from the aeroplane, possibly resulting in injuries to persons on the ground.
For the reasons described above, this [EASA] AD requires repetitive detailed inspections (DET) of the pylon AFF and, depending on findings, accomplishment of applicable corrective action(s).
Since the MCAI was issued, EASA has clarified that the detachment of a pylon AFF from the airplane could result in damage to the airplane; such damage could result in reduced structural integrity of the airplane.
You may examine the MCAI in the AD docket on the Internet at
Airbus has issued Service Bulletin A320-54-1027, dated April 10, 2014. This service information describes procedures for inspections for damage and cracking of the AFF of the pylons, and repair if necessary. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
The FAA worked in conjunction with industry, under the Airworthiness Directive Implementation Aviation Rulemaking Committee (ARC), to enhance the AD system. One enhancement was a new process for annotating which procedures and tests in the service information are required for compliance with an AD. Differentiating these procedures and tests from other tasks in the service information is expected to improve an owner's/operator's understanding of crucial AD requirements and help provide consistent judgment in AD compliance. The procedures and tests identified as Required for Compliance (RC) in any service information have a direct effect on detecting, preventing, resolving, or eliminating an identified unsafe condition.
As specified in a NOTE under the Accomplishment Instructions of the specified service information, procedures and tests that are identified as RC in any service information must be done to comply with the proposed AD. However, procedures and tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an alternative method of compliance (AMOC), provided the procedures and tests identified as RC can be done and the airplane can be put back in an airworthy condition. Any substitutions or changes to procedures or tests identified as RC will require approval of an AMOC.
We estimate that this proposed AD affects 69 airplanes of U.S. registry.
We also estimate that it would take about 4 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $23,460, or $340 per product.
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 14, 2016.
None.
This AD applies to Airbus Model A318-111 and -112 airplanes; Model A319-111, -112, -113, -114, and -115 airplanes; Model A320-211, -212, -214, and -215 airplanes; and Model A321-111, -112, -211, -212, and -213 airplanes; certificated in any category; all manufacturer serial numbers on which Airbus Modification 33844 has been embodied in production.
Air Transport Association (ATA) of America Code 54, Nacelles/pylons.
This AD was prompted by reports of cracking of the aft fixed fairing (AFF) of the pylons due to fatigue damage of the structure. We are issuing this AD to detect and correct damage and cracking of the AFF of the pylons, which could result in detachment of
Comply with this AD within the compliance times specified, unless already done.
At the later of times specified in paragraphs (g)(1) and (g)(2), or (g)(1) and (g)(3), of this AD, as applicable: Do a detailed inspection for damage and cracking of the AFF of the pylons, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-54-1027, dated April 10, 2014. Repeat the inspection thereafter at intervals not to exceed 2,500 flight cycles or 3,750 flight hours, whichever occurs first.
(1) For all airplanes: Before exceeding 5,000 flight cycles or 7,500 flight hours, whichever occurs first since the airplane's first flight.
(2) For airplanes on which the inspection specified in Airbus All Operators Transmission (AOT) A54N002-12 has been done as of the effective date of this AD: Within 2,500 flight cycles or 3,750 flight hours, since the most recent accomplishment of maintenance planning document (MPD) Task ZL 371-01, or since doing the most recent inspection specified in Airbus AOT A54N002-12, whichever occurs first.
(3) For airplanes on which the inspection specified in Airbus AOT A54N002-12 has not been done as of the effective date of this AD: Within 750 flight cycles or 1,500 flight hours after the effective date of this AD, whichever occurs first.
If any crack is found during any inspection required by paragraph (g) of this AD; before further flight, repair in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-54-1027, dated April 10, 2014. Accomplishment of this repair does not terminate the repetitive inspections required by paragraph (g) of this AD.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0154, dated July 2, 2014, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD, contact Airbus, Airworthiness Office—EAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes. This proposed AD was prompted by an evaluation by the design approval holder (DAH) indicating that the bulkhead is subject to widespread fatigue damage (WFD). This proposed AD would require repetitive inspections of the aft pressure bulkhead web for any cracking, incorrectly drilled fastener holes, and elongated fastener holes, and related investigative and corrective actions if necessary. We are proposing this AD to detect and correct fatigue cracking of the aft pressure bulkhead web at the “Y”-chord, which could result in reduced structural integrity of the airplane and rapid decompression of the fuselage.
We must receive comments on this proposed AD by January 14, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
• Federal eRulemaking Portal: Go to
• Fax: 202-493-2251.
• Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.
• Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
For service information identified in this proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P. O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone 206-544-5000, extension 1; fax 206-766-5680; Internet
You may examine the AD docket on the Internet at
Alan Pohl, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-917-6450; fax: 425-917-6590; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
Structural fatigue damage is progressive. It begins as minute cracks, and those cracks grow under the action of repeated stresses. This can happen because of normal operational conditions and design attributes, or because of isolated situations or incidents such as material defects, poor fabrication quality, or corrosion pits, dings, or scratches. Fatigue damage can occur locally, in small areas or structural design details, or globally. Global fatigue damage is general degradation of large areas of structure with similar structural details and stress levels. Multiple-site damage is global damage that occurs in a large structural element such as a single rivet line of a lap splice joining two large skin panels. Global damage can also occur in multiple elements such as adjacent frames or stringers. Multiple-site-damage and multiple-element-damage cracks are typically too small initially to be reliably detected with normal inspection methods. Without intervention, these cracks will grow, and eventually compromise the structural integrity of the airplane, in a condition known as widespread fatigue damage (WFD). As an airplane ages, WFD will likely occur, and will certainly occur if the airplane is operated long enough without any intervention.
The FAA's WFD final rule (75 FR 69746, November 15, 2010) became effective on January 14, 2011. The WFD rule requires certain actions to prevent structural failure due to WFD throughout the operational life of certain existing transport category airplanes and all of these airplanes that will be certificated in the future. For existing and future airplanes subject to the WFD rule, the rule requires that DAHs establish a limit of validity (LOV) of the engineering data that support the structural maintenance program. Operators affected by the WFD rule may not fly an airplane beyond its LOV, unless an extended LOV is approved.
The WFD rule (75 FR 69746, November 15, 2010) does not require identifying and developing maintenance actions if the DAHs can show that such actions are not necessary to prevent WFD before the airplane reaches the LOV. Many LOVs, however, do depend on accomplishment of future maintenance actions. As stated in the WFD rule, any maintenance actions necessary to reach the LOV will be mandated by airworthiness directives through separate rulemaking actions.
In the context of WFD, this action is necessary to enable DAHs to propose LOVs that allow operators the longest operational lives for their airplanes, and still ensure that WFD will not occur. This approach allows for an implementation strategy that provides flexibility to DAHs in determining the timing of service information development (with FAA approval), while providing operators with certainty regarding the LOV applicable to their airplanes.
We have received an evaluation by the design approval holder (DAH) indicating that the aft pressure bulkhead is subject to WFD. Cracks have been reported in the aft pressure bulkhead web at the web-to-“Y”-chord interface and have occurred in the aft row of fasteners connecting the aft pressure bulkhead web to the “Y”-chord. This condition, if not corrected, could result in fatigue cracking of the aft pressure bulkhead web at the “Y”-chord, which could result in reduced structural integrity of the airplane and rapid decompression of the fuselage.
We reviewed Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015. This service information describes, among other actions, procedures for repetitive inspections of the aft pressure bulkhead web for any cracking, incorrectly drilled fastener holes, and elongated fastener holes; and related investigative and corrective actions. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.” Refer to this service information for details on the procedures and compliance times.
The phrase “related investigative actions” is used in this proposed AD. “Related investigative actions” are follow-on actions that (1) are related to the primary action, and (2) further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.
The phrase “corrective actions” is used in this proposed AD. “Corrective actions” correct or address any condition found. Corrective actions in an AD could include, for example, repairs.
AD 2012-18-13 R1, Amendment 39-17429 (78 FR 27020, May 9, 2013), refers to Boeing Alert Service Bulletin 737-53A1214, Revision 4, dated December 16, 2011, as an appropriate source of service information for doing certain actions required by that AD. Since AD 2012-18-13 R1 was issued, Boeing issued Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015, to address WFD by adding new inspections specified in tables 9, 10, and 11 of paragraph 1.E.,
Therefore, although Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015, is effective for all The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes, this proposed AD applies to only certain The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes (
Accomplishing the actions required by paragraphs (g) and (h) of this proposed AD would terminate the inspections required by paragraphs (k) and (l) of AD 2012-18-13 R1, Amendment 39-17429 (78 FR 27020, May 9, 2013).
The service bulletin specifies to contact the manufacturer for instructions on how to repair certain conditions, but this proposed AD would require repairing those conditions in one of the following ways:
• In accordance with a method that we approve; or
• Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.
We estimate that this proposed AD affects 122 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 14, 2016.
This AD affects AD 2012-18-13 R1, Amendment 39-17429 (78 FR 27020, May 9, 2013).
This AD applies to The Boeing Company Model 737-100, -200, -200C, -300, -400, and -500 series airplanes, certificated in any category, identified as Group 2 in Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by an evaluation by the design approval holder indicating that the aft pressure bulkhead is subject to widespread fatigue damage. We are issuing this AD to detect and correct fatigue cracking of the aft pressure bulkhead web at the “Y”-chord, which could result in reduced structural integrity of the airplane and rapid decompression of the fuselage.
Comply with this AD within the compliance times specified, unless already done.
At the applicable time specified in tables 9 and 10 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015: Do detailed and low frequency eddy current (LFEC) inspections from the aft side of the aft pressure bulkhead web, or do detailed and high frequency eddy current (HFEC) inspections from the forward side of the aft pressure bulkhead web, for any cracking, incorrectly drilled fastener hole, and elongated fastener hole, and do all applicable related investigative and corrective actions, in accordance with Part I of the Accomplishment Instructions of Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015, except as required by paragraph (i) of this AD. Do all related investigative and corrective actions before further flight. If any cracking, incorrectly drilled fastener hole, or elongated fastener hole is found, before further flight, repair the web using a method approved in accordance with the procedures specified in paragraph (l) of this AD. Thereafter, repeat the inspections at the applicable times specified in tables 9 and 10 of paragraph 1.E., “Compliance” of Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015.
At the applicable time specified in table 11 of 1.E., “Compliance” of Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015: Do detailed and eddy current inspections of the web from the forward or aft side of the bulkhead for any cracking, incorrectly drilled fastener hole, and elongated fastener hole, and do all applicable corrective actions, in accordance with Part III of the Accomplishment Instructions of Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015, except as required by paragraph (i) of this AD. Do all corrective actions before further flight. If any cracking, incorrectly drilled fastener hole, or elongated fastener hole is found, before further flight, repair the web using a method approved in accordance with the procedures specified in paragraph (l) of this AD. Thereafter, repeat the inspections at the applicable times specified in table 11 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015.
Where Boeing Alert Service Bulletin 737-53A1214, Revision 5, dated January 30, 2015, specifies to contact Boeing for repair instructions: Before further flight, repair using a method approved in accordance with the procedures specified in paragraph (l) of this AD.
Accomplishing the actions required by paragraphs (g) and (h) of this AD terminates the inspections required by paragraphs (k) and (l) of AD 2012-18-13 R1, Amendment 39-17429 (78 FR 27020, May 9, 2013).
This paragraph provides credit for the actions required by paragraphs (g) and (h) of this AD, if the actions were performed before the effective date of this AD using Boeing Alert Service Bulletin 737-53A1214, Revision 4, dated December 16, 2011, which is not incorporated by reference in this AD.
(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (m)(1) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of airplane, and the approval must specifically refer to this AD.
(1) For more information about this AD, contact Alan Pohl, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-917-6450; fax: 425-917-6590; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P. O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone 206-544-5000, extension 1; fax 206-766-5680; Internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend Class E Airspace at West Dover, VT as the Mt. Snow Non-Directional Beacon (NDB) has been decommissioned, requiring airspace redesign at Deerfield Valley Regional Airport. This action would enhance the safety and management of Instrument Flight Rules (IFR) operations at the airport. This action also would recognize the airport's name change.
Comments must be received on or before January 14, 2016.
Send comments on this rule to: U. S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Bldg Ground Floor Rm W12-140, Washington, DC 20590-0001; Telephone: 1-800-647-5527; Fax: 202-493-2251. You must identify the Docket Number FAA-2015-4006; Airspace Docket No. 15-ANE-3, at the beginning of your comments. You may also submit and review received comments through the Internet at
FAA Order 7400.9Z, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
John Fornito, Operations Support Group, Eastern Service Center, Federal Aviation Administration, P.O. Box 20636, Atlanta, Georgia 30320; telephone (404) 305-6364.
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 proposed 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 proposed regulation is within the scope of that authority as it would amend Class E airspace at Deerfield Valley Regional Airport, West Dover, VT.
Interested persons are invited to comment on this rule by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (FAA Docket No. FAA-2015-4006; Airspace Docket No. 15-ANE-3) and be submitted in triplicate to the Docket Management System (see
Persons wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2015-4006; Airspace Docket No. 15-ANE-3.” The postcard will be date/time stamped and returned to the commenter.
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded from and comments submitted through
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory circular No. 11-2A, Notice of Proposed Rulemaking distribution System, which describes the application procedure.
This document proposes to amend FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
The FAA is considering an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 to amend Class E airspace extending upward from 700 feet above the surface at Deerfield Valley Regional Airport, West Dover, VT. Airspace reconfiguration to within an 11-mile radius of the airport is necessary due to the decommissioning of the Mt. Snow NDB, and cancelation of the NDB approach, and for continued safety and management of IFR operations at the airport. This action would also recognize the airport's name change from Mt. Snow Airport to Deerfield Valley Regional Airport.
Class E airspace designations are published in Paragraph 6005 of FAA Order 7400.9Z, dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (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 will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal would be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (Air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface with an11-mile radius of Deerfield Valley regional Airport.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to establish Class E airspace at Clinton, AR. Controlled airspace is necessary to accommodate new Standard Instrument Approach Procedures developed at Clinton Municipal Airport, for the safety and management of Instrument Flight Rules (IFR) operations at the airport.
Comments must be received on or before January 14, 2016.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001, telephone (202) 366-9826. You must identify the docket number FAA-2015-3967; Airspace Docket No. 15-ASW-12, at the beginning of your comments. You may also submit comments through the Internet at
FAA Order 7400.9Z, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA order 7400.9, Airspace Designations and Reporting Points is published yearly and effective on September 15.
Rebecca Shelby, Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone: 817-222-5857.
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 would establish Class E airspace at Clinton Municipal Airport, Clinton, AR.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2015-3967/Airspace Docket No. 15-ASW-12.” The postcard will be date/time stamped and returned to the commenter.
An electronic copy of this document may be downloaded through the Internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see
Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.
This document proposes to amend FAA Order 7400.9Z, airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
This action proposes to amend Title 14, Code of Federal Regulations (14 CFR), Part 71 by establishing Class E airspace extending upward from 700
Class E airspace areas are published in Paragraph 6005 of FAA Order 7400.9Z, dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (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 will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (Air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 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 6.0-mile radius of Clinton Municipal Airport.
Food and Drug Administration, HHS.
Notice of proposed rulemaking; reopening of the comment period.
The Food and Drug Administration (FDA) is reopening the comment period for the notice of proposed rulemaking (NPRM) that appeared in the
The comment period for the proposed rule published on September 25, 2015 (80 FR 57756) is extended. Submit either electronic or written comments by December 30, 2015.
You may submit comments as follows:
Submit electronic comments in the following way:
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• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
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• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
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Bryant Godfrey or Darin Achilles, Office of Regulations, Center for Tobacco Products, Food and Drug Administration, 10903 New Hampshire Ave, Silver Spring, MD 20993-0002, 877-287-1373,
In the
The Agency has received a request for a 45-day extension of the comment period for the NPRM. The request conveyed concern that the current 60-day comment period does not allow sufficient time to develop a meaningful or thoughtful response to the NPRM.
FDA has considered the request and is reopening the comment period for the NPRM for 30 days, until December 30, 2015. The Agency believes that reopening the comment period for an additional 30 days allows adequate time for interested persons to submit comments without significantly delaying rulemaking on these important issues.
Office of the General Counsel, HUD.
Extension of public comment period.
Through this notice, HUD is extending the public comment period on its proposed rule pertaining to Federal Policy for the Protection of Human Subjects, published in the
You may submit comments, identified by docket ID number HHS-OPHS-2015-0008, by one of the following methods:
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Comments received, including any personal information, will be posted without change to
Barry L. Steffen, Policy Development Division, Office of Policy Development and Research, Department of Housing and Urban Development, 451 7th Street SW., Room 8114, Washington, DC 20410-8000, telephone 202-402-5926. (This is not a toll-free number.) Persons with hearing- or speech-impairments may access this number through TTY number by calling the Federal Relay Service number at 800-877-8339 (this is a toll-free number).
On October 1, 2015, at 80 FR 59092, HUD published a proposed rule in the
Since the proposed rules were published in September and October, respectively, requests have been made to extend the public comment period to allow time to more thoroughly review the proposed revisions offered for comment by the Federal Departments and Agencies. The Department of Health and Human Services and the 15 other Federal Department Agencies have extended the time to submit public comments on the September 8, 2015, proposed rule to January 6, 2016, and HUD extends its public comment period for its October 1, 2015, proposed rule to this same date—January 6, 2016.
Executive Office for United States Trustees (“EOUST”), Justice.
Notice of public hearing; reopening of comment period.
On November 10, 2014, the Department of Justice, through its component, the EOUST, published its notice of proposed rulemaking (“NPRM”), Procedures for Completing Uniform Periodic Reports in Non-Small Business Cases Filed under Chapter 11 of Title 11 (“Periodic Reports”). In order to accommodate requests by certain commenters to meet with representatives of the EOUST to discuss the NPRM, and to provide an opportunity for interested persons to express their views directly to EOUST officials, the EOUST will hold a public hearing on the NPRM. In conjunction with the public hearing, the EOUST has reopened the comment period and will accept supplemental comments from those who submitted comments during the initial comment period and new comments from those who did not.
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(a) Mail or Hand Delivery/Courier. EOUST, 441 G Street NW., Suite 6150, Washington, DC 20530, attention: Carrie Weinfeld. Comments received by mail will be considered timely if they are postmarked on or before Monday, February 22, 2016, and deliveries by courier should be received by EOUST by 5:00 p.m. Eastern Time on Monday, February 22, 2016; or
(b) Federal eRulemaking Portal. Please follow the instructions for submitting comments located on the Federal eRulemaking Portal at
Carrie Weinfeld, (202) 307-1399 (this is not a toll free number), or
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Mine Safety and Health Administration, Labor.
Proposed rule; extension of comment period.
In response to a request, the Mine Safety and Health Administration (MSHA) is extending the comment period on the Agency's proposed rule on Proximity Detection Systems for Mobile Machines in Underground Mines. This extension gives stakeholders additional time to evaluate the comments and testimony received thus far and provide meaningful input.
The comment period for the proposed rule published on September 2, 2015 (80 FR 53070), is extended. Comments must be received or postmarked by midnight Eastern Standard Time on December 15, 2015.
Submit comments and informational materials, identified by RIN 1219-AB78 or Docket No. MSHA-2014-0019, by one of the following methods:
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Sheila A. McConnell, Acting Director, Office of Standards, Regulations, and Variances, MSHA, at
On September 2, 2015 (80 FR 53070), MSHA published a proposed rule that would require underground coal mine operators to equip coal hauling machines and scoops with proximity detection systems. Miners working near these machines face pinning, crushing, and striking hazards that result in accidents involving life threatening injuries and death. MSHA believes that the use of proximity detection systems would reduce the potential for these pinning, crushing, or striking accidents.
On September 28, 2015 (80 FR 58229), MSHA published a document announcing the dates and locations for four public hearings on the proposed rule. The hearings were held in October 2015. MSHA posted the comments received and the hearing transcripts on the Agency's Web site, and on
On November 18, 2015, MSHA received a request to extend the comment period an additional two weeks to provide more time for interested parties to comment. In response to this request, MSHA is extending the comment period from December 1, 2015, to December 15, 2015.
Forest Service, USDA.
Request for Information.
The Department of Agriculture (USDA), Forest Service, Business Operations, Office of Regulatory and Management Services (ORMS) is preparing to revise a portion of the Code of Federal Regulations (CFR) governing public participation requirements and procedures related to the issuance or revision of internal Agency directives. The Forest Service is committed to ensuring that a broad and representative cross-section of the interested public is provided advance notice and a full and fair opportunity to comment upon the formulation of standards, criteria, and guidelines applicable to Forest Service programs. In keeping with this commitment, the Agency is interested in enhancing its public engagement and expanding its approach for public notice and comment beyond just formal rulemaking. The Agency has identified a need to update the relevant regulations to reflect the varied media consumption patterns of key Forest Service stakeholders and the public at large. These potential regulatory revisions are also necessary to ensure that written policies align with the Agency's current practices, which have changed to ensure compliance with recent court orders.
The Agency is hosting a webinar for all interested members of the general public to inform the public of these changes to the Forest Service's public participation procedures. This session will include additional information on the need for these changes and the outcomes the Agency is seeking to achieve. It will also include an outline of a potential path forward and provide attendees an opportunity to ask questions, provide input, and suggest ideas.
A webinar will be held for interested members of the general public on Tuesday, December 15, 2015, from 1:00-2:30 p.m. Eastern Standard Time/10:00-11:30 a.m. Pacific Standard Time.
The webinar will be held via Adobe Connect web conferencing software. To access the presentation, enter the following URL into any Flash-enabled web browser:
Earnest Rawles, Acting Assistant Director, Office of Regulatory and Management Services—Directives and Regulations Branch (202) 205-2601,
The purpose of this RFI is to inform the public, gather feedback on potential future strategies for notifying the public, and obtaining comments prior to making any amendments to the Forest Service Directive System. Information obtained in response to this RFI may be used by the Forest Service for program planning and development, or for other purposes. Note that information shared by the Forest Service in conjunction with this RFI may or may not be used to inform or issue further policy.
Currently, the Forest Service uses the process set forth in the Administrative Procedure Act (APA) (5 U.S.C. 553) to notify the public of, and obtain comments on, changes to the Forest Service Directive System. This entails publication of notice in the
Postal Regulatory Commission.
Notice of proposed rulemaking.
The Commission is noticing a recent filing requesting that the Commission initiate an informal rulemaking proceeding to consider changes to analytical principles relating to periodic reports (Proposal Twelve). 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 November 20, 2015, the Postal Service filed a petition pursuant to 39 CFR 3050.11 requesting that the Commission initiate an informal rulemaking proceeding to consider changes to analytical principles relating to the Postal Service's periodic reports.
The Postal Service requests this rulemaking to re-align certain calculations within the CRA report to be consistent with the methodology approved by the Commission in Proposal Thirteen.
The Postal Service proposes to change the methodology for attributing costs relating to vehicles used on city carrier letter routes, including Motor Vehicle Service (MVS) Labor in Cost Segment 12.1, MVS Supplies and Materials in Cost Segment 12.2, and Vehicle Depreciation in Cost Segment 20.
The Postal Service proposes a minor change to the methodology for calculating office and street proportions that are used in the calculation of costs relating to city carrier labor for Vehicle Hire in Cost Segment 12.3 and Carfare and Driveout in Cost Segment 13.2.
The Commission establishes Docket No. RM2016-3 for consideration of matters raised by the Petition. Additional information concerning the Petition may be accessed via the Commission's Web site at
1. The Commission establishes Docket No. RM2016-3 for consideration of the matters raised by the Petition of the United States Postal Service for the Initiation of a Proceeding to Consider Proposed Changes in Analytical Principles (Proposal Twelve), filed November 20, 2015.
2. Comments are due no later than December 4, 2015. Reply comments are due no later than December 9, 2015.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Jennaca D. Upperman to serve as officer of the Commission (Public Representative) to represent the interests of the general public in this docket.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Federal Communications Commission.
Petitions for reconsideration.
Petitions for Reconsideration (Petitions) have been filed in the Commission's rulemaking proceeding by: Chuck Powers, on behalf of Motorola Solutions, Inc., and Brian Scarpelli, on behalf of Telecommunications Industry Association.
Oppositions to the Petitions must be filed on or before December 15, 2015. Replies to an opposition must be filed on or before December 28, 2015.
Federal Communications Commission, 445 12th Street SW., Washington, DC 20554.
Brian Butler, Office of Engineering and Technology Bureau, (202) 418-2702, email:
This is a summary of Commission's document, Report No. 3030, released October 22, 2015. The full text of the Petitions is available for viewing and copying at the FCC Reference Information Center, 445 12th Street SW., Room CY-A257, Washington, DC 20554 or may be accessed online via the Commission's Electronic Comment Filing System at
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Notice of gas pipeline advisory committee meeting.
This document announces a public meeting of the Gas Pipeline Advisory Committee (GPAC). The committee will meet to consider and vote on the proposed rule, “Pipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences” published in the
The meeting will be held on Thursday, December 17, 2015, from 1:00 p.m. to 4:00 p.m. EST.
The public may attend the meeting at the U.S. Department of Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590. Please register for the meeting or contact the individual listed under
The GPAC will take part in the meeting by telephone conference call. Attendees should register in advance at
Comments on the meeting may be submitted to the docket in the following ways:
If you wish to receive confirmation of receipt of your written comments, please include a self-addressed, stamped postcard with the following statement: “Comments on PHMSA-2011-0009 and PHMSA 2015-0173.” The Docket Clerk will date-stamp the postcard prior to returning it to you via the U.S. mail. Please note that due to delays in the delivery of U.S. mail to Federal offices in Washington, DC, we recommend that persons consider an alternative method (Internet, fax, or professional delivery service) of submitting comments to the docket and ensuring their timely receipt at DOT.
Anyone may search the electronic form of all comments received for any of our dockets. You may review DOT's complete Privacy Act Statement in the
For information on facilities or services for individuals with disabilities, or to seek special assistance at the meeting, please contact Cheryl Whetsel at 202-366-4431 by December 1, 2015.
For information about the meetings, contact Cheryl Whetsel by phone at 202-366-4431 or by email at
Members of the public may attend and make a statement during the advisory committee meetings. For a better chance to speak at the meetings, please contact the individual listed under
The GPAC is a statutorily mandated committee that advises PHMSA on proposed safety standards, risks assessments, and safety policies for natural gas pipelines. The committee falls under the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C. App. 1) and is mandated by the pipeline safety law (49 U.S.C. Chap. 601). The committee consists of 15 members—with membership evenly divided among the federal and state government, the regulated industry, and the public. The committee advises PHMSA on technical feasibility, practicability, and cost-effectiveness of each proposed pipeline safety standard. PHMSA staff may also provide an update on several regulatory and policy initiatives if time allows.
The agenda will include the committee's discussion and vote on the proposed rule, “Pipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences” published in the
The NPRM proposes to expand requirements for the use of excess flow valves beyond certain single-family homes to include additional homes and small commercial natural gas customers. Further, the NPRM proposes that manual service line shut-off valves (
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Advance notice of proposed rulemaking (ANPR); control date.
At the request of the North Pacific Fishery Management Council (Council), this document announces a control date of December 31, 2015, that may be used as a reference date for a future management action to limit future access to the offshore sector of the trawl groundfish fisheries in the Aleutian Islands. This date corresponds to the end of the 2015 fishing season in these fisheries. In October 2015, the Council announced its intent to evaluate participation and effort in the offshore sector of the trawl groundfish fisheries in the Aleutian Islands fisheries in response to a public request to consider further limits on access to the fisheries. This document is intended to promote awareness of possible rulemaking and provide notice to the public that any participation in the offshore sector of the trawl groundfish fisheries in the Aleutian Islands after the control date may not ensure continued access to those fisheries under a future management action. This document is also intended to discourage speculative entry into the fisheries while the Council considers whether and how access to the fisheries may be further limited under a future management action.
December 31, 2015, shall be known as the control date for the offshore sector of the trawl groundfish fisheries in the Aleutian Islands and may be used as a reference date for participation in a future management action that is consistent with the Council's objectives and applicable Federal laws.
Please consult the Council's Web site at
Rachel Baker: 907-586-7228 or
NMFS manages the groundfish fisheries in the U.S. exclusive economic zone (EEZ) of the Bering Sea and Aleutian Islands (BSAI) under the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP). The Council prepared, and NMFS approved, the FMP under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801
This advance notice of proposed rulemaking would apply to owners and operators of vessels that participate in Federal groundfish fisheries with trawl gear in the Aleutian Islands subarea (AI). The AI is defined at § 679.2 and shown in Figure 1 to 50 CFR part 679. Vessels that participate in the AI trawl groundfish fisheries harvest Pacific cod, Atka mackerel, and Pacific Ocean perch.
Vessels that participate in the offshore sector of the AI trawl groundfish fisheries include catcher vessels, catcher/processors, and motherships. Catcher vessels participate in the offshore sector by delivering groundfish to catcher/processors or motherships for processing. Catcher/processors participate in the offshore sector by catching and processing groundfish or by receiving and processing deliveries of groundfish from catcher vessels. Motherships participate in the offshore sector by receiving and processing deliveries of groundfish from catcher vessels. This advance notice of proposed rulemaking would not apply to owners and operators of trawl catcher vessels that participate in the inshore sector of the BSAI trawl groundfish fisheries (
The Council and NMFS annually establish biological thresholds and annual total allowable catch limits for
The Council and NMFS have long sought to control fishing effort in the North Pacific Ocean to ensure that fisheries are conservatively managed and do not exceed established biological thresholds. One of the measures used by the Council and NMFS is the license limitation program (LLP), which limits access to the groundfish, crab, and scallop fisheries in the BSAI and the Gulf of Alaska. The LLP is intended to limit entry into federally managed fisheries. For groundfish, the LLP requires that persons hold and assign a license to each vessel that is used to fish in federally managed fisheries, with some limited exemptions. The preamble to the final rule implementing the groundfish LLP provides a more detailed explanation of the rationale for specific provisions in the LLP (October 1, 1998; 63 FR 52642).
In October 2015, the Council received public testimony from participants in the offshore sector of the AI trawl groundfish fisheries. These participants indicated that new vessels have entered the fisheries in recent years. The testimony indicated that this new entry may negatively impact the ability of historical participants to maintain groundfish harvests in the AI. After considering this public testimony, the Council stated its intent to evaluate methods for further limiting access to the offshore sector of the AI trawl groundfish fisheries in a future management action. To dampen the effect of speculative entry into the offshore sector of the AI trawl groundfish fisheries in anticipation of potential future action to limit access to the fisheries, the Council announced a control date of December 31, 2015. The control date may be used as a reference date for a future management action to further limit access to the offshore sector of the AI trawl groundfish fisheries. The Council clarified that the control date would not obligate the Council to use this control date in any future management action. Further, the control date would not obligate the Council to take any action or prevent the Council from selecting another control date. Accordingly, this document is intended to promote awareness that the Council may develop a future management action to achieve its objectives for the offshore sector of the AI trawl groundfish fisheries; to provide notice to the public that any current or future access to the offshore sector of the AI trawl groundfish fisheries may be affected or restricted; and to discourage speculative participation and behavior in the fisheries while the Council considers whether to initiate a management action to further limit access to the fisheries. Any measures the Council considers may require changes to the FMP. Such measures may be adopted in a future amendment to the FMP, which would include opportunity for further public participation and comment.
NMFS encourages public participation in the Council's consideration of a management action to further limit access to the offshore sector of the AI trawl groundfish fisheries. Please consult the Council's Web site at
This notification and control date do not impose any legal obligations, requirements, or expectations.
16 U.S.C. 1801
Food and Nutrition Service (FNS), USDA.
Notice of prize competition
The goal of the prize competition (also described as “the hackathon”) is to produce an open source electronic school meal application that States and school districts can adapt for their own use. FNS hopes to develop a prototype that incorporates the best ideas from the innovation community at large. The application will contain a minimum FNS-defined package of design features that target applicant error and reduce applicant burden. FNS looks to innovators in design, human behavior, and software development to build upon these goals and give life to a model application that is visually appealing, easy to use, fast and efficient, and technically sound.
Prize Competition Submission Period: December 1, 2015 (10:00 a.m. Eastern Time)-March 1, 2016 (5:00 p.m. Eastern Time) (the “Hackathon Submission Period”)
Judging Period: March 16, 2016 (10:00 a.m. Eastern Time)—March 25, 2016 (5:00 p.m. Eastern Time) (the “Judging Period”)
Public Voting Period: March 16, 2016 (10:00 a.m. Eastern Time)—March 25, 2016 (5:00 p.m. Eastern Time) (the “Public Voting Period”)
Winner Announcement Date: On or around March 31, 2016 (2:00 p.m. Eastern Time)
Edward Harper, Director, Office of Program Integrity, Food and Nutrition Service, USDA. (703) 305-2340.
Tagline: Electronic Application Transformation—Create a model electronic application for the National School Lunch Program and help millions of American students access school meals.
An overwhelming majority of America's school children—roughly 50 million elementary and secondary school students—attend institutions that participate in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). Most consume school meals on a regular basis. In total, about 100,000 schools and institutions serve more than 5 billion meals through NSLP and 2 billion via the SBP to America's children each school year. Traditionally, households have applied for free or reduced price meal benefits by submitting paper or online applications through their local schools. Millions of these applications are filed every year and as of 2014, nearly 10 million low income children were certified by application for these benefits. However, due to issues with reporting, calculating, and processing, many applications contain errors that result in incorrect eligibility decisions for children.
FNS currently offers a prototype paper application on its Web site, and thousands of school districts have adopted or modified that application for their own use. Many districts also offer online applications, but FNS does not have an electronic prototype for them to use as a model. FNS recognizes that a well-designed electronic application holds promise as a tool to both facilitate access to program benefits and reduce certification error. Electronic applications have the potential to reduce applicant error by providing prompts and feedback to the user during the application process. For example, an electronic application can be designed to:
• Guide applicants through a process that prompts for all includable income types,
• Alert applicants to missing information, and
• Prompt applicants to confirm the accuracy of a final monthly income total.
The agency believes that inviting ideas from a broad community of design experts and programmers may be the best way to develop the most effective final product. Through this challenge, FNS hopes to develop a prototype that incorporates the best ideas from the innovation community at large. The challenge model gives the agency access to the talents of individuals that we are unlikely to reach through the traditional contracting process.
• Individuals who are at least 18 years of age or older, and who are citizens or permanent residents of the United States, at the time of entry (“Eligible Individuals”).
• Teams of Eligible Individuals (“Teams”).
• Organizations (including corporations, not-for-profit corporations and other nonprofit organizations, limited liability companies, partnerships, and other legal entities) that exist and have been organized or incorporated at the time of entry, are domiciled in the United States, and employ no more than 50 people (“Small Organizations”).
• Organizations (including corporations, not-for-profit corporations and other nonprofit organizations, limited liability companies, partnerships, and other legal entities) that employ more than 50 people and are domiciled in the United States (“Large Organizations”). Please note, however, that Large Organizations will only be eligible to win the Large Organization Recognition Award, which
An individual may join more than one Team, Small Organization, or Large Organization and an Eligible Individual who is part of a Team, Small Organization, or Large Organization may also enter the Hackathon on an individual basis.
If a Team, Small Organization, or Large Organization is entering the Hackathon, they must appoint and authorize one
• Individuals who are residents of, or organizations domiciled in, a country, state, province or territory outside of the United States.
• Organizations involved with the design, production, paid promotion, execution, or distribution of the Hackathon, including USDA and Devpost (“Promotion Entities”).
• Employees, representatives and agents** of such organizations, and all members of their immediate family or household.*
• Any other individual involved with the design, production, promotion, execution, or distribution of the Hackathon, and each member of their immediate family or household.*
• Any Judge (defined below); any company or individual that employs a Judge; or any company for whom a Judge serves as an officer, director, or agent.
• Any parent company, subsidiary, or other affiliate*** of any organization described above.
• Any individual, teams of individuals, or organizations that have a familial or financial relationship with any judge.
• Any Federal entity or Federal employee acting within the scope of their employment, or as may otherwise be prohibited by Federal law (employees should consult their agency ethics officials).
• Any individual, Team, Small Organization, or Large Organization that used Federal facilities or consulted with Federal employees to develop their Submission (as defined below), unless the facilities and employees were made available to all Makers participating in the Hackathon on an equitable basis.
• Any individual, Team, Small Organization, or Large Organization that used Federal funds to develop their Submission, unless such use is consistent with the grant award, or other applicable Federal funds awarding document. If a grantee using Federal funds enters and wins this Hackathon, the prize monies will need to be treated as program income for purposes of the original grant in accordance with applicable Office of Management and Budget Circulars. Federal contractors may not use Federal funds from a contract to develop a Submission for this Hackathon.
• Any other individual or organization whose participation in the Hackathon would create, in the sole discretion of the Sponsor and/or Administrator, a real or apparent conflict of interest.
* The members of an individual's immediate family include the individual's spouse, children and stepchildren, parents and stepparents, and siblings and stepsiblings. The members of an individual's household include any other person that shares the same residence as the individual for at least three (3) months out of the year.
** Agents include individuals or organizations that in creating a Submission to the Hackathon, are acting on behalf of, and at the direction of, a Promotion Entity through a contractual or similar relationship.
*** An affiliate is: (a) an organization that is under common control, sharing a common majority or controlling owner, or common management; or (b) an organization that has a substantial ownership in, or is substantially owned by the other organization.
Additional Prize specific eligibility requirements for students are stated below under Prize Specific Eligibility Requirements.
Makers must do the following to participate in the Hackathon:
(1) Registration: Register for the Hackathon on the Hackathon Web site by clicking the “Register for this hackathon” button. To complete registration, sign up to create a Devpost account, or log in with an existing Devpost account. There is no charge for creating a Devpost account. Registration will enable you to receive important updates and access the “Enter a Submission” page.
(2) Submission:
• Web-based Form: Build a functioning, web-based form that runs in a desktop web browser, and collects data required for the National School Lunch Program application, while improving applicant user experience and reducing applicant errors (each a “Web-based Form”). The Web-based Form refers both to the design elements of the form (the user interface) as well as the underlying program code. Your Web-based Form must:
○ Include and collect required fields necessary for application consideration by local school districts. A list of the required fields can be found below in Section 4C, and on the Resources & Requirements page of the Hackathon Web site Makers should include all required fields, however, the Sponsor may, at their discretion, deem a Web-based Form eligible, if it includes a substantial majority of the required fields.
○ Be open-sourced and provided under MIT license.
○ Include a way to capture, save, and export the completed Web-based Form responses.
○ Include user interface question prompting, to assist with form completion.
• Demonstration Video: Create a demonstration video walking through the main features of the Web-based Form via a step-by-step visual demonstration of the user flow involved in completing the form. The video should speak to how the Maker's design of the Web-based Form improves the user experience for applicants and reduces error.
• Additional Submission Requirements: Complete and enter all of the required fields on the “Enter a Submission” page of the Hackathon Web site (each a “Submission”) during the Hackathon Submission Period. Required fields include:
○ Uploaded image(s) of the Web-based Form design
○ A text description of the Web-based Form including the Maker's approach to the design and user experience
○ A link to the working Web-based Form
○ A link to an open source code repository (on Github or Bitbucket, for example)
• Follow the additional requirements described below.
All Submission materials must be in English or, if not in English, the Maker must provide an English translation of the demonstration video, text
(1) Functionality: The Web-based Form must be capable of running consistently on the web, and must function as depicted in the demonstration video and/or expressed in the text description.
(2) Platform: A submitted Web-based Form must be hosted on the web and must run on a desktop web browser.
(3) Required Fields: A Maker's Web-based Form should prompt users for the following (Please visit the Resources and Requirements pages of the Hackathon Web site for background and context on the School Lunch Program application requirements):
• A list of the names (first, middle initial, last) of all household members, both children (students and non-students) and adults.
• Place to indicate each child's status as foster, homeless, migrant or runaway, as applicable
• Income and frequency for each household member.
• The last four digits of the social security number of the adult household member
• If the adult member signing the application does not possess a social security number, the household must be able to indicate so.
• Prompted to enter or confirm the total number of household members.
• Field for a case number for Assistance Programs (SNAP, TANF, FDPIR).
• Electronic signature by an adult member of the household (signatures do not need to be government certified for the purpose of this competition).
• The date the application was signed.
• Address, phone number and email address (and an indication that these fields are optional).
• City, state and zip code
• All required statements (ex. USDA Non-Discrimination Statement, Use of Information Statement, Attesting Statement, and Children's Racial & Ethnic Identities Question).
(4) User Testing: Makers should demonstrate that user testing of their Web-based Form was completed and feedback was provided. To do so, Makers may utilize and complete the sample user-testing questionnaire to describe testing provided on the Hackathon Web site, or may address user testing in the demonstration video. While user testing is not required for eligibility, Makers are strongly encouraged to conduct user testing to improve the user experience of their Web-based Form. Submissions will be evaluated on the extent to which user testing was conducted, as set forth below in the Judging section.
(5) Testing: The Maker must make their working Web-based Form available online; make it open source under MIT license; and provide it free of charge, and without any restriction, for testing, evaluation and use by the Sponsor, Administrator and judges during the Hackathon and for 90 days following the Winner Announcement Date. Makers will be required to provide a link for accessing the Web-based Form on the “Testing Instructions” field on the Enter a Submission form.
(6) Multiple Submissions: A Maker may submit more than one Submission; however, each Submission must be unique and substantially different from any other Submission entered by the Maker. Whether a Maker's multiple Submissions are unique will be determined at the discretion of the Sponsor and/or the Administrator.
(7) Third Party Tools: Web-based Forms may integrate third party technologies, tools, database solutions, APIs, and libraries provided the Maker is authorized to use them and the use of such third party tools is consistent with making the Web-based Form open source under MIT license.
(8) Intellectual Property: Your Submission (including all design elements, functionality, and program code) must: (a) Be your (or your Team, Small Organization, or Large Organization's) original work product; (b) be solely owned by you, your Team, your Small Organization, or your Large Organization with no other person or entity having any right or interest in it; (c) not violate the intellectual property rights or other rights including but not limited to copyright, trademark, patent, contract, and/or privacy rights, of any other person or entity; and (d) be publicly available and open source under MIT license. A Maker may contract with a third party for technical assistance to create the Submission provided the Submission components are solely the Maker's work product and the result of the Maker's ideas and creativity, and the Maker owns all rights to them. A Maker may submit a Submission that includes the use of open source software, provided the Maker complies with applicable open source licenses and, as part of the Submission, creates software that enhances and builds upon the features and functionality included in the underlying open source product. By entering the Hackathon you represent, warrant, and agree that your Submission meets these requirements.
(9) Financial or Preferential Support: A Submission must not have been developed, or derived from work developed, with financial or preferential support from the Sponsor or Administrator. Such Submissions include, but are not limited to, those that received funding or investment for their development, were developed under contract, or received a commercial license, from the Sponsor or Administrator any time prior to the end of Hackathon Submission Period. The Sponsor, at their sole discretion, may disqualify a Submission, if awarding a prize to the Submission would create a real or apparent conflict of interest.
(1) Text Description: The text description should explain the features and functionality of your Web-based Form and how the design improves user experience for applicants and reduces error.
(2) Images: The image(s) should be photographs or screenshots of your working Web-based Form.
(3) Video: The video portion of the Submission:
(a) Should be less than five (5) minutes;
(b) Must include footage that clearly explains the Web-based Form's features and functionality through a comprehensive, step by step demonstration;
(c) Should address how the design improves user experience for applicants and reduces error;
(d) Must be uploaded to YouTube.com or Vimeo.com, and a link to the video must be provided on the submission form on the Hackathon Web site; and
(e) Must not include third party trademarks, or copyrighted music or other material unless the Maker has permission to use such material.
A. Maker Rights: The Maker will be credited with their work on the Submission on the Hackathon Web site, but will make the Web-based Form available open source, under MIT license.
B. Sponsor Rights: By entering the Hackathon, you grant to the Sponsor, Administrator, and any other third parties Sponsor, a royalty-free, non-exclusive, worldwide perpetual license to display publicly and use for promotional purposes the Submission, in perpetuity. This license includes, but is not limited to, posting or linking to
C. Submission Display: The following Submission components may be displayed to the public: Name, description, images, video URL, Web site URL (open source repo), and Team members. Other Submission materials may be viewed by the Sponsor, Administrator, and Judges for screening and evaluation.
D. Third Party Rights: By entering the Hackathon, you grant free and unlimited use of all design elements, functionality, and program code by all parties, public and private including for-profit commercial entities. This includes use or modification of your submission by any party in the development of an application for use by, or for sale to, any school or school district that participates in the National School Lunch Program or the School Breakfast Program.
E. Makers represent and warrant that the Sponsor, Administrator, and Hackathon partners are free to use Makers' Submission in the manner described above, as provided or as modified by Administrator, without obtaining permission or license from any third party and without any compensation to Makers.
A. Judges: Eligible Submissions will be evaluated by a panel of judges selected by the Sponsor (the “Judges”). Judges may be employees of the Sponsor or external, may or may not be listed individually on the Hackathon Web site, and may change before or during the Judging Period. Judging may take place in one or more rounds with one or more panels of Judges, at the discretion of the Sponsor.
B. Criteria: The Judges will score eligible Submissions using the following, equally weighted criteria (the “Judging Criteria”):
(1) UX and Design Appeal (Includes the degree to which the design reinvents the user experience of the form—focusing on usability, intuitiveness, and design appeal.)
(2) Effectiveness & Efficiency of Behavioral Prompts (Does the design keep the user engaged through user prompts? Does the design guide the applicants through all required fields and reduce mistakes?)
(3) Implementation of Form Requirements (Includes the extent to which the design adheres to the set of form and field requirements presented.)
(4) Application Code Documentation & Implementation (Includes the completeness and efficiency of the application documentation and code.)
(5) Demonstration of Testing and Debugging (Includes the extent to which user testing and debugging was performed and demonstrated within the submission.)
The Judging Criteria above may not apply to every Prize. See the Prizes section below for the Judging Criteria that apply for each Prize. The Maker(s) that are eligible for a Prize, and whose Submissions earn the highest overall scores based on the applicable Judging Criteria, will become potential winners of that Prize.
C. Submission Review: JUDGES ARE NOT REQUIRED TO TEST THE APPLICATION AND MAY CHOOSE TO JUDGE BASED SOLELY ON THE TEXT DESCRIPTION, IMAGES AND VIDEO PROVIDED IN THE SUBMISSION.
D. Tie Breaker: For each Prize listed below, if two or more Submissions are tied, the tied Submission with the highest score in the first applicable criterion listed above will be considered the higher scoring Submission. In the event any ties remain, this process will be repeated, as needed, by comparing the tied Submissions' scores on the next applicable criterion. If two or more Submissions are tied on all applicable criteria, the panel of Judges will vote on the tied Submissions.
In addition to the requirements in the Eligibility Section, Makers (including all members, if a Team submission) must:
• Be currently enrolled in at least nine credits or three courses, or the equivalent at the time of entry (or must have been enrolled in such credits or courses within the past three months); OR
• Have graduated in the three months prior to the date of entry from either a secondary school or functional equivalent, or an accredited post-secondary institution (
A. Verification Requirement: THE AWARD OF A PRIZE TO A POTENTIAL WINNER IS SUBJECT TO VERIFICATION OF THE IDENTITY, QUALIFICATIONS AND ROLE OF THE POTENTIAL WINNER IN THE CREATION OF THE SUBMISSION. The final decision to designate a winner shall be made by the Sponsor and/or Administrator.
B. Required Forms: Potential winners will be notified using the email address associated with the Devpost account used to enter the Submission (the submitter is the “Representative” in the case of a Team, Small Organization, or Large Organization). In order to receive a Prize, the potential winner (including all participating team members in the case of a Team, Small Organization, or Large Organization) will be required to sign and return to the Sponsor or Administrator, affidavit(s) of eligibility (or a similar verification document) and liability/publicity release(s), and any applicable tax forms (“Required Forms”).
Deadline for Returning Required Forms: Ten (10) business days after the Required Forms are sent.
C. Disqualification: The Sponsor and/or Administrator may deem a potential winner (or participating Team members) ineligible to win if:
(1) The potential winner's Representative or any participating member does not respond to multiple emails or fails to sign and return the Required Forms by the deadline listed above, or responds and rejects the Prize;
(2) The Prize or Prize notification is returned as undeliverable; or
(3) The Submission or the potential winner, or any member of a potential winner's Team, Small Organization, or Large Organization, is disqualified for any other reason.
In the event of a disqualification, the Sponsor and/or Administrator may award the applicable Prize to an alternate potential winner.
A. Substitutions & Changes: The Sponsor has the right to make a Prize substitution of equivalent or greater value. The Sponsor will not award a Prize if there are no eligible Submissions entered in the Hackathon, or if there are no eligible Makers or Submissions for a specific Prize.
B. Prize Delivery: A monetary Prize will be mailed to the winning Maker's address (if an individual) or the Representative's address (if a Team or Small Organization) after receipt of the Required Forms. Prizes will be payable to the Maker, if an individual, to the Maker's Representative, if a Team, or to the Small Organization, if the Maker is a Small Organization. It will be the responsibility of the winning Maker's Representative to allocate the Prize among their Team or Small Organization's participating members, as the Representative deems appropriate.
C. Prize Delivery Timeframe: Within 45 days of the Sponsor or Administrator's receipt of the Required Forms
D. Fees & Taxes: Winners (and in the case of Team or Small Organization, all participating members) are responsible for any fees associated with receiving or using a prize, including but not limited to, wiring fees. Winners (and in the case of Team or Small Organization, all participating members) are responsible for reporting and paying all applicable taxes in their jurisdiction of residence (federal, state/provincial/territorial and local). Winners may be required to provide certain information to facilitate receipt of the award; including completing and submitting any tax or other forms necessary for compliance with applicable withholding and reporting requirements. United States residents are required to provide a completed form W-9. THE SPONSOR, ADMINISTRATOR, AND/OR PRIZE PROVIDER RESERVE THE RIGHT TO WITHHOLD A PORTION OF THE PRIZE AMOUNT TO COMPLY WITH THE TAX LAWS OF THE UNITED STATES.
A. By entering the Hackathon, you (and, if you are entering on behalf of a Team or Small Organization, each participating members) agree(s) to the following:
(1) The relationship between you, the Maker, and the Sponsor and Administrator, is not a confidential, fiduciary, or other special relationship.
(2) You will be bound by and comply with these Official Rules and the decisions of the Sponsor, Administrator, and/or the Hackathon Judges which are binding and final in all matters relating to the Hackathon.
(3) You release, indemnify, defend and hold harmless the Sponsor, Administrator, Promotion Entities, and their respective parent, subsidiary, and affiliated companies, the Prize suppliers and any other organizations responsible for sponsoring, fulfilling, administering, advertising or promoting the Hackathon, and all of their respective past and present officers, directors, employees, agents and representatives (hereafter the “Released Parties”) from and against any and all claims, expenses, and liabilities (including reasonable attorneys' fees), including but not limited to negligence and damages of any kind to persons and property, defamation, slander, libel, violation of right of publicity, infringement of trademark, copyright or other intellectual property rights, property damage, or death or personal injury arising out of or relating to a Maker's entry, creation of Submission or entry of a Submission, participation in the Hackathon, acceptance or use or misuse of the Prize (including any travel or activity related thereto) and/or the broadcast, transmission, performance, exploitation or use of the Submission as authorized or licensed by these Official Rules.
B. Without limiting the foregoing, the Released Parties shall have no liability in connection with:
(1) Any incorrect or inaccurate information, whether caused by the Sponsor or Administrator's electronic or printing error, or by any of the equipment or programming associated with or utilized in the Hackathon;
(2) Technical failures of any kind, including, but not limited to malfunctions, interruptions, or disconnections in phone lines, internet connectivity or electronic transmission errors, or network hardware or software or failure of the Hackathon Web site;
(3) Unauthorized human intervention in any part of the entry process or the Hackathon;
(4) Technical or human error which may occur in the administration of the Hackathon or the processing of Submissions; or
(5) Any injury or damage to persons or property which may be caused, directly or indirectly, in whole or in part, from the Maker's participation in the Hackathon or receipt or use or misuse of any Prize.
The Released Parties are not responsible for incomplete, late, misdirected, damaged, lost, illegible, or incomprehensible Submissions or for address or email address changes of the Makers. Proof of sending or submitting will not be deemed to be proof of receipt by the Sponsor or Administrator.
If for any reason any Maker's Submission is determined to have not been received or been erroneously deleted, lost, or otherwise destroyed or corrupted, the Maker's sole remedy is to request the opportunity to resubmit its Submission. Such request must be made promptly after the Maker knows or should have known there was a problem, and will be determined at the sole discretion of the Sponsor.
By participating in the Hackathon you consent to the use of personal information about you, if you are a winner, by the Sponsor, Administrator, and third parties acting on their behalf. Such personal information includes, but is not limited to, your name, likeness, photograph, voice, opinions, comments and hometown and country of residence. It may be used in any existing or newly created media, worldwide without further payment or consideration or right of review, unless prohibited by law. Authorized use includes advertising and promotional purposes.
This consent applies, as applicable, to all members a Maker's Team or Small Organization or Large Organization that participated in the winning Submission.
A. Sponsor and Administrator reserve the right, in their sole discretion, to cancel, suspend and/or modify the Hackathon, or any part of it, in the event of a technical failure, fraud, or any other factor or event that was not anticipated or is not within their control.
B. Sponsor and Administrator reserve the right in their sole discretion to disqualify any individual or Maker it finds to be actually or presenting the appearance of tampering with the entry process or the operation of the Hackathon or to be acting in violation of these Official Rules or in a manner that is inappropriate, unsportsmanlike, not in the best interests of this Hackathon, or a violation of any applicable law or regulation.
C. Any attempt by any person to undermine the proper conduct of the Hackathon may be a violation of criminal and civil law. Should Sponsor or Administrator suspect that such an attempt has been made or is threatened, they reserve the right to take appropriate action including but not limited to requiring a Maker to cooperate with an investigation and referral to criminal and civil law enforcement authorities.
D. If there is any discrepancy or inconsistency between the terms and conditions of the Official Rules and disclosures or other statements contained in any Hackathon materials, including but not limited to the Hackathon Submission form, Hackathon Web site, advertising (including but not limited to television, print, radio or online ads), the terms and conditions of the Official Rules shall prevail.
E. The terms and conditions of the Official Rules are subject to change at any time, including the rights or obligations of the Maker, the Sponsor and the Administrator. The Sponsor and Administrator will post the terms and conditions of the amended Official Rules on the Hackathon Web site. To the fullest extent permitted by law, any amendment will become effective at the time specified in the posting of the amended Official Rules or, if no time is specified, the time of posting.
F. If at any time prior to the deadline, a Maker or prospective Maker believes that any Official Rule is or may be unclear or ambiguous, they must submit a written request for clarification.
G. The Sponsor or Administrator's failure to enforce any term of these Official Rules shall not constitute a waiver of that provision. Should any provision of these Official Rules be or become illegal or unenforceable in any jurisdiction whose laws or regulations may apply to a Maker, such illegality or unenforceability shall leave the remainder of these Official Rules, including the Rule affected, to the fullest extent permitted by law, unaffected and valid. The illegal or unenforceable provision shall be replaced by a valid and enforceable provision that comes closest and best reflects the Sponsor's intention in a legal and enforceable manner with respect to the invalid or unenforceable provision.
H. Excluding Submissions, all intellectual property related to this Hackathon, including but not limited to copyrighted material, trademarks, trade-names, logos, designs, promotional materials, Web pages, source codes, drawings, illustrations, slogans and representations are owned or used under license by the Sponsor and/or Administrator. All rights are reserved. Unauthorized copying or use of any copyrighted material or intellectual property without the express written consent of its owners is strictly prohibited. Any use in a Submission of Sponsor or Administrator intellectual property shall be solely to the extent provided for in these Official Rules.
By entering, all Makers (including, in the case of a Team, Small Organization, or Large Organization, all participating members) agree to be bound by the Official Rules and hereby release the Released Parties from any and all liability in connection with the Prizes or Maker's participation in the Hackathon. Provided, however, that any liability limitation regarding gross negligence or intentional acts, or events of death or body injury shall not be applicable in jurisdictions where such limitation is not legal.
A. Makers agree that, to the fullest extent permitted by law:
(1) Any and all disputes, claims and causes of action arising out of or connected with this Hackathon, or any Prizes awarded, other than those concerning the administration of the Hackathon or the determination of winners, shall be resolved individually, without resort to any form of class action;
(2) Any and all disputes, claims and causes of action arising out of or connected with this Hackathon or any Prizes awarded, shall be resolved exclusively by the United States District Court of New York or the appropriate New York State Court and Makers consent to the exclusive jurisdiction and venue of such courts; and
(3) Under no circumstances will Makers be entitled to, and Makers hereby waives all rights to claim, any punitive, incidental and consequential damages and any and all rights to have damages multiplied or otherwise increased.
SOME JURISDICTIONS DO NOT ALLOW THE LIMITATIONS OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE MAY NOT APPLY TO YOU.
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America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Reauthorization Act of 2010, 15 U.S.C. 3719.
U.S. Census Bureau, Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on the proposed 2016 National Survey of Children's Health, as required by the Paperwork Reduction Act of 1995.
To ensure consideration, written comments must be submitted on or before January 29, 2016.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Jason Fields, U.S. Census Bureau, ADDP, HQ-7H153, 4600 Silver Hill Road, Washington, DC 20233-0001 (301-763-2465 or via the Internet at
Sponsored by the U.S. Department of Health and Human Services' (HHS') Health Resources Services Administration's Maternal and Child Health Bureau (HRSA MCHB), the National Survey of Children's Health (NSCH) is designed to produce data on the physical and emotional health of American children under 18 years of age. The NSCH collects information on factors related to the well-being of children, including access to health care, in-home medical care, family interactions, parental health, school and after-school experiences, and neighborhood characteristics. In 2011-2012, the NSCH also collected information to assess parents' awareness of, experience with, and interest in enrolling in Medicaid and the State Children's Health Insurance Program (CHIP).
The NSCH project plan divides the sample into two groups of respondents to facilitate mailout procedures. We also include plans to test incentive efficacy (the relative benefit for reducing survey non-response by providing $0, $2, $5 incentives as a token of appreciation), contact materials, and modifications to data collection strategies based on modeled information about internet access. Preliminary results from the NSCH pretest (administered from June-December 2015) were used to inform the decisions made regarding this first year 2016 NSCH production survey project plan. First, the amount of respondent incentives to gain cooperation and participation in the survey will be tested with the initial mailing. From the NSCH pretest, the results showed that there was no statistically significant difference in the response rates when respondents were provided $5 or $10 as incentives to complete the survey. The cost of incentives are balanced against the reduction in follow-up effort and cost required to collect the required data. With the results from the pretest failing to show a substantial benefit for the larger $10 incentive, smaller amounts will be evaluated during the 2016 NSCH. In the 2016 NSCH, sampled addresses will receive either a $2 or a $5 cash incentive or they will be part of the control group that does not receive a cash incentive.
In addition to testing incentives and developing materials, the pretest also served as a platform to evaluate two options for the mode of data collection. The pretest included a mail only mode of data collection where respondents were mailed an advance letter, then a paper questionnaire to screen households with children into the survey and then a follow-up topical paper questionnaire to collect detailed information for only one of the children in the household. The second mode tested in the pretest was a self-administered internet/Web instrument. In this mode of data collection, the respondent was mailed an advance letter and then a letter inviting them to go to the Internet data collection portal for the Census Bureau and complete both the screener and topical sections through a single Web interview instrument. In the pretest, we observed a good Web response rate of over 70%. There are significant cost savings for Web data collection over paper data collection, and based on the pretest results, the decision was made to move to a data collection plan where Web is the primary data collection mode (Web push), and is followed by a mailing of paper screener and topical interviews (mail) for non-responding households. This “Web push + mail” data collection plan will be applied to the full sample, with alternative treatment paths to move either more quickly or more slowly to paper follow-up. The Web push + mail treatment is structured so that all households will first have the chance to complete the NSCH online, and only non-respondents or those who call in to request a hard copy will be mailed a paper questionnaire. Initially, all sampled households will receive a letter inviting them to complete the Web-based survey instrument.
The second data collection strategy being tested is one where non-respondents will receive follow-up mailings strategically organized to target households who are more likely to have Web access (High-Web Group), and separately, those households who are less likely to have Web access (Low-
Third, we will test different branding preferences for the survey materials. The initial mailing will utilize standard U.S. Census Bureau formats and be signed by the Director of the Census Bureau. During the first follow-up mailing, we will test the efficacy of mail materials that use letterhead/logos from the U.S. Census Bureau and from the Health Resources Services Administration's Maternal and Child Health Bureau (HRSA MCHB). Before the third or fourth follow-up mailings, we plan to determine which branding was more effective and should be used in the future.
Finally, for respondents who experience technical problems with the Web instrument, have questions about the survey, or need other forms of assistance, the 2016 NSCH will have a telephone questionnaire assistance (TQA) line available. TQA staff will not only be able to answer respondent questions and concerns, but they will also have the ability to collect survey responses over the phone if the respondent calls in and would like to have interviewer assistance in completing the interview.
Regardless of collection mode, the survey design for the 2016 NSCH focuses on first collecting information about the children in the household and basic special health care needs, and then selecting a child from the household for follow-up to collect additional detailed topical information. We estimate that of the original 416,000 selected households, our target response rate of 70 percent will yield approximately 292,000 responses to the screener. We then estimate that 40 percent of households from the first phase of the screener will receive a topical questionnaire, and 70 percent of these households will complete the topical questionnaire, resulting in approximately 82,000 completed topical interviews. A household could be selected for one of three age-based topical surveys: 0 to 5 year old children, 6 to 11 year old children, or 12 to 17 year old children.
Census staff have developed a plan to select a production sample of approximately 416,000 households (addresses) from a Master Address File (MAF) based sampling frame, with split panels to test mode of administration (
The goal of the first-year production survey is to provide HRSA MCHB with the necessary data to produce national and state-based estimates on the health and well-being of children, their families, and their communities as well as estimates of the prevalence and impact of children with special health care needs.
The production 2016 NSCH plan for a Web Push + Mail data collection design includes all 416,000 households receiving an initial invite with instructions on how to complete an English or Spanish language screening questionnaire via the Web. Those households who decide to complete the Web-based survey will be taken through the screening questionnaire to determine if they screen into one of the three topical instruments. If a household lists at least one child who is 0 to 17 years old in the screener, they will be directed into a topical questionnaire immediately after the last screener question. The Web Push + Mail production sample of 416,000 is broken out into three incentive groups: 104,000 household receiving no incentive, 104,000 households receiving a $2 incentive, and 208,000 households receiving a $5 incentive. No additional incentives are planned for subsequent follow-up reminders or paper questionnaire mailings Web Push + Mail treatment groups will not receive any additional incentives.
The NSCH historically was conducted in a partnership between the Health Services Resources Administration's Maternal and Child Health Bureau and the National Center for Health Statistics. As such, the survey information was sent to respondents under letterhead from the Department of Health and Human Services and the Centers for Disease Control and Prevention, with the Director of NCSH signing the letters to the respondent.
In the 2016 NSCH, we will test alternative branding to the standard contact utilized for Census Bureau surveys, which includes Census Bureau letterhead and the Census Director's signature. The first follow-up mailing, sent to non-responding households approximately three-weeks after their initial invitation to respond to the survey by Web, will be split into two groups. The first group will be sent a reminder to participate with their Web login and password under standard Census Bureau letterhead. The second group will be sent their reminder under a HRSA MCHB letterhead. The differential success of these reminder treatments will be evaluated during data collection and the program plans to responsively tailor future non-response follow-up correspondence. These results will also inform the design of contact strategies for future administrations of the NSCH.
Households that do not respond to the initial request or first follow-up request to complete the Web-based survey will then fall into one of two non-response follow-up groups: The High-Web group or Low-Web group. The High-Web group will receive three additional Web survey invitation letters requesting their participation in the survey prior to receiving their first paper screener questionnaire in the fourth follow-up mailing. The Low-Web Group will receive only one additional Web survey invitation letter prior to receiving their first paper screener questionnaire in the second follow-up mailing. Once a household receives a paper screener questionnaire, they will then have the option to either complete the Web-based survey or complete the mailed paper screener. If the household chooses to complete the mailed paper questionnaire, then they would then be considered part of the Mailout/Mailback Paper-and-Pencil Interviewing (PAPI) Treatment Group and would receive a paper topical questionnaire if there is at least one eligible child who is 0 to 17 years old listed on the screener. Non-response follow-up for the topical questionnaire will include three more mailings, each including the paper topical questionnaire.
NSCH-P-T1 (English Topical for 0- to 5-year-old children),
NSCH-P-T2 (English Topical for 6- to 11-year-old children),
NSCH-P-T3 (English Topical for 12- to 17-year-old children),
NSCH-PS-S1 (Spanish Screener),
NSCH-PS-T1 (Spanish Topical for 0- to 5-year-old children),
NSCH-PS-T2 (Spanish Topical for 6- to 11-year-old children), and
NSCH-PS-T3 (Spanish Topical for 12- to 17-year-old children).
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
Economic Development Administration, Department of Commerce.
Notice and opportunity for public comment.
Pursuant to Section 251 of the Trade Act 1974, as amended (19 U.S.C. 2341
Any party having a substantial interest in these proceedings may request a public hearing on the matter. A written request for a hearing must be submitted to the Trade Adjustment Assistance for Firms Division, Room 71030, Economic Development Administration, U.S. Department of Commerce, Washington, DC 20230, no later than ten (10) calendar days following publication of this notice.
Please follow the requirements set forth in EDA's regulations at 13 CFR 315.9 for procedures to request a public hearing. The Catalog of Federal Domestic Assistance official number and title for the program under which these petitions are submitted is 11.313, Trade Adjustment Assistance for Firms.
At the request of the applicant, a public hearing was scheduled to be held for the case referenced above on December 3, 2015 (see 80 FR 68504,
For further information, contact Pierre Duy at
In notice document 2015-28460, beginning on page 69193 in the issue of Monday, November 9, 2015, make the following correction:
On page 69197, in the table, in eighteenth and nineteenth rows,
International Trade Administration, Department of Commerce.
Notice and Call for Applications.
In this notice, the U.S. Department of Commerce (DOC) International Trade Administration (ITA) announces that it will begin accepting applications for the International Buyer Program (IBP) for calendar year 2017 (January 1, 2017, through December 31, 2017). The announcement also sets out the objectives, procedures and application review criteria for the IBP. The purpose of the IBP is to bring international buyers together with U.S. firms in industries with high export potential at leading U.S. trade shows. Specifically, through the IBP, the ITA selects domestic trade shows which will receive ITA assistance in the form of global promotion in foreign markets, provision of export counseling to exhibitors, and provision of matchmaking services at the trade show. This notice covers selection for IBP participation during calendar year 2017.
Applications for the IBP must be received by Friday, January 8, 2016.
The application form can be found at
Vidya Desai, Acting Director, International Buyer Program, Trade Promotion Programs, International Trade Administration, U.S. Department of Commerce, 1300 Pennsylvania Ave. NW., Ronald Reagan Building, Suite 800M—Mezzanine Level—Atrium North, Washington, DC 20004; Telephone (202) 482-2311; Facsimile: (202) 482-7800; Email:
The IBP was established in the Omnibus Trade and Competitiveness Act of 1988 (Pub. L. 100-418, codified at 15 U.S.C. 4724) to bring international buyers together with U.S. firms by promoting leading U.S. trade shows in industries with high export potential. The IBP emphasizes cooperation between the DOC and trade show organizers to benefit U.S. firms exhibiting at selected events and provides practical, hands-on assistance such as export counseling and market analysis to U.S. companies interested in exporting. Shows selected for the IBP will provide a venue for U.S. companies interested in expanding their sales into international markets.
Through the IBP, ITA selects U.S. trade shows with participation by U.S. firms interested in exporting that ITA determines to be leading international trade shows, for promotion in overseas markets by U.S. Embassies and Consulates. The DOC is authorized to provide successful applicants with assistance in the form of overseas promotion of the show; outreach to show participants about exporting; recruitment of potential buyers to attend the events; and staff assistance in setting up international trade centers at the events. Worldwide promotion is executed through ITA officers at U.S. Embassies and Consulates in more than 70 countries representing the United States' major trading partners, and also in Embassies in countries where ITA does not maintain offices.
The International Trade Administration (ITA) is accepting applications from trade show organizers for the IBP for trade events taking place between January 1, 2017, and December 31, 2017. Selection of a trade show is valid for one event,
For the IBP in calendar year 2017, the ITA expects to select approximately 20 events from among the applicants. The ITA will select those events that are determined to most clearly meet the statutory mandate in 15 U.S.C. 4721 to promote U.S. exports, especially those of small- and medium-sized enterprises, and the selection criteria articulated below.
There is no fee required to submit an application. If accepted into the program for calendar year 2017, a participation fee of $9,800 is required for shows of five days or fewer. For trade shows more than five days in duration, or requiring more than one International Trade Center, a participation fee of $15,000 is required. For trade shows ten days or more in duration, and/or requiring more than two International Trade Centers, the participation fee will be determined by DOC and stated in the written notification of acceptance. It would be calculated on a full cost recovery basis.
The MOA constitutes an agreement between ITA and the show organizer specifying which responsibilities for international promotion and export assistance services at the trade shows are to be undertaken by ITA as part of the IBP and, in turn, which responsibilities are to be undertaken by the show organizer. Anyone requesting application information will be sent a sample copy of the MOA along with the application and a copy of this
Selection as an IBP partner does not constitute a guarantee by DOC of the show's success. IBP partnership status is not an endorsement of the show except as to its international buyer activities. Non-selection of an applicant for IBP partnership status should not be viewed as a determination that the event will not be successful in promoting U.S. exports.
Eligibility: All 2017 U.S. trade events are eligible to apply for IBP participation through the show organizer.
Exclusions: Trade shows that are either first-time or horizontal (non-industry specific) events generally will not be considered.
General Evaluation Criteria: The ITA will evaluate shows to be International Buyer Program partners using the following criteria:
(a) Export Potential: The trade show promotes products and services from U.S. industries that have high export potential, as determined by DOC sources, including industry analysts' assessment of export potential, ITA best prospects lists and U.S. export statistics.
(b) Level of International Interest: The trade show meets the needs of a significant number of overseas markets and corresponds to marketing opportunities as identified by ITA. Previous international attendance at the show may be used as an indicator of such interest.
(c) Scope of the Show: The event offers a broad spectrum of U.S. made products and services for the subject industry. Trade shows with a majority of U.S. firms as exhibitors will be given priority.
(d) U.S. Content of Show Exhibitors: Trade shows with exhibitors featuring a high percentage of products produced in the United States or products with a high degree of U.S. content will be preferred.
(e) Stature of the Show: The trade show is clearly recognized by the industry it covers as a leading event for the promotion of that industry's products and services both domestically and internationally, and as a showplace for the latest technology or services in that industry.
(f) Level of Exhibitor Interest: U.S. exhibitors have expressed interest in receiving international business visitors during the trade show. A significant number of U.S. exhibitors should be seeking to begin exporting or to expand their sales into additional export markets.
(g) Level of Overseas Marketing: There has been a demonstrated effort by the applicant to market this event and prior related events. For this criterion, the applicant should describe in detail, among other information, the international marketing program to be conducted for the event, and explain how efforts should increase individual and group international attendance.
(h) Logistics: The trade show site, facilities, transportation services, and availability of accommodations at the site of the exhibition (
(i) Level of Cooperation: The applicant demonstrates a willingness to cooperate with the ITA to fulfill the program's goals and adhere to the target dates set out in the MOA and in the event timetables, both of which are available from the program office (see the
(j) Delegation Incentives: The IBP Office will be evaluating the level and/or range of incentives offered to delegations and/or delegation leaders recruited by U.S. overseas Embassies and Consulates. Examples of incentives to international visitors and to organized delegations include: Special organized events, such as receptions, meetings with association executives, briefings, and site tours; and complimentary accommodations for delegation leaders (beyond those required in the MOA).
Review Process: ITA will evaluate all applications received based on the criteria set out in this notice. Vetting will include soliciting input from ITA industry analysts, as well as domestic and international field offices, focusing primarily on the export potential, level of international interest, and stature of the show. In reviewing applications, ITA will also consider scheduling and sector balance in terms of the need to allocate resources to support selected events.
Application Requirements: Show organizers submitting applications for the 2017 IBP are requested to submit: (1) A narrative statement addressing each question in the application, Form OMB 0625-0143 (found at
Legal Authority: The statutory program authority for the ITA to conduct the International Buyer Program is 15 U.S.C. 4724. The DOC has the legal authority to enter into MOAs with show organizers under the provisions of the Mutual Educational and Cultural Exchange Act of 1961 (MECEA), as amended (22 U.S.C.s 2455(f) and 2458(c)). MECEA allows ITA to accept contributions of funds and services from firms for the purposes of furthering its mission.
The Office of Management and Budget (OMB) has approved the information collection requirements of the application to this program (Form OMB 0625-0143) under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
For further information please contact: Vidya Desai, Acting Director, International Buyer Program (
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Notice.
The Department of Commerce (the Department) is rescinding its administrative review in part on certain oil country tubular goods from Taiwan for the period of review (POR) July 18, 2014, through August 31, 2015.
Yang Jin Chun, AD/CVD Operations Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-5760.
On September 1, 2015, we published a notice of opportunity to request an administrative review of the antidumping duty order on certain oil country tubular goods from Taiwan for the POR July 18, 2014, through August 31, 2015.
On November 10, 2015, Shin Yang withdrew its request for an administrative review.
Pursuant to 19 CFR 351.213(d)(1), the Department will rescind an administrative review, “in whole or in part, if a party that requested a review withdraws the request within 90 days of the date of publication of notice of initiation of the requested review.” Because Shin Yang withdrew its review request in a timely manner, and because no other party requested a review of this company, we are partially rescinding the administrative review with respect to Shin Yang.
The Department will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries. For Shin Yang, for which the review is rescinded, antidumping duties shall be assessed at rates equal to the cash deposit of estimated antidumping duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). The Department intends to issue appropriate assessment instructions to CBP within 15 days after publication of this notice.
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement may result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
This notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO, in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On October 23, 2015, the Department of Commerce (“the Department”) published the affirmative preliminary determination of circumvention of the antidumping duty order on uncovered innerspring units (“innerspring units”) from the People's Republic of China (“PRC”).
Susan Pulongbarit, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-4031.
On October 23, 2015, the Department published the
The merchandise subject to the order is uncovered innerspring units composed of a series of individual metal springs joined together in sizes corresponding to the sizes of adult mattresses (
Uncovered innerspring units are suitable for use as the innerspring component in the manufacture of innerspring mattresses, including mattresses that incorporate a foam encasement around the innerspring. Pocketed and non-pocketed innerspring units are included in this definition. Non-pocketed innersprings are typically joined together with helical wire and border rods. Non-pocketed innersprings are included in this definition regardless of whether they have border rods attached to the perimeter of the innerspring. Pocketed innersprings are individual coils covered by a “pocket” or “sock” of a nonwoven synthetic material or woven material and then glued together in a linear fashion.
Uncovered innersprings are classified under subheading 9404.29.9010 and have also been classified under subheadings 9404.10.0000, 7326.20.0070, 7320.20.5010, or 7320.90.5010 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The HTSUS subheadings are provided for convenience and customs purposes only; the written description of the scope of the order is dispositive.
The products covered by this inquiry are innerspring units, as described above, that are manufactured in Malaysia by Goldon with PRC-origin components and other direct materials, such as helical wires, and that are subsequently exported from Malaysia to the United States.
In the
Because no party provided any additional information or comments regarding our
In accordance with section 781(b) of the Act and 19 CFR 351.225(1)(3), the Department will continue to direct CBP to suspend liquidation and to require a
This notice serves as the only reminder to parties subject to the administrative protective order (“APO”) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305. 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 which is subject to sanction.
This final affirmative circumvention determination is published in accordance with section 781(b) of the Act and 19 CFR 351.225(h).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on brass sheet and strip (BSS) from Italy.
Joseph Shuler, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1293.
The merchandise subject to the antidumping duty order is brass sheet and strip, other than leaded brass and tin brass sheet and strip, from Italy, which is currently classified under subheading 7409.21.00.50, 7409.21.00.75, 7409.21.00.90, 7409.29.00.50, 7409.29.00.75, and 7409.29.00.90 of the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS numbers are provided for convenience and customs purposes. A full description of the scope of the order is contained in the Preliminary Decision Memorandum.
The Preliminary Decision Memorandum is a public document and is on file electronically
In accordance with sections 776(a) and (b) of the Tariff Act of 1930, as amended (the Act), we relied on facts available with an adverse inference with respect to KME Italy SpA (KME Italy), the only company for which a review was requested. Thus, we preliminarily assign a rate of 22.00 percent as the dumping margin for KME Italy. In making these findings, we relied on facts available because KME Italy failed to respond to the Department's antidumping duty questionnaire, and thus withheld requested information, failed to provide requested information by the established deadlines, and significantly impeded this proceeding.
For a full description of the methodology underlying our conclusions,
As a result of our review, we preliminarily determine that the following dumping margin on BSS from Italy exists for the period March 1, 2014, through February 28, 2015:
Pursuant to 19 CFR 351.309(c), interested parties may submit case briefs not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than five days after the date for filing case briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically
The Department intends to issue the final results of this administrative review, including the results of its analysis of the issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act.
Upon issuance of the final results, the Department shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries covered by this review. If the preliminary results are unchanged for the final results we will instruct CBP to apply an
We intend to issue liquidation instructions to CBP 15 days after publication of the final results of review.
The following deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of BSS from Italy entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(2) of the Act: (1) The cash deposit rate for the reviewed company will be the rate established in the final results of this review; (2) for merchandise exported by manufacturers or exporters not covered in this review but covered in a prior segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment of this proceeding; (3) if the exporter is not a firm covered in this review, a prior review, or the less-than-fair-value investigation but the manufacturer is, the cash deposit rate will be the rate established for the most recently completed segment of this proceeding for the manufacturer of the merchandise; (4) if neither the exporter nor the manufacturer has its own rate, the cash deposit rate will be 5.44 percent. These deposit requirements, when imposed, shall remain in effect until further notice.
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
International Trade Administration, Department of Commerce.
Notice and call for applications.
The U.S. Department of Commerce (DOC), International Trade Administration (ITA) announces that it will begin accepting applications for the International Buyer Program (IBP) Select service for calendar year 2017 (January 1, 2017, through December 31, 2017). This announcement sets out the objectives, procedures and application review criteria for IBP Select. Under IBP Select, ITA recruits international buyers to U.S. trade shows to meet with U.S suppliers exhibiting at those shows. The main difference between IBP and IBP Select is that IBP offers worldwide promotion, whereas IBP Select focuses on promotion and recruitment in up to five international markets. Specifically, through the IBP Select, the DOC selects domestic trade shows that will receive DOC assistance in the form of targeted promotion and recruitment in up to five foreign markets, export counseling to exhibitors, and export counseling and matchmaking services at the trade show. This notice covers selection for IBP Select participation during calendar year 2017.
Applications for IBP Select must be received by Friday, January 8, 2016.
The application form can be found at
Vidya Desai, Acting Director, International Buyer Program, Trade Promotion Programs, International Trade Administration, U.S. Department of Commerce, 1300 Pennsylvania Ave. NW., Ronald Reagan Building, Suite 800M—Mezzanine Level—Atrium North, Washington, DC 20004; Telephone (202) 482-2311; Facsimile: (202) 482-7800; Email:
The IBP was established in the Omnibus Trade and Competitiveness Act of 1988 (Pub. L. 100-418, title II, § 2304, codified at 15 U.S.C. 4724) to bring international buyers together with U.S. firms by promoting leading U.S. trade shows in industries with high export potential. The IBP emphasizes cooperation between the DOC and trade show organizers to benefit U.S. firms exhibiting at selected events and provides practical, hands-on assistance such as export counseling and market analysis to U.S. companies interested in exporting. Shows selected for the IBP Select will provide a venue for U.S. companies interested in expanding their sales into international markets.
Through the IBP, the DOC selects trade shows that DOC determines to be leading trade shows with participation by U.S. firms interested in exporting.
ITA is accepting applications for IBP Select from trade show organizers of trade events taking place between January 1, 2017, and December 31, 2017. Selection of a trade show for IBP Select is valid for one event. A trade show organizer seeking selection for a recurring event must submit a new application for selection for each occurrence of the event. For events that occur more than once in a calendar year, the trade show organizer must submit a separate application for each event.
There is no fee required to submit an application. For IBP Select in calendar year 2017, ITA expects to select approximately 8 events from among the applicants. ITA will select those events that are determined to most clearly support the statutory mandate in 15 U.S.C. 4721 to promote U.S. exports, especially those of small- and medium-sized enterprises, and that best meet the selection criteria articulated below. Once selected, applicants will be required to enter into a Memorandum of Agreement (MOA) with the DOC, and submit payment of the $6,000 2017 participation fee (by check or credit card) within 30 days of written notification of acceptance into IBP Select. The MOA constitutes an agreement between the DOC and the show organizer specifying which responsibilities for international promotion and export assistance services at the trade shows are to be undertaken by the DOC as part of the IBP Select and, in turn, which responsibilities are to be undertaken by the show organizer. Anyone requesting application information will be sent a sample copy of the MOA along with the application form and a copy of this
Selection as an IBP Select show does not constitute a guarantee by DOC of the show's success. IBP Select participation status is not an endorsement of the show except as to its international buyer activities. Non-selection of an applicant for IBP Select status should not be viewed as a determination that the event will not be successful in promoting U.S. exports.
Eligibility: 2017 U.S. trade events with 1,350 or fewer exhibitors are eligible to apply, through the show organizer, for IBP Select participation. First-time events will also be considered.
Exclusions: U.S. trade shows with over 1,350 exhibitors will not be considered for IBP Select.
General Evaluation Criteria: ITA will evaluate applicants for IBP Select using the following criteria:
(a) Export Potential: The trade show promotes products and services from U.S. industries that have high export potential, as determined by DOC sources, including industry analysts' assessment of export potential, ITA best prospects lists, and U.S. export analysis.
(b) Level of International Interest: The trade show meets the needs of a significant number of overseas markets and corresponds to marketing opportunities as identified by ITA. Previous international attendance at the show may be used as an indicator.
(c) Scope of the Show: The event must offer a broad spectrum of U.S. made products and services for the subject industry. Trade shows with a majority of U.S. firms as exhibitors are given priority.
(d) U.S. Content of Show Exhibitors: Trade shows with exhibitors featuring a high percentage of products produced in the United States or products with a high degree of U.S. content will be preferred.
(e) Stature of the Show: The trade show is clearly recognized by the industry it covers as a leading event for the promotion of that industry's products and services both domestically and internationally, and as a showplace for the latest technology or services in that industry.
(f) Level of Exhibitor Interest: There is significant interest on the part of U.S. exhibitors in receiving international business visitors during the trade show. A significant number of U.S. exhibitors should be new-to-export or seeking to expand their sales into additional export markets.
(g) Level of Overseas Marketing: There has been a demonstrated effort by the applicant to market prior shows overseas. In addition, the applicant should describe in detail the international marketing program to be conducted for the event, and explain how efforts should increase individual and group international attendance.
(h) Level of Cooperation: The applicant demonstrates a willingness to cooperate with ITA to fulfill the program's goals and adhere to the target dates set out in the MOA and in the event timetables, both of which are available from the program office (see the
(i) Delegation Incentives: Waived or reduced (by at least 50%) admission fees are required for international attendees who are participating in IBP Select. Delegation leaders also must be provided complimentary admission to the event. In addition, show organizers should offer a range of incentives to delegations and/or delegation leaders recruited by the DOC overseas posts. Examples of incentives to international visitors and to organized delegations include: Special organized events, such as receptions, meetings with association executives, briefings, and site tours; or complimentary accommodations for delegation leaders.
Review Process: ITA will vet all applications received based on the criteria set out in this notice. Vetting will include soliciting input from ITA industry analysts, as well as domestic and international field offices, focusing primarily on the export potential, level of international interest, and stature of the show. In reviewing applications, ITA will also consider sector and calendar diversity in terms of the need to allocate resources to support selected events. Application Requirements: Show organizers submitting applications for 2017 IBP Select are required to submit: (1) A narrative statement addressing each question in the application, OMB 0625-0143 (found at
Legal Authority: The statutory program authority for ITA to conduct the IBP is 15 U.S.C. 4724. ITA has the legal authority to enter into MOAs with show organizers under the provisions of the Mutual Educational and Cultural Exchange Act of 1961 (MECEA), as amended (22 U.S.C.s 2455(f) and 2458(c)). MECEA allows ITA to accept contributions of funds and services from firms for the purposes of furthering its mission.
The Office of Management and Budget (OMB) has approved the information collection requirements of the application to this program (0625-0143) under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
For further information please contact: Vidya Desai, Acting Director, International Buyer Program (
International Trade Administration, U.S. Department of Commerce.
Notice of an open meeting.
The United States Travel and Tourism Advisory Board (Board) will hold an open meeting via teleconference on Wednesday, December 16, 2015. The Board was re-chartered in August 2015 and advises the Secretary of Commerce on matters relating to the U.S. travel and tourism industry. The purpose of the meeting is for Board members to review and deliberate on a recommendation focused on expanding and protecting the Visa Waiver Program (VWP). The final agenda will be posted on the Department of Commerce Web site for the Board at
Wednesday, December 16, 2015, 1:00 p.m.-2:00 p.m. The deadline for members of the public to register, including requests to make comments during the meeting and for auxiliary aids, or to submit written comments for dissemination prior to the meeting, is 5 p.m. EST on December 9, 2015.
The meeting will be held by conference call. The call-in number and passcode will be provided by email to registrants. Requests to register (including to speak or for auxiliary aids) and any written comments should be submitted to: U.S. Travel and Tourism Advisory Board, U.S. Department of Commerce, Room 4043, 1401 Constitution Avenue NW., Washington, DC 20230; email:
Archana Sahgal, the United States Travel and Tourism Advisory Board, Room 4043, 1401 Constitution Avenue, NW., Washington, DC 20230, telephone: 202-482-4501, email:
In addition, any member of the public may submit pertinent written comments concerning the Board's affairs at any time before or after the meeting. Comments may be submitted to Archana Sahgal at the contact information indicated above. To be considered during the meeting, comments must be received no later than 5:00 p.m. EST on December 9, 2015, to ensure transmission to the Board prior to the meeting. Comments received after that date and time will be distributed to the members but may not be considered on the call. Copies of Board meeting minutes will be available within 90 days of the meeting.
International Trade Administration, U.S. Department of Commerce.
Notice of an open meeting.
The United States Manufacturing Council (Council) will hold an open meeting via teleconference on Wednesday, December 16, 2015. The Council was established in April 2004 to advise the Secretary of Commerce on matters relating to the U.S. manufacturing industry. The purpose of the meeting is for Council members to review and deliberate on a recommendation by the Energy Subcommittee focused on trade missions. The final agenda will be posted on the Department of Commerce Web site for the Council at
Wednesday, December 16, 2015, 12:00 p.m.-1:00 p.m. The deadline for members of the public to register, including requests to make comments during the meeting and for auxiliary aids, or to submit written comments for dissemination prior to the meeting, is 5 p.m. EST on December 9, 2015.
The meeting will be held by conference call. The call-in number and passcode will be provided by email to registrants. Requests to register (including to speak or for auxiliary aids) and any written comments should be
Archana Sahgal, U.S. Manufacturing Council, Room 4043, 1401 Constitution Avenue NW., Washington, DC 20230, telephone: 202-482-4501, email:
In addition, any member of the public may submit pertinent written comments concerning the Council's affairs at any time before or after the meeting. Comments may be submitted to Archana Sahgal at the contact information indicated above. To be considered during the meeting, comments must be received no later than 5:00 p.m. EST on December 9, 2015, to ensure transmission to the Board prior to the meeting. Comments received after that date and time will be distributed to the members but may not be considered on the call. Copies of Council meeting minutes will be available within 90 days of the meeting.
Notice of Application for an Amended Export Trade Certificate of Review by DFA of California (“DFA”), Application No. 14-2A004.
The Secretary of Commerce, through the International Trade Administration, Office of Trade and Economic Analysis (OTEA), has received an application for an amended Export Trade Certificate of Review (“Certificate”) from DFA. This notice summarizes the proposed amendment and seeks public comments on whether the amended Certificate should be issued.
Joseph E. Flynn, Director, Office of Trade and Economic Analysis, International Trade Administration, by telephone at (202) 482-5131 (this is not a toll-free number) or email at
Title III of the Export Trading Company Act of 1982 (15 U.S.C. Sections 4001-21) authorizes the Secretary of Commerce to issue Export Trade Certificates of Review. An Export Trade Certificate of Review protects the holder and the members identified in the Certificate from State and Federal government antitrust actions and from private treble damage antitrust actions for the export conduct specified in the Certificate and carried out in compliance with its terms and conditions. The regulations implementing Title III are found at 15 CFR part 325 (2015). Section 302(b)(1) of the Export Trading Company Act of 1982 and 15 CFR 325.6(a) require the Secretary to publish a notice in the
An original and five (5) copies, plus two (2) copies of the nonconfidential version, should be submitted no later than 20 days after the date of this notice to: Office of Trade and Economic Analysis, International Trade Administration, U.S. Department of Commerce, Room 21028, Washington, DC 20230.
Information submitted by any person is exempt from disclosure under the Freedom of Information Act (5 U.S.C. 552). However, nonconfidential versions of the comments will be made available to the applicant if necessary for determining whether or not to issue the amended Certificate. Comments should refer to this application as “Export Trade Certificate of Review, application number 14-2A004.”
Contact: c/o Gilbert Associates, Inc., 2880 Gateway Oaks Drive, Suite 100, Sacramento, California 95833.
Proposed Amendments:
1. Add as new Members with respect to the covered products listed below:
a. Walnuts: Chico Nut Company; Pearl Crop, Inc.; Omega Walnut, Inc.; O-G Nut Company; California Walnut Company, Inc.; and Morada Nut Company, LP.
2. Change the name of existing Member Linden Nut Company to Pearl Crop, Inc.
DFA's proposed amendment of its Export Trade Certificate of Review would result in the following entities as Members under the Certificate:
Enforcement and Compliance, International Trade Administration, Department of Commerce
Hermes Pinilla at (202) 482-3477 (Brazil); Scott Hoefke at (202) 482-2947 (the People's Republic of China (PRC)); Patrick O'Connor at (202) 482-0989 (India and Japan); Steve Bezirganian at (202) 482-1131 (the Republic of Korea (Korea)); Eve Wang at (202) 482-6231 (the Russian Federation (Russia)); and Thomas Schauer at (202) 482-0410 (the United Kingdom), AD/CVD Operations, Enforcement and Compliance, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.
On August 17, 2015, the Department of Commerce (the Department) initiated antidumping duty (AD) investigations of imports of certain cold-rolled steel flat products (cold-rolled steel) from Brazil, the PRC, India, Japan, Korea, Russia, and the United Kingdom.
Sections 733(c)(1)(B)(i) and (ii) of the Act permit the Department to postpone the time limit for the preliminary determination if it concludes that the parties concerned are cooperating and determines that the case is extraordinarily complicated by reason of the number and complexity of the transactions to be investigated or adjustments to be considered, the novelty of the issues presented, or the number of firms whose activities must be investigated, and additional time is necessary to make the preliminary determination. Under this section of the Act, the Department may postpone the preliminary determination until no later than 190 days after the date on which the Department initiated the investigation.
The Department determines that the parties involved in the cold-rolled steel AD investigations on Brazil, India, Japan, the Republic of Korea, the Russian Federation, and the United Kingdom are cooperating, and that the investigations are extraordinarily complicated. Additional time is required to analyze the questionnaire responses and issue appropriate requests for clarification and additional information. With regard to the PRC investigation, this case has necessitated multiple rounds of quantity and value questionnaires, independent research into respondent locations, and ongoing analysis. As with the other investigations, we consider this case to be extraordinarily complicated and will require additional time to explore our options moving forward.
Therefore, in accordance with section 733(c)(1)(B) of the Act and 19 CFR 351.205(f)(1), the Department is postponing the time period for the preliminary determinations of these investigations by 50 days, to February 23, 2016. Pursuant to section 735(a)(l) of the Act and 19 CFR 351.210(b)(1), the deadline for the final determinations will continue to be 75 days after the date of the preliminary determinations, unless postponed at a later date.
This notice is issued and published pursuant to section 733(c)(2) of the Act and 19 CFR 351.205(f)(1).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of a public meeting.
The North Pacific Fishery Management Council's Pacific Northwest Crab Industry Advisory Committee (PNCIAC) will meet December 17, 2015.
The meeting will be held on Thursday, December 17, 2015, from 12 p.m. to 5 p.m.
The meeting will be held at the Alaska Bering Sea Crabbers' office 4005 20th Ave. W, Suite 102, Seattle, WA 98188. Please call 1-800-920-7487, passcode is 88696426#.
Diana Stram, Council staff; telephone: (907) 271-2809, or Lance Farr, (206) 669-7163.
The Committee will discuss issues to recommend for the Bering Sea Aleutian Island Crab 10-year review.
The Agenda is subject to change, and the latest version will be posted at
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Shannon Gleason at (907) 271-2809 at least 7 working days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Issuance of permit.
Notice is hereby given that Coonamessett Farm Foundation, Inc., 277 Hatchville Road, East Falmouth, MA 02536 [Responsible Party: Ronald Smolowitz], has been issued a permit to take sea turtles for purposes of scientific research.
The permit and related documents are available for review upon written request or by appointment in the Permits and Conservation Division, Office of Protected Resources, NMFS, 1315 East-West Highway, Room 13705, Silver Spring, MD 20910; phone (301) 427-8401; fax (301) 713-0376.
Malcolm Mohead or Amy Hapeman, (301) 427-8401.
On April 22, 2014, notice was published in the
Mr. Smolowitz has been issued a five-year permit to continue ongoing research assessing and reducing sea turtle bycatch in sea scallop fisheries in the Mid-Atlantic Bight. The research will aid in estimating abundance estimates, evaluating scallop harvesting strategies to minimize harm to sea turtles, and defining critical habitat of loggerhead (
Issuance of this permit, as required by the ESA, was based on a finding that such permit (1) was applied for in good faith, (2) will not operate to the disadvantage of such endangered or threatened species, and (3) is consistent with the purposes and policies set forth in section 2 of the ESA.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meetings.
The Mid-Atlantic Fishery Management Council's (Council) Northeast Trawl Advisory Panel (NTAP) will hold a public meeting.
The meeting will be held on Wednesday, December 16, 2015 for the Advisory Panel from 8 a.m. to 5 p.m. For agenda details, see
The meeting will held at the Radisson Hotel Providence Airport, 2081 Post Road, Warwick, RI 02886; telephone: (401) 739-3000.
Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526-5255.
The NTAP is a joint advisory panel of the Mid-Atlantic and New England Fishery Management Councils. It is composed of Council members, fishing industry, academic, and government and non-government fisheries experts who will provide advice and direction on the conduct of trawl research. The NTAP was established to bring commercial fishing, fisheries science, and fishery management professionals in the northeastern U.S. together to identify concerns about regional research survey performance and data, to identify
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to M. Jan Saunders, (302) 526-5251, at least 5 days prior to the meeting date.
First Responder Network Authority (FirstNet), U.S. Department of Commerce.
Notice of public meetings.
The Board of the First Responder Network Authority (FirstNet) will convene an open public meeting on December 9, 2015, preceded by open public meetings of the Board Committees on December 8, 2015.
On December 8, 2015 between 8:00 a.m. and 3:30 p.m. CST, there will be a joint meeting of FirstNet's four Board Committees. The meeting of the Governance and Personnel, Finance, Technology, and Consultation and Outreach Committees and will be open to the public from 8:00 a.m. to 10:00 a.m. CST. The FirstNet Committees will then go into a closed session from 10:00 a.m. to 3:30 p.m. The full FirstNet Board will hold an open public meeting on December 9, 2015 between 8:00 a.m. and 10:30 a.m. CST.
The meetings on December 8 and December 9, 2015 will be held at Hyatt Regency Houston, 1200 Louisiana Street, Houston, TX 77002.
Eli Veenendaal, Board Secretary (Acting), FirstNet, 12201 Sunrise Valley Drive, M/S 243, Reston, VA 20192; telephone: (571) 665-6143; email:
This notice informs the public that the Board of FirstNet will convene an open public meeting on December 9, 2015, preceded by a joint open public meeting of the Board Committees on December 8, 2015.
The meetings are accessible to people with disabilities. Individuals requiring accommodations, such as sign language interpretation or other ancillary aids, are asked to notify Monica Welham, Executive Assistant, FirstNet, at (571) 665-6144 or
The meetings will also be webcast. Please refer to FirstNet's Web site at
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is announcing an opportunity for public comment on the proposed renewal of a 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 January 29, 2016.
You may submit comments, identified by “Regulations Establishing and Governing the Duties of Swap Dealers and Major Swap Participants,” and Collection Number 3038-0084 by any of the following methods:
• The Agency's Web site, at
•
•
•
Please submit your comments using only one method.
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
Adam Kezsbom, Special Counsel, 202-418-5372,
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;
You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.
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
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is announcing an opportunity for public comment on the proposed renewal of a 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 January 29, 2016.
You may submit comments, identified by “Reporting, Recordkeeping, and Daily Trading Records Requirements For Swap Dealers and Major Swap Participants,” and Collection Number 3038-0087 by any of the following methods:
• The Agency's Web site, at
•
•
•
Please submit your comments using only one method.
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
Adam Kezsbom, Special Counsel, 202-418-5372,
Under the PRA,
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;
You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.
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
There are no new capital costs or operating and maintenance costs associated with this collection.
44 U.S.C. 3501
Department of Defense.
Charter Amendment of a Federal Advisory Committee.
The Department of Defense is publishing this notice to announce that it is amending the charter for the Board of Regents, Uniformed Services University of the Health Sciences (“the Board”).
Jim Freeman, Advisory Committee Management Officer for the Department of Defense, 703-692-5952.
This committee's charter is being amended pursuant to 10 U.S.C. 2113a and in accordance with the Federal Advisory Committee Act (FACA) of 1972 (5 U.S.C., Appendix, as amended) and 41 CFR 102-3.50(a).
The Board is a statutory Federal advisory committee that assists the Secretary of Defense in an advisory capacity in carrying out the Secretary's responsibility to conduct the business of the Uniformed Services University of the Health Sciences (“the University”). The Board shall provide advice and recommendations on academic and administrative matters critical to the full accreditation and successful operation of the University.
The DoD, through the Office of the USD(P&R), provides support for the performance of the Board's functions and ensures compliance with the requirements of the FACA, the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended) (“the Sunshine Act”), governing Federal statutes and regulations, and established DoD policies and procedures.
Under the provisions of 10 U.S.C. 2113a(b), the Board shall be composed of 15 members, appointed or designated as follows:
a. Nine persons outstanding in the field of health care, higher education administration, or public policy, who shall be appointed from civilian life by the Secretary of Defense;
b. The Secretary of Defense, or his designee, who shall be an
c. The Surgeons General of the Uniformed Services, who shall be
d. The President of the University, who shall be a non-voting,
a. Any member appointed to fill a vacancy occurring before the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term; and,
b. Any member whose term of office has expired shall continue to serve until his successor is appointed.
In accordance with 10 U.S.C. 2113a(d), one of the members of the Board (other than an
Board members that are not
Those members appointed by the Secretary of Defense from civilian life provide their best judgment on the matters before the Board, based upon each individual's professional experience. Board members who are not full-time or permanent part-time Federal officers or employees will be appointed as experts or consultants pursuant to 5 U.S.C. 3109 to serve as special government employee (SGE) members. Board members who are full-time or permanent part-time Federal officers or employees will serve as regular government employee (RGE) members pursuant to 41 CFR 102-3.130(a). No member may serve more than two consecutive terms of service without Secretary of Defense or Deputy Secretary of Defense approval.
Pursuant to 10 U.S.C. 2113a(e), Board members (other than
DoD, when necessary and consistent with the Board's mission and DoD policies and procedures, may establish subcommittees, task forces, or working groups to support the Board. Establishment of subcommittees will be based upon a written determination, to include terms of reference, by the Secretary of Defense, the Deputy Secretary of Defense, or the USD(P&R), as the Board's Sponsor.
Such subcommittees will not work independently of the Board and will report all of their recommendations and advice solely to the Board for full and open deliberation and discussion. Subcommittees, task forces, or working groups have no authority to make decisions and recommendations, verbally or in writing, on behalf of the Board. No subcommittee or any of its members can update or report, verbally or in writing, on behalf of the Board, directly to the DoD or any Federal officers or employees. Each member, based upon his or her individual professional experience, provides his or her best judgment on the matters before the Board, and he or she does so in a manner that is free from conflict of interest. All subcommittee members will be appointed by the Secretary of Defense or the Deputy Secretary of Defense to a term of service of one-to-four years, with annual renewals, even if the individual is already a member of the Board. Subcommittee members will not serve more than two consecutive terms of service, unless authorized by the Secretary of Defense or the Deputy Secretary of Defense.
Subcommittee members who are not full-time or permanent part-time Federal
All subcommittees operate under the provisions of FACA, the Sunshine Act, governing Federal statutes and regulations, and established DoD policies and procedures.
The Board's Designated Federal Officer (DFO) must be a full-time or permanent part-time DoD officer or employee, designated in accordance with established DoD policies and procedures. The Board's DFO is required to be in attendance at all meetings of the Board and any subcommittees for the entire duration of each and every meeting. However, in the absence of the Board's DFO, a properly approved Alternate DFO duly designated to the Board according to established DoD policies and procedures, must attend the entire duration of all meetings of the Board and any subcommittees.
The DFO, or the Alternate DFO, calls all meetings of the Board and its subcommittees; prepares and approves all meeting agendas; and adjourns any meeting when the DFO, or the Alternate DFO, determines adjournment to be in the public interest or required by governing regulations or DoD policies and procedures.
Pursuant to 41 CFR 102-3.105(j) and 102-3.140, the public or interested organizations may submit written statements to Board membership about the Board's mission and functions. Written statements may be submitted at any time or in response to the stated agenda of planned meeting of the Board.
All written statements shall be submitted to the DFO for the Board, and this individual will ensure that the written statements are provided to the membership for their consideration. Contact information for the Board's DFO can be obtained from the GSA's FACA Database—
The DFO, pursuant to 41 CFR 102-3.150, will announce planned meetings of the Board. The DFO, at that time, may provide additional guidance on the submission of written statements that are in response to the stated agenda for the planned meeting in question.
Consolidated Adjudications Facility, DoD.
Notice.
In compliance with the
Consideration will be given to all comments received by January 29, 2016.
You may submit comments, identified by docket number and title, by any of the following methods:
•
•
Any associated form(s) for this collection may be located within this same electronic docket and downloaded for review/testing. Follow the instructions at
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Department of Defense Consolidated Adjudications Facility, Attn: E. A. Foster, Fort George Meade, Maryland 20755, or call the DoD CAF Privacy Act Office, at 301-833-3790.
Respondents are DoD Consolidated Adjudications Facility employees who collect records maintained in available databases, based on information provided on the DoD Consolidated Adjudications Facility Request for Records form by the requester. The completed form is included in the Privacy Act case file, and documents the validity of the request and the records provided for anyone reviewing the case file. If the form is not included in the case file, individuals reviewing the file
Department of the Army, U.S. Army Corps of Engineers, DOD.
Notice of Intent.
The Environmental Impact Statement (EIS) is being prepared pursuant to the National Environmental Policy Act (NEPA), Council on Environmental Quality (CEQ) regulations (40 CFR, 1500-1517), and the USACE implementing regulation, Policy and Procedures for Implementing NEPA, Engineer Regulation (ER) 200-2-2 (1988). The study is being conducted in accordance with the requirements of 36 CFR 327.30, dated 27 July 1990 and ER 1130-2-406, dated 31 October 1990. The EIS will evaluate potential impacts (beneficial and adverse) to socioeconomic conditions, cultural and ecological resources, public access and safety, impacts to lake use, public parks and recreation, aesthetics, infrastructure, lake water quality, terrestrial and aquatic fish and wildlife habitats, federally-listed threatened and endangered species, and cumulative impacts associated with past, current, and reasonably foreseeable future actions at Table Rock Lake.
Submit written comments to Mr. Bob Singleton, Biologist, U.S. Army Corps of Engineers, Planning and Environmental Division, Environmental Branch, Little Rock District, P.O. Box 867, Little Rock, AR 72203-0867. Comments will be accepted through December 31, 2015.
For questions or comments regarding the Draft Table Rock Lake Shoreline Management Plan EIS, please contact Mr. Bob Singleton, (501) 324-5018 or email:
1.
Federal Student Aid (FSA), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before December 30, 2015.
To access and review all the documents related to the information
For specific questions related to collection activities, please contact Beth Grebeldinger, 202-377-4018.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than December 14, 2015.
A. Federal Reserve Bank of Dallas (Robert L. Triplett III, Senior Vice President) 2200 North Pearl Street, Dallas, Texas 75201-2272:
1.
Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).
Notice.
This notice announces a meeting of the Advisory Panel on Hospital Outpatient Payment (the Panel) for March 14-15, 2016. The purpose of the Panel is to advise the Secretary of the Department of Health and Human Services (DHHS) (the Secretary) and the Administrator of the Centers for Medicare & Medicaid Services (CMS) (the Administrator) on the clinical integrity of the Ambulatory Payment Classification (APC) groups and their associated weights and hospital outpatient therapeutic services supervision issues.
• Monday, March 14, 2016, 9 a.m. to 5 p.m. EDT
• Tuesday, March 15, 2016, 9 a.m. to 5 p.m. EDT
The actual meeting hours and days will be posted in the agenda. The Panel meeting will be conducted only via teleconference and webcast. The teleconference agenda, dial-in instructions, and related webcast and webinar details will be posted on the CMS Web site approximately 1 week prior to the meeting at:
We note that this is a teleconference-only meeting. There will not be an in-person meeting location for this public Panel meeting.
Presentations and comments may be submitted by email to the Designated Federal Official's (DFO's) email inbox (
Registration is not required to participate in this teleconference public meeting. Interested participants will be able to access the teleconference, webcast, and webinar by following the instructions on the above referenced CMS Web site.
The public may participate in this meeting via webinar, webcast or by teleconference. During the scheduled meeting, webcasting is accessible online at:
Carol Schwartz, DFO, 7500 Security Boulevard, Mail Stop: C4-04-25, Woodlawn, MD 21244-1850. Phone: (410) 786-3985. Email:
Send email copies to the following address: Email:
Representatives must contact our Public Affairs Office at (202) 690-6145.
The phone number for the CMS Federal Advisory Committee Hotline is (410) 786-3985.
For additional information on the Panel and updates to the Panel's activities, we refer readers to view our Web site at:
Information about the Panel and its membership in the Federal Advisory Committee Act (FACA) database are also located at:
The Secretary of the Department of Health and Human Services (DHHS) (the Secretary) is required by section 1833(t)(9)(A) of the Social Security Act (the Act) and is allowed by section 222 of the Public Health Service Act (PHS Act) to consult with an expert outside panel, that is, the Advisory Panel on Hospital Outpatient Payment (the Panel) regarding the clinical integrity of the Ambulatory Payment Classification (APC) groups and relative payment weights and hospital outpatient therapeutic services supervision issues. The Panel is governed by the provisions of the Federal Advisory Committee Act (Pub. L. 92-463), as amended (5 U.S.C. Appendix 2), to set forth standards for the formation and use of advisory panels.
The Charter provides that the Panel shall meet up to 3 times annually. We consider the technical advice provided by the Panel as we prepare the proposed and final rules to update the outpatient prospective payment system (OPPS).
The agenda for the March 14, 2016 through March 15, 2016, meeting will provide for discussion and comment on the following topics as designated in the Panel's Charter:
• Addressing whether procedures within an APC group are similar both clinically and in terms of resource use.
• Evaluating APC group weights.
• Reviewing the packaging of OPPS services and costs, including the methodology and the impact on APC groups and payment.
• Removing procedures from the inpatient-only list for payment under the OPPS.
• Using single and multiple procedure claims data for CMS' determination of APC group weights.
• Addressing other technical issues concerning APC group structure.
• Recommending the appropriate supervision level (general, direct, or personal) for individual hospital outpatient therapeutic services.
The Agenda will be posted on the CMS Web site at
The subject matter of any presentation and/or comment matter must be within the scope of the Panel designated in the Charter. Any presentations or comments outside of the scope of this Panel will be returned or requested for amendment. Unrelated topics include, but are not limited to, the conversion factor, charge compression, revisions to the cost report, pass-through payments,
The Panel may use data collected or developed by entities and organizations other than DHHS and CMS in conducting its review. We recommend organizations submit data for CMS staff and the Panel's review.
All presentations are limited to 5 minutes, regardless of the number of individuals or organizations represented by a single presentation. Presenters may use their 5 minutes to represent either one or more agenda items. All 508 compliant presentations and comments will be placed on the CMS Web site. For guidance on making documents Section 508 compliant, we refer readers to
In order to consider presentations and/or comments, we will need to receive the following:
1. An
2. Form
• The form is now available through the CMS Forms Web site. The Uniform Resource Locator (URL) for linking to this form is as follows:
• We encourage presenters to make efforts to ensure that their presentations and comments are 508 compliant.
In addition to formal oral presentations, which are limited to 5 minutes total per presentation, there will be an opportunity during the meeting for public oral comments, which will be limited to 1 minute for each individual and a total of 3 minutes per organization.
This is a teleconference-only meeting. The Panel meeting format is teleconference, webcast, and webinar. There will not be an in-person meeting location for this public Panel meeting. In addition, no meeting registration is required to access the meeting.
The Panel's recommendations at any Panel meeting generally are not final until they have been reviewed and approved by the Panel on the last day of the meeting, before the final adjournment. These recommendations will be posted to our Web site after the meeting.
This document does not impose information collection requirements, that is, reporting, recordkeeping or third-party disclosure requirements. Consequently, there is no need for review by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Centers for Medicare & Medicaid Services (CMS), HHS.
Notice of meeting.
This notice announces a Town Hall meeting in accordance with section 1886(d)(5)(K)(viii) of the Social Security Act (the Act) to discuss fiscal year (FY) 2017 applications for add-on payments for new medical services and technologies under the hospital inpatient prospective payment system (IPPS). Interested parties are invited to this meeting to present their comments, recommendations, and data regarding whether the FY 2017 new medical services and technologies applications meet the substantial clinical improvement criterion.
In addition, we are providing two alternatives to attending the meeting in person—(1) there will be an open toll-free phone line to call into the Town Hall Meeting; or (2) participants may
Alternatively, you may forward your requests via email to
Sections 1886(d)(5)(K) and (L) of the Social Security Act (the Act) require the Secretary to establish a process of identifying and ensuring adequate payments to acute care hospitals for new medical services and technologies under Medicare. Effective for discharges beginning on or after October 1, 2001, section 1886(d)(5)(K)(i) of the Act requires the Secretary to establish (after notice and opportunity for public comment) a mechanism to recognize the costs of new services and technologies under the hospital inpatient prospective payment system (IPPS). In addition, section 1886(d)(5)(K)(vi) of the Act specifies that a medical service or technology will be considered “new” if it meets criteria established by the Secretary (after notice and opportunity for public comment). (See the fiscal year (FY) 2002 IPPS proposed rule (66 FR 22693, May 4, 2001) and final rule (66 FR 46912, September 7, 2001) for a more detailed discussion.)
In the September 7, 2001 final rule (66 FR 46914), we noted that we evaluated a request for special payment for a new medical service or technology against the following criteria in order to determine if the new technology meets the substantial clinical improvement requirement:
• The device offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments.
• The device offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods. There must also be evidence that use of the device to make a diagnosis affects the management of the patient.
• Use of the device significantly improves clinical outcomes for a patient population as compared to currently available treatments. Some examples of outcomes that are frequently evaluated in studies of medical devices are the following:
++ Reduced mortality rate with use of the device.
++ Reduced rate of device-related complications.
++ Decreased rate of subsequent diagnostic or therapeutic interventions (for example, due to reduced rate of recurrence of the disease process).
++ Decreased number of future hospitalizations or physician visits.
++ More rapid beneficial resolution of the disease process treatment because of the use of the device.
++ Decreased pain, bleeding or other quantifiable symptoms.
++ Reduced recovery time.
In addition, we indicated that the requester is required to submit evidence that the technology meets one or more of these criteria.
Section 503 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) amended section 1886(d)(5)(K)(viii) of the Act to revise the process for evaluating new medical services and technology applications by requiring the Secretary to do the following:
• Provide for public input regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of Medicare beneficiaries before publication of a proposed rule.
• Make public and periodically update a list of all the services and technologies for which an application is pending.
• Accept comments, recommendations, and data from the public regarding whether the service or technology represents a substantial improvement.
• Provide for a meeting at which organizations representing hospitals, physicians, manufacturers and any other interested party may present comments, recommendations, and data to the clinical staff of CMS as to whether the service or technology represents a substantial improvement before publication of a proposed rule.
The opinions and presentations provided during this meeting will assist us as we evaluate the new medical services and technology applications for FY 2017. In addition, they will help us to evaluate our policy on the IPPS new technology add-on payment process before the publication of the FY 2017 IPPS proposed rule.
As noted in section I. of this notice, we are required to provide for a meeting at which organizations representing hospitals, physicians, manufacturers and any other interested party may present comments, recommendations, and data to the clinical staff of CMS concerning whether the service or technology represents a substantial clinical improvement. This meeting will allow for a discussion of the substantial clinical improvement criteria for each of the FY 2017 new medical services and technology add-on payment applications. Information regarding the applications can be found on our Web site at
The majority of the meeting will be reserved for presentations of comments, recommendations, and data from registered presenters. The time for each presenter's comments will be approximately 10 to 15 minutes and will be based on the number of registered presenters. Presenters will be scheduled to speak in the order in which they register and grouped by new technology applicant. Therefore, individuals who would like to present must register and submit their agenda item(s) via email to
In addition, written comments will also be accepted and presented at the meeting if they are received via email to
For participants who cannot attend the Town Hall Meeting in person, an open toll-free phone line, (877) 267-1577, has been made available. The Meeting Place meeting ID is 998-698-471.
Also, there will be an option to view and participate in the Town Hall Meeting via live streaming technology or a webinar. Information on the option to participate via live streaming technology or a webinar will be provided through an upcoming listserv notice and posted on the New Technology Web site at
We cannot guarantee reliability for live streaming technology or a webinar.
The Division of Acute Care in CMS is coordinating the meeting registration for the Town Hall Meeting on substantial clinical improvement. While there is no registration fee, individuals planning to attend the Town Hall Meeting in person must register to attend.
Registration may be completed on-line at the following Web address:
If you are unable to register on-line, you may register by sending an email to
Because this meeting will be located on Federal property, for security reasons, any persons wishing to attend this meeting must register by the date specified in the
Security measures include the following:
• Presentation of government-issued photographic identification to the Federal Protective Service or Guard Service personnel. The Real ID Act of 2005 (Pub. L. 109-13), establishes minimum standards for the issuance of state-issued driver's licenses and identification (ID) cards. It prohibits Federal agencies from accepting an official driver's license or ID card from a state unless the Department of Homeland Security determines that the state is in compliance with the Real ID Act. (For information regarding the states or territories that are not in compliance with the Real ID Act see
• Inspection of vehicle's interior and exterior (this includes engine and trunk inspection) at the entrance to the grounds. Parking permits and instructions will be issued after the vehicle inspection.
• Inspection, via metal detector or other applicable means of all persons entering the building. We note that all items brought into CMS, whether personal or for the purpose of presentation or to support a presentation, are subject to inspection. We cannot assume responsibility for coordinating the receipt, transfer, transport, storage, set-up, safety, or timely arrival of any personal belongings or items used for presentation or to support a presentation.
All visitors must be escorted in all areas other than the lower level lobby and cafeteria area and first floor auditorium and conference areas in the Central Building. Seating capacity is limited to the first 250 registrants.
Section 503 of Pub. L. 108-173.
Food and Drug Administration, HHS.
Notice.
This notice announces a forthcoming meeting of a public advisory committee of the Food and Drug Administration (FDA). The meeting will be open to the public.
The meeting will be held on February 3, 2016, from 8 a.m. to 5 p.m.
During the afternoon session, the committee will discuss new drug application 204447/supplemental new drug application 006, for the effectiveness of vortioxetine for the treatment of cognitive dysfunction in MDD, submitted by Takeda Development Center Americas, Inc.
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its Web site prior to the meeting, the background material will be made publicly available at the location of the advisory committee meeting, and the background material will be posted on FDA's Web site after the meeting. Background material is available at
Persons attending FDA's advisory committee meetings are advised that the Agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with disabilities. If you require accommodations due to a disability, please contact Kalyani Bhatt at least 7 days in advance of the meeting.
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our Web site at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Health Resources and Services Administration, HHS.
Notice.
The Health Resources and Services Administration (HRSA) is publishing this notice of petitions received under the National Vaccine Injury Compensation Program (the Program), as required by Section 2112(b)(2) of the Public Health Service (PHS) Act, as amended. While the Secretary of Health and Human Services is named as the respondent in all proceedings brought by the filing of petitions for compensation under the Program, the United States Court of Federal Claims is charged by statute with responsibility for considering and acting upon the petitions.
For information about requirements for filing petitions, and the Program in general, contact the Clerk, United States Court of Federal Claims, 717 Madison Place, NW., Washington, DC 20005, (202) 357-6400. For information on HRSA's role in the Program, contact the Director, National Vaccine Injury Compensation Program, 5600 Fishers Lane, Room 11C-26, Rockville, MD 20857; (301) 443-6593, or visit our Web site at:
The Program provides a system of no-fault compensation for certain individuals who have been injured by specified childhood vaccines. Subtitle 2 of Title XXI of the PHS Act, 42 U.S.C. 300aa-10
A petition may be filed with respect to injuries, disabilities, illnesses, conditions, and deaths resulting from vaccines described in the Vaccine Injury Table (the Table) set forth at 42 CFR 100.3. This Table lists for each covered childhood vaccine the conditions that may lead to compensation and, for each condition, the time period for occurrence of the first symptom or manifestation of onset or of significant aggravation after vaccine administration. Compensation may also be awarded for conditions not listed in the Table and for conditions that are manifested outside the time periods specified in the Table, but only if the petitioner shows that the condition was caused by one of the listed vaccines.
Section 2112(b)(2) of the PHS Act, 42 U.S.C. 300aa-12(b)(2), requires that “[w]ithin 30 days after the Secretary receives service of any petition filed under section 2111 the Secretary shall publish notice of such petition in the
Section 2112(b)(2) also provides that the special master “shall afford all interested persons an opportunity to submit relevant, written information” relating to the following:
1. The existence of evidence “that there is not a preponderance of the evidence that the illness, disability, injury, condition, or death described in the petition is due to factors unrelated to the administration of the vaccine described in the petition,” and
2. Any allegation in a petition that the petitioner either:
a. “[S]ustained, or had significantly aggravated, any illness, disability, injury, or condition not set forth in the Vaccine Injury Table but which was caused by” one of the vaccines referred to in the Table, or
b. “[S]ustained, or had significantly aggravated, any illness, disability, injury, or condition set forth in the Vaccine Injury Table the first symptom or manifestation of the onset or significant aggravation of which did not occur within the time period set forth in the Table but which was caused by a vaccine” referred to in the Table.
Office of the Secretary, HHS.
Notice.
In compliance with section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, has submitted an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB) for review and approval. The ICR is for revision of the approved information collection assigned OMB control number 0990-0302, scheduled to expire on December 31, 2015. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public on this ICR during the review and approval period.
Comments on the ICR must be received on or before December 30, 2015.
Submit your comments to
Information Collection Clearance staff,
When submitting comments or requesting information, please include the OMB control number 0990-0302-30D for reference.
Office of the Assistant Secretary for Health, Office of the Secretary, Department of Health and Human Services.
Notice.
As stipulated by the Federal Advisory Committee Act, the U.S. Department of Health and Human Service (DHHS) is hereby giving notice that the Presidential Advisory Council
The call will be held on Monday, December 14, 2015, at 4:30 p.m. (ET) to approximately 5:30 p.m. (ET).
The conference call-in number for members of the public in the United States or Canada is (888) 390-3967 and the International dial-in number is (862) 255-5351.
Ms. Caroline Talev, Public Health Analyst, Presidential Advisory Council on HIV/AIDS, Department of Health and Human Services, 200 Independence Avenue SW., Room 443H, Hubert H. Humphrey Building, Washington, DC 20201; (202) 205-1178. More detailed information about PACHA can be obtained by accessing the Council's Web site
PACHA was established by Executive Order 12963, dated June 14, 1995, as amended by Executive Order 13009, dated June 14, 1996. The Council was established to provide advice, information, and recommendations to the Secretary regarding programs, policies, and research to promote effective treatment, prevention, and cure of HIV disease and AIDS, including considering common co-morbidities of those infected with HIV as needed to promote effective prevention and treatment and quality services to persons living with HIV disease and AIDS. The functions of the Council are solely advisory in nature.
The Council consists of not more than 25 members. Council members are selected from prominent community leaders with particular expertise in, or knowledge of, matters concerning HIV and AIDS, public health, global health, philanthropy, marketing or business, as well as other national leaders held in high esteem from other sectors of society. Council members are appointed by the Secretary or designee, in consultation with the White House Office on National AIDS Policy. The agenda for the upcoming meeting will be posted on the Council's Web site at
Pre-registration for the call is advisable and can be accomplished by contacting Caroline Talev at
Pursuant to section 10(a) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of a meeting of the Cures Acceleration Network Review Board.
The meeting will be open to the public, viewing virtually by WebEx.
Individuals can register to view and access the meeting by the link below.
1. Go to “Event Status” on the left hand side of page, then click “Register”. On the registration form, enter your information and then click “Submit” to complete the required registration.
2. You will receive a personalized email with the live event link.
This notice is being published less than 15 days prior to the meeting due to finalizing the agenda and scheduling of meeting topics.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Department of Homeland Security, Privacy Office.
Notice of Privacy Act system of records.
In accordance with the Privacy Act of 1974, the Department of Homeland Security proposes to update and reissue a current Department of Homeland Security system of records titled, “Department of Homeland Security/U.S. Citizenship and Immigration Services-010 Asylum Information and Pre-Screening System of Records.” This system of records allows the Department of Homeland Security/U.S. Citizenship Immigration Services to collect and maintain records pertaining to asylum applications, credible fear and reasonable fear screening processes, and applications for benefits provided by section 203 of the Nicaraguan Adjustment and Central American Relief Act.
As a result of a biennial review of this system, Department of Homeland Security/U.S. Citizenship and Immigration Services is updating this system of records notice to: (1) Clarify that data originating from this system of records may be stored in a classified network; (2) provide an updated system location; (3) include follow-to-join (derivative) asylum information as a category of records; (4) expand the categories of records for benefit requestors, beneficiaries, derivatives, accredited representatives (including attorneys), form preparers, and interpreters; (5) remove routine use K because it was duplicative; (6) add two new routine uses K and L to permit the sharing of information with the Departments of State and Health and Human Services, respectively; (7) update the retention schedules to include additional systems; (8) add name and date of birth combination and receipt number to retrieve records; and
Submit comments on or before December 30, 2015. This updated system will be effective December 30, 2015.
You may submit comments, identified by docket number DHS-2015-0077 by one of the following methods:
•
•
•
For general questions, please contact: Donald K. Hawkins, (202) 272-8000, Privacy Officer, U.S. Citizenship and Immigration Services, 20 Massachusetts Avenue NW., Washington, DC 20529. For privacy questions, please contact: Karen L. Neuman, (202) 343-1717, Chief Privacy Officer, Privacy Office, Department of Homeland Security, Washington, DC 20528-0655.
In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the Department of Homeland Security (DHS) U.S. Citizenship and Immigration Services (USCIS) proposes to update and reissue a current DHS system of records titled, “DHS/USCIS-010 Asylum Information and Pre-Screening System of Records.”
As set forth in section 451(b) of the Homeland Security Act of 2002, Congress charged USCIS with the administration of the asylum program, which provides protection to qualified individuals in the United States who have suffered past persecution or have a well-founded fear of future persecution in their country of origin as outlined under Title 8, Code of Federal Regulations (8 CFR) section 208. USCIS is also responsible for adjudicating the benefit program established by Section 203 of the Nicaraguan Adjustment and Central American Relief Act (Pub. L. 105-100, hereinafter “NACARA”), in accordance with 8 CFR part 241, and maintaining and administering the credible fear and reasonable fear screening processes, under 8 CFR 208.30 and 208.31.
Every year people come to the United States seeking protection because they have suffered persecution or fear that they will suffer persecution on account of race, religion, nationality, membership in a particular social group, or political opinion. The two ways to obtain asylum in the United States are through the affirmative process and defensive process. To obtain asylum, the individual must be physically present in the United States. An individual may apply for affirmative asylum status regardless of how he or she arrived in the United States or his or her current immigration status. An individual may include his or her spouse and/or unmarried children present in the United States as derivatives on his or her asylum application. A defensive application for asylum occurs when an individual requests asylum as a defense against removal from the United States. In defensive asylum cases, the individual is currently in removal proceedings in immigration court with the Department of Justice's Executive Office for Immigration Review (EOIR). USCIS is responsible for the administration and adjudication of the affirmative asylum process. Individuals granted asylum status possess this status indefinitely, may work in the United States, may request derivative status for immediate family members within two years of the grant of asylum status, and may apply for permanent residence after one year.
An individual who entered the United States and was granted asylum status within the past two years may petition to have his or her spouse and/or unmarried children “follow-to-join” him or her in the United Sates and obtain derivative asylum status under 8 CFR 208.21. The derivatives may be in the United States or outside the United States.
Section 203 of NACARA applies to certain individuals from Guatemala, El Salvador, and the former Soviet bloc countries (the Soviet Union or any republic of the former Soviet Union, such as Russia, Latvia, Lithuania, Estonia, Albania, Bulgaria, the former Czechoslovakia, the former East Germany, Hungary, Poland, Romania, or Yugoslavia or any state of the former Yugoslavia) who entered the United States and applied for asylum by specified dates or registered for benefits. Section 203 of NACARA allows qualified individuals to apply for suspension of deportation or for special rule cancellation of removal under the standards similar to those in effect before the Illegal Immigration Reform and Immigrant Responsibility Act of 1996. If granted, individuals receive lawful permanent resident status.
Section 235 of Immigration and Nationality Act (INA), as amended, and its implementing regulations provide that certain categories of individuals are subject to expedited removal without a hearing before an immigration judge. These include: arriving stowaways; certain arriving aliens at ports of entry who are inadmissible under section 212(a)(6)(C) of the INA (because they have presented fraudulent documents or made a false claim to USCIS or other material misrepresentations to gain admission or other immigration benefits) or 212(a)(7) of the INA (because they lack proper documents to gain admission); and certain designated aliens who have not been admitted or paroled into the United States.
Individuals subject to expedited removal who indicate an intention to apply for asylum, express a fear of persecution or torture, or a fear of return to their home country are referred to USCIS asylum officers to determine whether they have a credible fear of persecution or torture. Individuals found to have a credible fear of persecution or torture may apply for asylum or withholding of removal as a defense to removal before an immigration judge.
Sections 238(b) and 241(a)(5) of the INA provide for streamlined removal procedures that prohibit certain individuals (
In order to carry out its statutory obligations in administering these benefit programs, USCIS has established the Asylum Information and Pre-Screening System of Records to facilitate every aspect of intake, adjudication, and review of the specified programs. The Asylum Information and Pre-Screening System records are used to track case status, facilitate scheduling appointments, issue notices throughout the process, and generate decision documents. These records are also used to initiate, facilitate, and track security and background check screening, and to prevent the approval of any benefit prior to the review and completion of all security checks. Finally, these records are used by USCIS to generate statistical reports to assist with oversight of production and processing goals.
Information contained in DHS/USCIS-010 Asylum Information and Pre-Screening is afforded the confidentiality protections contained in 8 CFR 208.6, which strictly limits the disclosure of information to third parties. 8 CFR 208.6 specifically covers the confidentiality of asylum applicants and individuals in the credible fear and reasonable fear screening processes. Information may not be disclosed without the written consent of the applicant, except as permitted by 8 CFR 208.6 or at the discretion of the Secretary of Homeland Security or the Attorney General of the United States.
Consistent with DHS's information sharing mission, information stored in the DHS/USCIS-010 Asylum Information and Pre-Screening may be shared with other DHS components that have a need to know the information to carry out their national security, law enforcement, immigration, intelligence, or other homeland security functions. In addition, DHS/USCIS may share information with appropriate federal, state, local, tribal, territorial, foreign, or international government agencies consistent with the confidentiality provisions of 8 CFR 208.6 and with the routine uses set forth in this system of records notice. This updated system will be included in DHS's inventory of record systems.
DHS/USCIS is updating this system of records notice to: (1) Clarify that data originating from this system of records may be stored in a classified network; (2) provide an updated system location; (3) include follow-to-join (derivative) asylum information as a category of records; and (4) expand the categories of records for benefit requestors, beneficiaries, derivatives, accredited representatives (including attorneys), form preparers, and interpreters. The categories of records for benefit requestors, beneficiaries, and derivatives are being updated to include: date of birth; receipt number; Social Security number; foreign residency history; detention center location; phone number; gender; place of marriage; education history; government identification number; notices and communication; records regarding membership or affiliation with organizations; personal background information; description of foreign travel; supporting documentation; and photographs. The category of records for attorneys and accredited representatives include: name; law firm/recognized organization; physical and mailing addresses; phone and fax numbers; email address; attorney bar card number or equivalent; bar membership and accreditation date; Board of Immigration Appeals representative accreditation and expiration date; law practice restriction explanation; and signature. The category of records for preparers and interpreters is being updated to include: name; organization name; business state ID number; physical and mailing addresses; email address; phone and fax numbers; relationship to benefit requestor; and signature.)
DHS/USCIS is also updating this system of records to (1) remove routine use K since it was duplicative of routine use E; (2) add two new routine uses K and L to permit the sharing of information with the Departments of State and Health and Human Services; (3) update the retention schedules to include additional systems; (4) add name and date of birth combination and receipt number to retrieve records; and (5) update record source categories to include accredited representatives (including attorneys), interpreters, preparers, and USCIS personnel.
The Privacy Act embodies fair information practice principles in a statutory framework governing the means by which Federal Government agencies collect, maintain, use, and disseminate individuals' records. The Privacy Act applies to information that is maintained in a “system of records.” A “system of records” is a group of any records under the control of an agency from which information is retrieved by the name of an individual or by some identifying number, symbol, or other identifying particular assigned to the individual. In the Privacy Act, an individual is defined to encompass U.S. citizens and lawful permanent residents. As a matter of policy, DHS extends administrative Privacy Act protections to all individuals when systems of records maintain information on U.S. citizens, lawful permanent residents, and visitors.
Below is the description of the DHS/USCIS-010 Asylum Information and Pre-Screening System of Records.
In accordance with 5 U.S.C. 552a(r), DHS has provided a report of this system of records to the Office of Management and Budget and to Congress.
Department of Homeland Security (DHS)/U.S. Citizenship and Immigration Services (USCIS)-010
DHS/USCIS-010 Asylum Information and Pre-Screening
Unclassified. The data originating from this system may be retained on classified DHS networks but this does not change the nature and character of the data until it is combined with classified information.
The operational information technology (IT) systems that support the Asylum Information Pre-Screening System include: Refugees, Asylum, and Parole System (RAPS), Asylum Pre-Screening System (APSS), Case and Activity Management for International Operations (CAMINO), and the Computer Linked Information Application Management System 3 (CLAIMS 3). Affirmative asylum and cases under section 203 of NACARA cases are processed in RAPS. Reasonable fear and credible fear screenings are processed in APSS. Asylee Relative Petitions are processed in CLAIMS 3 and CAMINO.
Records are maintained in the respective USCIS case management systems and associated electronic and paper files located at USCIS
Categories of individuals covered by Asylum Information and Pre-Screening System include:
• Individuals covered by provisions of section 208 of the INA, as amended, who have applied with USCIS for asylum on Form I-589 (Application for Asylum and for Withholding of Removal);
• The spouse and children of a principal asylum applicant properly included in an asylum application as beneficiaries;
• Individuals who have applied for suspension of deportation/special rule cancellation of removal under section 203 of NACARA on Form I-881 (Application for Suspension of Deportation or Special Rule Cancellation of Removal (Pursuant to section 203 of Public Law 105-100 (NACARA)));
• Individuals who were referred to a USCIS asylum officer for a credible fear or reasonable fear screening determination under 8 CFR 208, Subpart B, after having expressed a fear of return to the intended country of removal because of fear of persecution or torture, during the expedited removal process under 8 § U.S.C. 1225(b), the administrative removal processes under 8 U.S.C. 1228(b) (removal of certain aliens convicted of aggravated felonies), or 8 U.S.C. 1231(a)(5) (reinstatement of certain prior removal orders);
• Individuals who have petitioned for follow-to-join (derivative) asylum status for their spouse and children on Form I-730 (Refugee/Asylee Relative Petition); and
• Persons who complete asylum, Section 203 of NACARA, or follow-to-join applications, or participate in the credible fear or reasonable fear processes on behalf of the applicant (
• Name;
• Alias names;
• Dates of birth;
• Alien number (A-number);
• Receipt Number;
• Social Security number (if available);
• Address/residence in the United States;
• Foreign residence history;
• Detention location (if detained by U.S. Immigration and Customs Enforcement);
• Phone number;
• Gender;
• Marital status;
• Place of marriage;
• Date of birth;
• Country of birth;
• Country of nationality (or nationalities);
• Ethnic origin;
• Religion;
• Port(s), date(s) of entry, and status at entry(ies);
• Filing date of asylum, Section 203 of NACARA, or follow-to-join application;
• Education history;
• Work history;
• Results of security checks;
• Languages spoken;
• Claimed basis of eligibility for benefit(s) sought;
• Case status;
• Case history;
• Employment authorization eligibility and application history;
• Government-issued identification (
○ Document type;
○ Issuing organization;
○ Document number;
○ Expiration date; or
○ Benefit requested.
• Notices and communications, including:
○ Appointment notices;
○ Receipt notices;
○ Requests for evidence;
○ Notices of Intent to Deny (NOID);
○ Decision notices and assessments; or
○ Proofs of benefit.
• Records regarding organization membership or affiliation;
• Personal background information (
• Tax records;
• Explanation/description of foreign travel;
• Signature;
• Supporting documentation as necessary (
• Photographs; and
• Criminal and national security background check information.
• Name;
• Law firm/recognized organization;
• Physical and mailing addresses;
• Phone and fax numbers;
• Email address;
• Attorney bar card number or equivalent;
• Bar membership;
• Accreditation date;
• Board of Immigration Appeals representative accreditation;
• Expiration date;
• Law practice restriction explanation; and
• Signature.
• Name;
• Organization;
• Business state ID number;
• Physical and mailing addresses;
• Email address;
• Phone and fax numbers;
• Relationship to benefit requestor; and
• Signature.
Authority for maintaining this system is in 8 U.S.C. 1101, 1103, 1158, 1225, 1228, and 1522.
The purpose of Asylum Information and Pre-Screening System is to manage, control, and track the following types of adjudications:
A. Affirmative asylum applications (Form I-589);
B. Applications filed with USCIS for suspension of deportation/special rule cancellation of removal pursuant to Section 203 of NACARA (Form I-881);
C. Credible fear screening cases under 8 U.S.C. 1225(b)(1)(B);
D. Reasonable fear screening cases under 8 CFR 208.31; and
E. Follow-to-join derivative asylum/refugee cases (Form I-730) under 8 CFR 208.21.
DHS maintains a replica of some or all of the data in the operating system on unclassified and classified DHS networks to allow for analysis and vetting consistent with the above stated purposes and this published notice.
In addition to those disclosures generally permitted under 5 U.S.C.
Information in this system of records contains information relating to persons who have pending or approved asylum applications, follow-to-join applications, or in the credible fear or reasonable fear process and should not be disclosed pursuant to a routine use unless disclosure is otherwise permissible under 8 CFR 208.6. These confidentiality provisions do not prevent DHS from disclosing information to the U.S. Department of Justice and Offices of the U.S. Attorneys as part of an ongoing criminal or civil investigation. These provisions permit disclosure to courts under certain circumstances as well, as provided under 8 CFR 208.6(c)(2). Subject to these restrictions, DHS may disclose:
A. To the Department of Justice (DOJ), including Offices of the U.S. Attorneys, or other federal agency conducting litigation or in proceedings before any court, adjudicative, or administrative body, when it is relevant or necessary to the litigation and one of the following is a party to the litigation or has an interest in such litigation:
1. DHS or any Component thereof;
2. Any employee or former employee of DHS in his/her official capacity;
3. Any employee or former employee of DHS in his/her individual capacity when DOJ or DHS has agreed to represent the employee; or
4. The United States or any agency thereof.
B. To a congressional office from the record of an individual in response to an inquiry from that congressional office made at the request of the individual to whom the record pertains.
C. To the National Archives and Records Administration (NARA) or General Services Administration pursuant to records management inspections being conducted under the authority of 44 U.S.C. 2904 and 2906.
D. To an agency or organization for the purpose of performing audit or oversight operations as authorized by law, but only such information as is necessary and relevant to such audit or oversight function.
E. To appropriate agencies, entities, and persons when:
1. DHS suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised;
2. DHS has determined that as a result of the suspected or confirmed compromise, there is a risk of identity theft or fraud, harm to economic or property interests, harm to an individual, or harm to the security or integrity of this system or other systems or programs (whether maintained by DHS or another agency or entity) that rely upon the compromised information; and
3. The disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with DHS's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
F. To contractors and their agents, grantees, experts, consultants, and others performing or working on a contract, service, grant, cooperative agreement, or other assignment for DHS, when necessary to accomplish an agency function related to this system of records. Individuals provided information under this routine use are subject to the same Privacy Act requirements and limitations of 8 CFR 208.6 on disclosure as are applicable to DHS officers and employees. 8 CFR 208.6 prohibits the disclosure to third parties information contained in or pertaining to asylum applications, credible fear determinations, and reasonable fear determinations except under certain limited circumstances.
G. To an appropriate federal, state, tribal, local, international, or foreign law enforcement agency or other appropriate authority charged with investigating or prosecuting a violation or enforcing or implementing a law, rule, regulation, or order, when a record, either on its face or in conjunction with other information, indicates a violation or potential violation of law, which includes criminal, civil, or regulatory violations and such disclosure is proper and consistent with the official duties of the person making the disclosure as limited by the terms and conditions of 8 CFR 208.6 and any waivers issued by the Secretary pursuant to 8 CFR 208.6.
H. To any element of the U.S. Intelligence Community, or any other federal or state agency having a counterterrorism function, provided that the need to examine the information or the request is made in connection with its authorized intelligence or counterterrorism function or functions and the information received will be used for the authorized purpose for which it is requested.
I. To other federal, state, tribal, and local government agencies, foreign governments, intergovernmental organizations and other individuals and organizations as necessary and proper during the course of an investigation, processing of a matter, or during a proceeding within the purview of U.S. or foreign immigration and nationality laws, to elicit or provide information to enable DHS to carry out its lawful functions and mandates, or to enable the lawful functions and mandates of other federal, state, tribal, and local government agencies, foreign governments, or intergovernmental organizations as limited by the terms and conditions of 8 CFR 208.6 and any waivers issued by the Secretary.
J. To a federal, state, tribal, or local government agency or foreign government seeking to verify or ascertain the citizenship or immigration status of any individual within the jurisdiction of the agency for any purpose authorized by law as limited by the terms and conditions of 8 CFR 208.6 and any waivers issued by the Secretary pursuant to 8 CFR 208.6.
K. To the Department of State for the purpose of assisting in the processing of petitions or applications for benefits under the Immigration and Nationality Act, and all other immigration and nationality laws including treaties and reciprocal agreements.
L. To the Department of Health and Human Services (HHS), Office of Refugee Resettlement (ORR) and the Centers for Disease Control and Prevention (CDC) to provide emergency relief to qualified asylees, meet congressional reporting requirements, provide post-decisions services, and generate statistical reports for allocating funding for asylee social benefits.
None.
Records in this system are stored electronically in the operational system as well as on the unclassified and classified network or on paper in secure facilities in a locked drawer behind a locked door. The records are stored on magnetic disc, tape, digital media, and CD-ROM. The records may be stored on magnetic disc, tape, and digital media.
Records may be retrieved by name and date of birth, A-number, or receipt number.
DHS/USCIS safeguards records in this system according to applicable rules and policies, including all applicable DHS automated systems security and access policies. USCIS has imposed strict controls to minimize the risk of compromising the information that is being stored. Access to the computer system containing the records in this system is limited to those individuals who have a need to know the information for the performance of their official duties and who have appropriate clearances or permissions.
USCIS stores the physical documents and supplemental documentation in the Alien File and processes asylum, NACARA and follow-to-join applications, and credible fear or reasonable fear determinations in the respective case management system. The A-File records are permanent whether hard copy or electronic. USCIS transfers the A-Files to the custody of NARA 100 years after the individual's date of birth.
NARA approved the RAPS [N1-563-04-06], APSS [N1-563-04-07], CAMINO [N1-566-12-06] and CLAIMS 3 [N1-566-08-12] Retention Schedule. RAPS, APSS, and CAMINO Master File automated records are maintained for 25 years after the case is closed and then destroyed. CLAIMS 3 records are destroyed after the data is transferred to the electronic master file and verified. Information in the master file is destroyed 15 years after the last completed action with respect to the benefit. USCIS is proposing to update the CLAIMS 3 Retention Schedule to destroy records 25 years after the last completed action.
Records replicated on the unclassified and classified networks will follow the same retention schedule.
The Chief of the Asylum Division, Refugee, Asylum, and International Operations Directorate, U.S. Citizenship and Immigration Services, Suite 3300, 20 Massachusetts Avenue NW., Washington, DC, 20529.
Individuals seeking notification of and access to any record contained in this system of records, or seeking to contest its content, may submit a request in writing to the National Records Center (NRC) FOIA/PA Office, P.O. Box 648010, Lee's Summit, MO, 64064-8010. The NRC's contact information can be found at
When seeking records about yourself from this system of records or any other Departmental system of records, your request must conform with the Privacy Act regulations set forth in 6 CFR part 5. You must first verify your identity, meaning that you must provide your full name, current address, and date and place of birth. You must sign your request, and your signature must either be notarized or submitted under 28 U.S.C. 1746, a law that permits statements to be made under penalty of perjury as a substitute for notarization. While no specific form is required, you may obtain forms for this purpose from the Chief Privacy Officer and Chief FOIA Officer,
• Explain why you believe the Department would have information on you;
• Identify which Component(s) of the Department you believe may have the information about you;
• Specify when you believe the records would have been created; and
• Provide any other information that will help the FOIA staff determine which DHS component agency may have responsive records;
If your request is seeking records pertaining to another living individual, you must include a statement from that individual certifying his/her agreement for you to access his/her records.
Without the above information, the component(s) may not be able to conduct an effective search, and your request may be denied due to lack of specificity or lack of compliance with applicable regulations.
In processing requests for access to information in this system, USCIS will review not only the records in the operational system but also the records that were replicated on the unclassified and classified networks, and based on this notice provide appropriate access to the information.
See “Notification procedure” above.
See “Notification procedure” above.
Records are obtained from the applicant orhis or her accredited representative, preparer, or interpreter. Information contained in this system may also be supplied by DHS, other U.S. federal, state, tribal, or local government agencies, foreign government agencies, and international organizations. USCIS personnel may input information as they process a case, including information from internal and external sources to verify whether a benefit requestor or family is eligible for the benefit requested. Information from other systems of records (or their successor systems) such as Alien File, Index, and National File Tracking System of Records (DHS/USCIS/ICE/CBP-001, 78 FR 69983, November 22, 2013); USCIS Benefits Information System (BIS) (DHS/USCIS-007, 73 FR 56596, September 29, 2008); ICE Removable Alien Records System (DHS/ICE-011, 75 FR 23274, May 3, 2010); U.S. Customs and Border Protection (CBP) TECS (DHS/CBP-011, 73 FR 77778, December 19, 2008); DHS Automated Biometric Identification System (IDENT) (DHS/USVISIT-004, 72 FR 31080, June 5, 2007); Department of Justice (DOJ) Records and Management Information System (JUSTICE/EOIR-001, 72 FR 3410, January 25, 2007;) Department of Defense (DOD) Defense Biometric Services, 74 FR 48237, (September 22, 2009); DOD Detainee Biometric Information System, 72 FR 14534, (March 28, 2007); and DOD Defense Biometric Identification Records System, 74 FR 17840, (April 17, 2009).
None.
Transportation Security Administration, DHS.
60-day Notice.
The Transportation Security Administration (TSA) invites public comment on one currently approved Information Collection Request (ICR), OMB control number 1652-0053, abstracted below that we will submit to the Office of Management and Budget (OMB) for renewal in compliance with the Paperwork Reduction Act. The ICR describes the nature of the information collection and its expected burden. The collections of information that make up this ICR include: (1) Applications from entities that wish to become Certified Cargo Screening Facilities (CCSFs); (2) personally identifiable information to allow TSA to conduct security threat assessments on certain individuals employed by the CCSFs; (3) standard security program or submission of a proposed modified security program or amendment to a security program; and (4) recordkeeping requirements for CCSFs. TSA is seeking the renewal of the ICR for the continuation of the program in order to secure passenger aircraft carrying cargo.
Send your comments by January 29, 2016.
Comments may be emailed to
Christina A. Walsh at the above address, or by telephone (571) 227-2062.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
(1) Evaluate whether the proposed information requirement is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including using appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
TSA certifies qualified facilities as Certified Cargo Screening Facilities (CCSFs). Companies seeking to become CCSFs are required to submit an application for a security program and for certification to TSA at least 90 days before the intended date of operation. All CCSF applicants submit applications and related information either electronically through email, through the online Air Cargo Document Management System, or by postal mail.
TSA regulations (49 CFR parts 1540 and 1549) require CCSFs to ensure that individuals performing screening and related functions, and those who have unescorted access to cargo, have successfully completed a security threat assessment (STA) conducted by TSA. In addition, the senior manager or representative in control of the CCSF operations, and the CCSF Security Coordinators and their alternates, must all undergo STAs. CCSFs must submit personally identifiable information on these individuals to TSA so that TSA can conduct an STA. TSA also requires CCSFs to accept and implement a standard security program provided by TSA or to submit a proposed modified security program to the designated TSA official for approval. The CCSF must also submit to an assessment of its facility by TSA. Once TSA approves the security program and determines that the applicant is qualified to be a CCSF, TSA will send the applicant a written notice of approval and certification to operate as a CCSF.
Once approved, CCSFs must maintain screening, training, and other security-related records of compliance with their security program and make them available for TSA inspectors.
The forms used for this collection of information include the CCSF Facility Profile Application (TSA Form 419B), CCSF Principal Attestation (TSA Form 419D), Security Profile (TSA Form 419E), and the Security Threat Assessment Application (TSA Form 419F).
As noted above, TSA has identified several separate information collections under this ICR. Collectively, these four information collections represent an estimated average of 18,290 responses annually, for an average annual hour burden of 7125.24 hours.
1.
2.
3.
In addition, TSA currently has 950 CCSFs that must recertify every 3 years. According to the CCSP Section of the TSA Office of Security Operations (OSO), about half of these, or 475, will renew their certification or will relocate annually. TSA estimates that a renewal of the CCSF or relocation update to the CCSF will take 3 hours per entity. A site visit to approve the renewal of the CCSF will take an additional 2 hours for each entity. TSA estimates that a site visit takes place for approximately 20 percent of renewals, or 95 entities (475 × .20). Thus, TSA estimates that the annual hour burden associated with the renewal applications of existing CCSFs is 1,615 (475 renewals × 3 hours + 95 site visits × 2 hours).
4.
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW., Room 4176, Washington, DC 20410-5000; telephone 202-402-3400 (this is not a toll-free number) or email to
Ivery W. Himes, Director, Office of Single Family Asset Management, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410; email Ivery Himes at
Copies of available documents submitted to OMB may be obtained from Ms. Himes.
This notice informs the public that HUD is seeking approval from the OMB for the information collection described in Section A.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
Office of the Assistant Secretary for Policy Development and Research, HUD. ACTION: Announcement of funding awards.
In accordance with Section 501 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z-1) and the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2014 as included in the Consolidated Appropriations Act, 2014 (Pub. L. 113-
Ophelia Wilson, Office of University Partnerships, Department of Housing and Urban Development, 451 Seventh Street SW., Room 8226, Washington, DC 20410, telephone (202) 402-4390. To provide service for persons who are hearing-or-speech-impaired, this number may be reached via TTY by Dialing the Federal Relay Service on (800) 877-8339 or (202) 708-1455. (Telephone number, other than “800” TTY numbers are not toll free).
The Catalog of Federal Domestic Assistance number for the Research and Evaluation, Demonstrations and Data Analysis and Utilization initiative is: 14.536. On March 12, 2015, HUD posted a Notice of Funding Availability (NOFA) on Grants.gov announcing the availability of approximately $5.20 million for the Research and Evaluation, Demonstrations and Data Analysis and Utilization initiative. Under this initiative, HUD awarded cooperative agreements to three entities to conduct research and evaluation of the following projects: Moving to Work Evaluation, Jobs Plus Evaluation, and Small Area Fair Market Rent Demonstration Evaluation.
The Department reviewed, evaluated, and scored the applications received based on the criteria in the NOFA. As a result, HUD has funded the applications below, in accordance with section 501 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z-1) and the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2014 as included in the Consolidated Appropriations Act, 2014 (Public Law 113-76, approved January 17, 2014) and the Consolidated and Further Continuing Appropriations Act, 2013 (Public Law 113-6, approved March 26, 2013). More information about the winners can be found at
Office of the Assistant Secretary for Policy Development and Research, HUD
Announcement of Funding Awards.
The Consolidated Appropriations Act, 2014, (Pub. L. 113-76, approved January 18, 2014) (FY 2014 appropriation) authorizes the Office of Policy Development and Research (PD&R) to enter into noncompetitive cooperative agreements for research projects that are aligned with PD&R's research priorities and where HUD can gain value by having substantial involvement in the research activity. Research projects must be funded at least 50 percent by philanthropic entities or other Federal, state or local government agencies. This document announces the names, addresses and the amount awarded to entities selected to undertake research projects for PD&R.
Madlyn Wohlman Rodriguez, Office of University Partnerships, Department of Housing and Urban Development, 451 Seventh Street SW., Room 8226, Washington, DC 20410, telephone (202) 402-5939. To provide service for persons who are hearing-or-speech-impaired, this number may be reached via TTY by Dialing the Federal Information Relay Service on 800-877-8339 or 202-708-1455. (Telephone number, other than “800” TTY numbers are not toll free).
On March 21, 2014 at 79 FR 15766, HUD announced Authority to Accept Unsolicited Proposals for Research Partnerships. The authority that Congress provided HUD to enter into noncompetitive cooperative agreements for research is a central tool for research collaborations that informs important policy and program objectives. Under this authority, HUD awarded cooperative agreements to nine entities to undertake the following research projects:
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW., Room 4176, Washington, DC 20410-5000; telephone 202-402-3400 (this is not a toll-free number) or email at
Brian Siebenlist, Director, Office of Housing Counseling, Policy and Grants Administration, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410; email Brian Siebenlist at
Copies of available documents submitted to OMB may be obtained from Mr. Siebenlist.
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the collection of information on those who
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW., Room 4176, Washington, DC 20410-5000; telephone 202-402-3400 (this is not a toll-free number) or email at
Ivery Himes, Director, Office of Single Family Asset Management, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, telephone (202) 708-1672 x5628 (this is not a toll free number) for copies of the proposed forms and other available information.
This is not a toll-free number. Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at (800) 877-8339. Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
The Department is submitting the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended).
This Notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond; including the use of appropriate automated collection techniques or other forms of information technology,
This Notice also lists the following information:
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
Fish and Wildlife Service, Interior.
Notice of availability; extending of public comment period.
We, the U.S. Fish and Wildlife Service (Service), advise the public that we are extending the public review and comment period for the draft low effect habitat conservation plan (draft HCP) for the Los Angeles Department of Water and Power's operations, maintenance, and management activities on its land in Inyo and Mono Counties, California, and draft Environmental Action Statement/Low Effect Screening Form.
To ensure consideration of your comments in our final determination regarding whether to issue an incidental take permit, we must receive your written comments by January 15, 2016.
You may obtain copies of the draft HCP and Environmental
Suite 208, Palm Springs, CA 92262.
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.
Kennon A. Corey, Assistant Field Supervisor, Palm Springs Fish and Wildlife Office; telephone 760-322-2070. If you use a telecommunications device for the deaf (TDD), please call the Federal Information Relay Service (FIRS) at 800-877-8339.
In the October 7, 2015,
Since we announced the availability of the draft documents and extended the comment period to November 4, we have received additional requests from the public to allow more time for public comment. Public involvement is an important part of the process in considering a draft HCP and application for an incidental take permit. Therefore, we are extending the comment period to January 15, 2016. All comments received by the date specified in
We provide this notice under section 10 of the Act (16 U.S.C. 1531
Bureau of Indian Affairs, Interior.
Notice of submission to OMB.
In compliance with the Paperwork Reduction Act of 1995, the Bureau of Indian Affairs (BIA) has submitted to the Office of Management and Budget (OMB) a request for a revision to a currently approved collection of information for the Tribal Education Department Grant Program, authorized by OMB Control Number 1076-0185. The information collection will expire November 30, 2015.
Interested persons are invited to submit comments on or before December 30, 2015.
You may submit comments on the information collection to the Desk Officer for the Department of the Interior at the Office of Management and Budget, by facsimile to (202) 395-5806 or you may send an email to:
Wendy Greyeyes, (202) 208-5810. You may review the information collection requests online at
Under 25 U.S.C. 2020, Congress appropriated funding through the Bureau of Indian Education (BIE) for the development and operation of tribal departments or divisions of education for the purpose of planning and coordinating all educational programs of the tribe. All tribal education departments (TEDs) awarded will provide coordinating services and technical assistance to the school(s) they serve. As required under 25 U.S.C. 2020, for a Federally recognized tribe to be eligible to receive a grant, the tribe shall submit a grant application proposal. Once the grant has been awarded, each awardee will be responsible for quarterly and annual reports. All awardees shall comply with regulations relating to grants made under 25 U.S.C. 450h(a).
On September 1, 2015, Bureau of Indian Education (BIE) published a notice announcing the renewal of this information collection and provided a 60-day comment period in the
The BIE requests your comments on these collections concerning: (a) The necessity of this information collection for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) The accuracy of the agency's estimate of the burden (hours and cost) of the collection of information, including the validity of the methodology and assumptions used; (c) Ways we could enhance the quality, utility, and clarity of the information to
Please note that an agency may not conduct or sponsor, and an individual need not respond to, a collection of information unless it has a valid OMB Control Number.
It is our policy to make all comments available to the public for review at the location listed in the
Bureau of Indian Affairs, Interior.
Notice of submission to OMB.
In compliance with the Paperwork Reduction Act of 1995, the Bureau of Indian Affairs (BIA) is submitting to the Office of Management and Budget (OMB) a request for approval for the collection of information for Leases and Permits. The information collection is currently authorized by OMB Control Number 1076-0155, which expires November 30, 2015.
Interested persons are invited to submit comments on or before December 30, 2015.
You may submit comments on the information collection to the Desk Officer for the Department of the Interior at the Office of Management and Budget, by facsimile to (202) 395-5806 or you may send an email to:
Ms. Sharlene Round Face, Office of Trust Services, Bureau of Indian Affairs, 1849 C Street NW., Mailstop 3642—MIB, Washington, DC 20240; email:
The Bureau of Indian Affairs (BIA) is seeking renewal of the approval for information collection conducted under 25 CFR 162, Leases and Permits, for the review and approval of leases and permits on land the United States holds in trust or restricted status for individual Indians and Indian Tribes. This information collection allows BIA to review applications for leases and permits, modifications, and assignments, and to determine:
(a) Whether or not a lease may be approved or granted;
(b) The value of each lease;
(c) The appropriate compensation to landowners; and
(d) Provisions for violations of trespass.
A response is required to obtain or retain a benefit.
On September 14, 2015, BIA published a notice announcing the renewal of this information collection and provided a 60-day comment period in the
The BIA requests your comments on this collection concerning: (a) The necessity of this information collection for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) The accuracy of the agency's estimate of the burden (hours and cost) of the collection of information, including the validity of the methodology and assumptions used; (c) Ways we could enhance the quality, utility, and clarity of the information to be collected; and (d) Ways we could minimize the burden of the collection of the information on the respondents.
Please note that an agency may not conduct or sponsor, and an individual need not respond to, a collection of information unless it has a valid OMB Control Number.
It is our policy to make all comments available to the public for review at the location listed in the
Bureau of Land Management, Interior.
Notice of availability.
In accordance with the National Environmental Policy Act of 1969, as amended, and the Federal Land Policy and Management Act of 1976, as amended, the Bureau of Land Management (BLM) has prepared a Draft Environmental Impact Statement (Draft EIS) for the Copper Flat Copper Mine and by this notice is announcing the opening of the comment period.
To ensure comments will be considered, the BLM must receive written comments on the Copper Flat Copper Mine Draft EIS within 45 days following the date the Environmental Protection Agency publishes its Notice of Availability in the
You may submit comments related to the Copper Flat Copper Mine by any of the following methods:
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Copies of the Copper Flat Copper Mine Draft EIS are available at the Las Cruces District Office at the above address and public libraries in Hillsboro, New Mexico, at 158 Elenora Street, and Truth or Consequences, New Mexico, at 325 Library Lane. The Draft EIS and supporting documents are also available electronically on the Copper Flat Project (Project) Web site at:
Doug Haywood, telephone (575) 525-4498; address 1800 Marquess Street, Las Cruces, NM 88005; email
The Copper Flat Copper Mine is the proposed reestablishment of a poly-metallic mine and processing facility located near Hillsboro, New Mexico, that would produces copper, gold, silver, and molybdenum. The Proposed Action is to approve the Project as proposed, consisting of an open pit mine, flotation mill, tailings impoundment, waste rock disposal areas, a low-grade ore stockpile, and ancillary facilities. In most respects, the facilities, disturbance, and operations would be similar to the former operation. The Project is owned and operated by the New Mexico Copper Corporation (Copper Corporation), a wholly owned subsidiary of THEMAC Resources Group Limited. The Project is comprised of 963 acres (841 acres of proposed disturbance and 122 acres undisturbed) of private land and 1,227 acres (745 acres of proposed disturbance and 482 acres undisturbed) of public land, for a total of 2,190 acres. The proposed mining plan of operations was submitted by the Copper Corporation to the BLM in June 2011and is based upon the plan of development that Quintana Mineral Corporation used in the previous operation of Copper Flat mining activities in 1982. The Project includes upgrades and modifications based on current engineering designs and regulations and was intentionally developed to re-use the existing foundations, production wells, and water pipeline that were employed by the previous Quintana operation. Four Alternatives are analyzed: No Action, Proposed Action, Alternative A, and Alternative B. The Preferred Alternative (Alternative B) is different than the Proposed Action in that ore would be processed at a faster rate, therefore shortening the mine life of the Project.
Under the Proposed Action, the BLM would approve the Copper Corporation's plan to process 17,500 tons per day of copper ore over a mine operations period of 16 years, resulting in 100 million tons of ore processed over the mine life. Alternative A would process 25,000 tons per day of copper ore over a mine operations period of 11 years, resulting in 103 million tons of ore processed over the mine life. Alternative B would process 30,000 tons per day of copper ore over a mine operations period of 12 years, resulting in 125 million tons of ore processed over the mine life.
Mitigation of impacts are proposed in the mining plan of operations for reducing water quality effects; reducing the effects of the spread of nonnative vegetation and noxious weeds; providing protection to special-status bird species; pre-development surveying for bat species; developing measures to avoid, minimize, or mitigate the adverse effects to historic properties; reducing adverse impacts on historic properties; informational signing for mining as a resource to reduce visual impacts; fencing to prevent injury or loss of livestock from mining operations; reducing “boom and bust” socioeconomic impacts; reducing public concerns about potential company bankruptcy; and reducing effects to environmental justice populations.
The scoping period began on January 9, 2012, and ended on March 9, 2012. Scoping meetings were held in Hillsboro and Truth or Consequences, New Mexico, on February 22 and 23,
The BLM has prepared the Draft EIS in conjunction with its four Cooperating Agencies: The New Mexico Department of Game and Fish, New Mexico Environment Department, New Mexico Energy, Minerals and Natural Resources Department, and New Mexico Office of the State Engineer.
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.
40 CFR 1506.6, 40 CFR 1506.10.
National Park Service, Interior.
Notice.
The National Park Service is soliciting comments on the significance of properties nominated before November 7, 2015, for listing or related actions in the National Register of Historic Places.
Comments should be submitted by December 15, 2015.
Comments may be sent via U.S. 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.
The properties listed in this notice are being considered for listing or related actions in the National Register of Historic Places. Nominations for their consideration were received by the National Park Service before November 7, 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.
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.
Chateau Pacheteau, 1670 Diamond Mountain Rd., Calistoga, 15000913
In the interest of preservation, a request for removal/re-listing has been received for the following resource:
36 CFR 60.13.
National Park Service, Interior.
Notice.
The National Park Service is soliciting comments on the significance of properties nominated before October 31, 2015, for listing or related actions in the National Register of Historic Places.
Comments should be submitted by December 15, 2015.
Comments may be sent via U.S. 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.
The properties listed in this notice are being considered for listing or related actions in the National Register of Historic Places. Nominations for their consideration were received by the National Park Service before October 31, 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.
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.
A request to move has been received for the following resource:
36 CFR 60.13.
Bureau of Ocean Energy Management (BOEM), Interior.
Cancellation of Chukchi Sea Lease Sale 237.
The Department of the Interior has decided to cancel Chukchi Sea Lease Sale 237, which was scheduled to occur in 2016 under the 2012-2017 OCS Oil and Gas Leasing Program. Sale 237 is being canceled due to lack of industry interest; current market conditions (
David Diamond, BOEM, Chief, Leasing Division, at (703) 787-1776 or
Bureau of Ocean Energy Management (BOEM), Interior.
Cancellation of Beaufort Lease Sale 242.
The Department of the Interior has decided to cancel Beaufort Sea Lease Sale 242, which was scheduled to occur in 2017 under the 2012-2017 OCS Oil and Gas Leasing Program. Sale 242 is being canceled due to current market conditions (
David Diamond, BOEM, Chief, Leasing Division, at (703) 787-1776 or
Bureau of Ocean Energy Management (BOEM), Interior.
Extension of public scoping comment period.
On September 25, 2015, BOEM published a Notice of Intent (NOI) to Prepare an Environmental Impact Statement (EIS) for the Liberty Development and Production Plan (DPP) in the Beaufort Sea Planning Area (80 FR 57873). The September 25 notice provided for a 60-day comment period, which is scheduled to end on November 24, 2015. During BOEM's scoping, the pubic recommended extending the comment period. To further the intent of the National Environmental Policy Act (NEPA) to collect information to define the scope of issues to be addressed in depth in the analyses that will be included in the EIS, and to provide additional opportunity for interested and affected parties to comment, BOEM is extending the scoping comment period for an additional 60 days to January 26, 2016.
Scoping comments should be submitted by January 26, 2016.
For information on the Liberty DPP EIS or BOEM's policies associated with this notice, please contact Lauren Boldrick, Project Manager, BOEM, Alaska OCS Region, 3801 Centerpoint Drive, Suite 500, Anchorage, AK 99503, telephone (907) 334-5227.
Federal, State, Tribal, and local governments and/or agencies and other interested parties may submit written comments on the scope of the EIS through the Federal eRulemaking Portal:
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 comments to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
The NOI to prepare an EIS was issued pursuant to the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4231
Bureau of Reclamation, Interior.
Notice.
The Bureau of Reclamation has forwarded the following Information Collection Request to the Office of Management and Budget (OMB) for review and approval: Diversions, Return Flows, and Consumptive Use of Colorado River Water in the Lower Colorado River Basin (OMB Control Number 1006-0015).
OMB has up to 60 days to approve or disapprove this information collection request, but may respond after 30 days; therefore, public comments must be received on or before December 30, 2015.
Send written comments to the Desk Officer for the Department of the Interior at the Office of Management and Budget, Office of Information and Regulatory Affairs, via facsimile to (202) 395-5806, or email to
Paul Matuska at 702-293-8164. You may
The Bureau of Reclamation delivers Colorado River water to water users for diversion and beneficial consumptive use in the States of Arizona, California, and Nevada. The Consolidated Decree of the United States Supreme Court in the case of
The Form LC-72, Record of Water Diverted From Lake Mead and/or the Colorado River for Use in the State of Nevada, is no longer needed because the water entitlement holder who used the form is no longer able to withdraw water from the Colorado River.
A
We again invite comments concerning this information collection on:
(a) Whether the proposed collection of information is necessary for the proper performance of our functions, including whether the information will have practical use;
(b) The accuracy of our burden estimate for the proposed collection of information, including the validity of the methodology and assumptions used;
(c) Ways to enhance the quality, usefulness, and clarity of the information to be collected; and
(d) Ways to minimize the burden of the collection of information on respondents.
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. Reclamation will display a valid OMB control number on the forms.
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.
U.S. International Trade Commission.
Notice of Commission Determination not to review an initial determination granting a joint motion to terminate the investigation based on a patent license agreement; termination of the investigation.
Notice is hereby given that the U.S. International Trade Commission has determined not to review the presiding administrative law judge's (“ALJ”) initial determination (“ID”) (Order No. 14) that granted a joint motion to terminate the above-captioned investigation based on a patent license agreement. The investigation is terminated.
Cathy Chen, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205-2392. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205-2000. General information concerning the Commission may also be obtained by accessing its Internet server at
The Commission instituted this investigation on March 19, 2015, based on a complaint filed by NXP B.V. of The Netherlands and NXP Semiconductors USA, Inc. of San Jose, California (collectively, “NXP”). 80
On October 16, 2015, NXP and Dell filed a joint motion to terminate the investigation on the basis of a patent license agreement between the parties. Order No. 14 at 1. On October 26, 2015, the Commission investigative staff filed a response supporting the motion.
On October 26, 2015, the ALJ issued the subject ID (Order No. 14) granting the joint motion to terminate the investigation. The ALJ found that the joint motion complies with the Commission's rules for termination and that the agreement does not adversely affect the public interest.
No petitions for review were filed. The Commission has determined not to review the subject 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.
United States International Trade Commission.
Notice.
The Commission hereby gives notice of the scheduling of expedited reviews pursuant to the Tariff Act of 1930 (“the Act”) to determine whether revocation of the antidumping duty order and countervailing duty order on certain magnesia carbon bricks from China and the antidumping duty order on certain magnesia carbon bricks from Mexico would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
Joseph Traw, (202-205-3062), 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 these reviews 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, D, E, and F (19 CFR part 207).
In accordance with sections 201.16(c) and 207.3 of the rules, each document filed by a party to the reviews must be served on all other parties to the reviews (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.
These reviews are being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.62 of the Commission's rules.
By order of the Commission.
On January 9, 2015, Chief Administrative Law Judge John J. Mulrooney, II (hereinafter, CALJ), issued the attached Recommended Decision (cited as R.D.).
Having concluded that the Government had “made out a
Respondent filed Exceptions to the CALJ's Decision. Having considered the record in its entirety including Respondent's Exceptions, I have decided to adopt the CALJ's factual findings, conclusions of law, and recommended order. A discussion of Respondent's Exceptions follows.
Respondent takes exception to the CALJ's finding that he did not adequately accept responsibility for his misconduct. Specifically, Respondent takes issue with the following reasoning in the CALJ's Recommended Decision:
According to Respondent, he “did in fact accept responsibility and present an understanding that his answers were false.” Exceptions at 2. Quoting from his proposed factual findings, his counsel argues that “ ‘[i]n retrospect, Respondent understands that he made a mistake in providing `no' [answers] to various liability questions. Respondent had no intention of being deceitful.’ ”
Having reviewed Respondent's testimony, I agree with the CALJ's conclusion that Respondent has not unequivocally acknowledged his misconduct. To be sure, Respondent did answer “yes” when asked by his counsel whether “[i]n retrospect, would you say that was a mistake?” Tr. 124. Yet a review of the record shows that “that” was not a reference to the three DEA applications he falsified but rather to an application for malpractice insurance.
When Respondent did address why he provided a “no” answer to the question on the DEA applications regarding whether he had ever been disciplined by state licensing or controlled substance authorities, he claimed that he called either of two investigators for the State Dental Board and was “specifically told” that he could “answer no” on his DEA applications. Tr. 115-16. When pressed by the CALJ as to why he would ask investigators for the Dental Board how to answer questions on the DEA applications, Respondent testified:
At the time I was asking about everything. So their answers were, and obviously I jumped and assumed, but their answers were, yeah, you can answer no. When I did and nothing happened, I took that as they know what they're talking about. I never had dealt with this previously, so I didn't know, you know, how to deal with it, and they're the only people I could talk to.
Later, on cross-examination, the Government asked Respondent: “. . . if DEA asked you or if the PPO asked you or if the pharmacy board asked you about any previous disciplinary actions, do you understand the objective in their asking you whether you had any previous disciplinary actions with a licensing board?” Tr. 129. Respondent answered: “I don't think they explain the reason why they're asking.”
Returning to the issue of why he did not contact DEA and ask how he should answer the question on his DEA applications, Respondent explained:
I never had a relationship with anybody from the DEA. I never thought to call them directly, and my sole contact was with the governing board of my license. So I assumed they knew—they were the umbrella. So, if you go to the top, everything else falls underneath them. That's what I assumed.
After he again asserted that both the Dental Board and Ohio Pharmacy Board knew about his disciplinary record, the CALJ asked: “[b]ut if DEA wasn't part of that, there was no reason that you had to know that DEA would know any of this . . . ?”
Either . . . I assumed that they're all in conjunction with each other, I assume, and if they didn't know about it, I don't know. Why wouldn't they know about it? If the board was able to find out about it, why wouldn't the—you know, if the dental board found out about it, I'm sure that the pharmacies—the drug board would find out about it.
Still later, on re-direct examination, Respondent agreed with his counsel that he had “answered no to these liability questions on numerous applications.”
Respondent then asserted that at the time, he thought these “people” were, in the words of his counsel, “people in authority at least in the State of Ohio” and with the Dental Board.
The Agency has repeatedly held that where, as here, the Government has made out a
While Respondent had the burden of production on the issue of whether he accepted responsibility for his misconduct and can be entrusted with a registration, the CALJ found his evidence insufficient to rebut the Government's
The CALJ found implausible Respondent's testimony that a Dental Board investigator told him he could answer “no” to the DEA application's liability question. R.D. at 15-16. I agree and find that Respondent provided false testimony on this issue. Indeed, the only respect in which Respondent provided truthful testimony related to this issue was when he acknowledged that he was concerned that if he answered “yes” to questions on the various applications “it would trigger some other response both in insurance or the regulatory boards.” Tr. 132. Disturbingly, even at the hearing, Respondent persisted in offering excuses rather than admit that he lied on his three DEA applications. His false testimony is fatal to his contention that he acknowledges his misconduct and his claim that he is entitled to remain registered.
As the ALJ noted, because Respondent has failed to acknowledge his misconduct, his assurance (even if I found it credible) that he will provide truthful answers on future DEA applications is irrelevant. R.D. 23. Moreover, in his Exceptions, Respondent ignores that there are additional factors that are relevant in determining the appropriate sanction.
These include the egregiousness and extent of a registrant's misconduct.
The CALJ found that Respondent's misconduct was egregious in that he materially falsified his applications three times and was “motivated by his desire to avoid drawing negative
Finally, the CALJ also found that the Agency's interests in both specific and general deterrence support the revocation of his registration. Here too, Respondent does not challenge the CALJ's findings. I agree with the CALJ's findings that the Agency's interests in both specific and general deterrence support the revocation of Respondent's registration.
Accordingly, I reject Respondent's Exceptions and will adopt the CALJ's recommended order.
Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 824(a), as well as 28 CFR 0.100(b), I order that DEA Certificate of Registration BG1606219 issued to Daniel A. Glick, D.D.S, be, and it hereby is, revoked. I further order that any application of Daniel A. Glick, D.D.S., to renew or modify his registration, be, and it hereby is, denied. This Order is effective December 30, 2015.
Chief Administrative Law Judge John J. Mulrooney, II. On August 4, 2014, the Deputy Assistant Administrator of the Drug Enforcement Administration (DEA) issued an Order to Show Cause (OSC)
The issue ultimately to be adjudicated by the Administrator, with the assistance of this recommended decision, is whether the record as a whole establishes by substantial evidence that the Respondent's continued registration with the DEA should be revoked pursuant to 21 U.S.C. 824(a).
After carefully considering the testimony elicited at the hearing, the admitted exhibits, the arguments of counsel, and the record as a whole, I have set forth my recommended findings of fact and conclusions of law below.
In its OSC, in support of the revocation it seeks, the Government alleges that the Respondent “materially falsif[ied] [his] renewal applications for continuing authorization to handle controlled substances under [his] DEA COR,” in violation of 21 U.S.C. 824(a)(1).
The Government and the Respondent, through counsel, have entered into stipulations regarding the following matters:
1) Respondent is currently registered with DEA as a practitioner in Schedules II-V under DEA registration number BG1606219 at a registered location of 22901 Millcreek Boulevard, Suite 140, Beachwood, Ohio 44122. His DEA COR is current, and reflects an expiration date of September 30, 2015.
2) On November 6, 2003, Respondent entered into a Consent Agreement with the Ohio State Dental Board (Dental Board).
3) On or about September 19, 2003, Respondent was charged with felony possession of cocaine in the Cuyahoga County Court in Ohio.
4) On October 22, 2003, Respondent entered a plea of no contest to the above charges. On or about that same date, Respondent successfully petitioned the court for treatment in lieu of conviction, and on or about October 6, 2004, the charge of cocaine possession was dismissed, and Respondent's plea of no contest was vacated.
5) On January 7, 2004, Respondent's dental license was reinstated by the Dental Board.
6) Cocaine is a Schedule II controlled substance pursuant to 21 CFR 1308.12(b)(4).
The Government's case-in-chief included the testimony of two witnesses: Ohio State Dental Board Executive Director Lili Reitz, Esq. and DEA Diversion Group Supervisor Scott Brinks.
Diversion Group Supervisor (GS) Scott Brinks, the lead DEA investigator on the Government's case, testified that he is a fifteen-year DEA investigator, retired Department of Veterans Affairs police officer, and former military police officer.
Through GS Brinks's testimony, the Government offered three COR renewal applications submitted by the
Has the applicant ever . . . had a state professional license or controlled substance registration . . . suspended . . . or placed on probation. . . .
The testimony presented by GS Brinks was essentially uncontested.
The Government also introduced, without objection, an affidavit executed by DEA's Chief of the Registration and Program Support Section, Richard A. Boyd, regarding the history of the Respondent's registration with the DEA (DEA Records Affidavit). Gov't Ex. 2. The DEA Records Affidavit states that DEA initially assigned the Respondent COR BG1606219 on October 20, 1988.
Executive Director (Exec. Dir.) Lili E. Reitz also testified for the Government. Exec. Dir. Reitz testified that she is and has been the Executive Director of the Dental Board since May 1996 and that she is also an attorney. Tr. 25. Exec. Dir. Reitz testified that as executive director, her responsibilities include overseeing the operations of the Dental Board's three “primary functions” regarding dental professionals in the state,
Although produced by the Government ostensibly to explain the finer points of the application and renewal procedures at the Dental Board, Exec. Dir. Reitz's testimony was regrettably marked by a significant level of inconsistency and confusion. Exec. Dir. Reitz initially explained that in Ohio, as dentists renew their state licenses every two years, they are only required to report disciplinary actions that occurred within that biennium and are likewise not required to report disciplinary actions occurring in a previous renewal period. Tr. 26-28. Early in her testimony, Exec. Dir. Reitz indicated that it was her belief that the pertinent liability question on the renewal application asks applicants to disclose only those disciplinary actions occurring in the two years prior to submission. Tr. 27-28. Exec. Dir. Reitz went on to explain that even where a disciplinary matter has been completed within the biennium, a dentist is still required to disclose it if the matter occurred within the relevant period for the application. Tr. 33-34. Exec. Dir. Reitz was unequivocal in her testimony that the biennium language in the renewal applications has been in place “at least” since May 1996, when she began her career at the Dental Board. Tr. 28, 37. Exec. Dir. Reitz even offered that the guidance to the practitioners in this regard is “the way the question is worded [, which is] pretty clear.” Tr. 34.
Later in her testimony, Exec. Dir. Reitz was compelled to admit that she was mistaken regarding the language in the renewal applications utilized by the Dental Board at the time of the renewal applications at issue in these proceedings. Tr. 39-41. When confronted with the undeniable reality that the language of the renewal applications in issue for the Respondent did not self-limit to two years, but rather stated “at any time,” Exec. Dir. Reitz conceded that she was unfamiliar with the language in the renewal applications in question. Tr. 44. It was only after the language utilized in the relevant forms was inflicted on her as she testified that she reasoned (with a level of conviction that equaled her earlier, likewise confident assurances) that the “at any time” language required a licensure renewal applicant at that time to disclose any and all previous disciplinary action taken against him or her at any time. Tr. 50. Exec. Dir. Reitz testified that she is confident that the current 2013 renewal applications now specify a two-year period, and that the Dental Board must have made the change to the liability question sometime between 2009 and 2013. Tr. 41-42. Her estimation as to why the Dental Board changed the question to limit the disclosure time to two years was because the Dental Board was “getting the same information renewal period after renewal period for older types of actions.” Tr. 45. Thus, the focus of the change was to ensure that the Dental Board was apprised of actions that had not been processed through its own disciplinary apparatus. Exec. Dir. Reitz testified that even prior to the application language modification, a renewal applicant “would be expected to answer the question as written . . . [but f]rom the board standpoint, if they did not disclose something that occurred between the board and the licensee, we were aware of it anyway.” Tr. 46. She explained that the liability question was more geared toward dentists disclosing disciplinary actions taken against them in other states, or by a different regulatory entities, and that the Dental Board has “never disciplined a licensee for not disclosing to [them] an action that [it] took against that licensee.” Tr. 48-49, 53. Exec. Dir. Reitz testified that the Dental Board would not necessarily know if an individual answered one of its liability questions incorrectly unless it conducted an audit, because the system does not “flag” an application for further review. Tr. 47. Exec. Dir. Reitz testified that because the Dental Board is aware of its own actions, the failure by an applicant to
When pressed for details on any guidance that Ohio dentists would have had regarding the correct way to answer the “at any time” language in the 2009 Ohio dental license renewal application, Exec. Dir. Reitz testified that there was no internal guidance on this issue, no additional supplemental publications (such as a “frequently asked questions” resource) available to renewal applicants to assist in the process, and that the expectation was that the applicant would be required to comply with the plain language in the application in use at the time, to include the question that seeks disclosure of disciplinary actions that occurred “at any time.” Tr. 33-34, 42-43, 49. According to Exec. Dir. Reitz, telephonic inquiries by license renewal applicants are fielded by a cadre of experienced Dental Board staff members who “have been there many years.” Tr. 52. Exec. Dir. Reitz testified that she would be surprised if she were to learn that a Dental Board staff member ever provided advice to a caller that limited the temporal scope of the “at any time” question on the 2009 application.
Exec. Dir. Reitz also testified about a Consent Agreement that was entered into between the Respondent and the Dental Board in 2003 (Consent Agreement).
According to Exec. Dir. Reitz, the Dental Board worked in conjunction with the state pharmacy board and the Cleveland Police Department regarding the Respondent's possession of a controlled substance. Tr. 29. Exec. Dir. Reitz referred to the Consent Agreement as a “typical impairment consent agreement that [the Dental Board] enter[s] into with dentists.” Tr. 32. According to Exec. Dir. Reitz, the Board “had concerns about [the Respondent's] alcohol and drug use.”
Exec. Dir. Reitz's testimony was certainly not without its warts. She presented as a witness who was as committed to her first version of licensee application expectations as she was to her second, corrected version. As the Dental Board's Executive Director for eighteen years, it would not be unreasonable to expect that she understood the requirements of the application language that, according to her own testimony, each new iteration of which she was obligated “to review . . . before it gets issued for each licensing or renewal period.” Tr. 37. Her testimonial deficiencies were amplified by her initial representation that, prior to taking the witness stand in this case, she “reviewed the files regarding [the Respondent] and [the Board's] history with [the Respondent] and the consent agreements, renewal information, anything relevant.”
Still, even with its blemishes, Exec. Dir. Reitz's testimony was credible. Notwithstanding the aforementioned single internal inconsistency, Exec. Dir. Reitz presented as an impartial and generally knowledgeable state regulator who was mistaken on one (ultimately non-dispositive) issue. When confronted with the issue, Exec. Dir. Reitz quickly, candidly, and commendably addressed and persuasively explained the basis for her mistake and did not equivocate in any way.
The Respondent presented his case-in-chief through his own testimony and two exhibits.
Although the Government's case focused on the three COR renewal applications at issue, the Respondent, during his direct testimony, raised the issue of, and spoke at some length about, the events precipitating his 2003 airport arrest and corresponding criminal charge for possession of cocaine. According to the Respondent, cocaine was found at the airport in his checked luggage as he was preparing to depart with some high school friends for Key West for a fortieth birthday party. Tr. 96-97. The Respondent testified in essence that the cocaine was brought to enhance the vacation experience, which in his words:
The Respondent's testimony regarding the cocaine was uneven and confusing. At one point, the Respondent testified that “[t]here was cocaine in a suitcase that was registered in my name.” Tr. 96. He then offered that “one of the bags that was checked in under my name had cocaine in it” and that the bag “[h]ad cocaine in it, and that's why I was arrested.” Tr. 97. When pressed on the issue of how it was that the cocaine ended up in his bag, the Respondent answered: “I will take ownership of it. I always have and I always will. I had the cocaine in my bag.” Tr. 97. After multiple questions and an equal number of equivocations, the Respondent's answers eventually morphed from his “tak[ing] ownership” and “accept[ing] responsibility” for the cocaine to his reluctant admission that he had actually placed the cocaine in his own bag. Tr. 97-98. Later in his testimony, the Respondent described how another member of his party was carrying fireworks, and that he (the Respondent) “was able to get the cocaine” and that he was “the one that was going to carry it.” Tr. 139. The Respondent, at another point in his testimony, did volunteer that he now feels his actions were a “stupid mistake” and a “stupid, hugely horrible mistake.” Tr. 97, 99. The testimony the Respondent offered regarding his arrest veered wildly, and was styled much less as an acceptance of responsibility than as an innocent man nobly accepting culpability for a high school chum. Suffice it to say that this narrative structure did not enhance the credibility of the Respondent's testimony.
The Respondent also testified about the criminal proceedings associated with his arrest. According to the Respondent, following his arrest, he was offered the option to participate in a drug court program
The Respondent testified that approximately two months after his arrest, a Dental Board investigator visited his office.
The Respondent testified that the airport incident and its consequences burdened him with some financial hardships, the most significant of which was apparently his removal from some insurance company panels as a result of having been placed on probation by the Consent Agreement.
Boiled down to its essence, the Respondent's position in these proceedings has consistently been that his DEA COR application answers were incorrect because in 2009, he completed his Ohio state license renewal application (apparently incorrectly), and applied the same (incorrect) rule he used at the state level to his (federal) DEA application. In support of this position, the Respondent supplied the record with a copy of his 2009 Ohio State Dental Board license renewal application (2009 Renewal Application).
The Respondent testified that before filing his 2009 Renewal Application, he called investigators at the Dental Board for guidance in responding to the “Discipline” questions. Tr. 104. At the hearing, the Respondent said that he conceived the idea to call the Dental Board investigators after participating in the Caduceus program, which was a series of substance abuse rehabilitation meetings geared toward the special needs of professionals in the medical and dental communities. Tr. 108-10. According to the Respondent, the Dental Board investigator that he spoke to
The Respondent likewise testified to his process of answering “no” to the DEA liability question regarding whether he had ever had his license suspended or placed on probation. He stated that he asked the (state) Dental Board investigators about how to answer the (federal) DEA liability questions, and that, according the Respondent, the investigators told him that he could answer the DEA questions in the negative. Tr. 115. The Respondent clarified:
Additionally, the Respondent said that he believed that the (state) Dental Board oversees his (federal) DEA registration. The Respondent said:
At his DEA hearing, in addition to his misperception that investigators at the state Dental Board wielded authority over his (federal) DEA COR, the Respondent also attributed his decision not to check with DEA to his (equally inexplicable) assumption that all regulatory authority (even federal DEA regulatory authority) fell under the jurisdiction of his state pharmacy board, and that the state pharmacy board was notified in some way by the state Dental Board. Tr. 134-35. When pressed on the patent illogic of his reasoning, the Respondent had the following to say:
The Respondent, in a perhaps more candid moment during his testimony, admitted that at the time he completed the various applications, he was concerned about a “trickle-down” effect on other applications should he answer in the affirmative to the liability questions asked by the Dental Board in its Renewal Application. Tr. 131. He stated:
The Respondent's assessment of whether he was intending to deceive with his false DEA COR renewal application answers was all over the place. At one point in his testimony, he denied there was any attempt to deceive or mislead. Tr. 124. At another point, when asked by his counsel whether he felt he was “being misleading or duplicitous,” the Respondent's answer was more introspective: “I think initially the first time, yes, but since then no. No. No.” Tr. 125. When he was asked “why not be truthful . . . ?”, the Respondent replied:
The Respondent's testimony was problematic from a credibility standpoint. As discussed,
In addition to its equivocations and inconsistencies, the Respondent's testimony was implausible. His theory, that, even as an experienced practitioner, he was misled by errant advice supplied by state investigators is simply not supported by reason. The language in the 2009 Renewal Application further undermines his position. The 2009 Renewal Application he points to actually distinguishes between the Discipline questions, which are phrased in terms of “at any time,” and Addiction questions, which are targeted at “the past biennium.” Resp't Ex. 1, at 1-2. The Respondent's credibility also is profoundly compromised by his admission that, when it suited him to do so, he intentionally attempted to mislead his insurance carrier by providing false information on his policy renewal form and was caught. The Respondent's testimony in these proceedings, taken as a whole, suffered from inconsistencies, equivocations, and implausibility that preclude a finding that he was entirely credible.
The Government seeks revocation of the Respondent's COR based on its evidence that on three occasions, the Respondent filed COR renewal applications wherein he falsely declared that his state professional license had never been suspended or placed on probation.
For the Government to prevail under a theory of material falsification, its evidence must establish, by “clear, unequivocal, and convincing” evidence
As a materiality determination turns on an analysis of the relevant substantive law,
The Agency has held that a material falsification existed when a registrant failed to disclose on DEA renewal applications that he had entered into consent agreements with the state licensing agency which had either placed him on probation or suspended his state license.
In the present case, the Respondent's state controlled substance privileges were suspended based on his arrest and no contest plea
In this case, the pertinent inquiry is whether the Respondent knew, or should have known that he submitted false applications for renewal of his DEA COR in 2006, 2009, and 2012. The Respondent does not contest that he did not disclose the Consent Agreements that he had entered into with the Dental Board, or that it is important to answer liability questions truthfully as part of a
The liability question in the three DEA COR renewal applications was worded in straightforward terms that left scarce little to the imagination of even the most unschooled of applicants. In pertinent part, the question to which the Respondent replied in the negative queried: “Has the applicant ever . . . had a state professional license . . . suspended . . . or placed on probation, or is any such action pending?” Gov't Exs. 4-6. In fact, the Agency has specifically confirmed the clarity of the language utilized here in sustaining findings of materially falsified applications under 21 U.S.C. 824(a)(1).
The Respondent is highly educated
Another fatal blow to his defense stems from the fact that his case in this regard is entirely dependent upon the strength of his testimony, which, as discussed in detail,
The Respondent's evidence that he was confused by Ohio Dental Board policy is wholly unpersuasive. Moreover, no evidence about how that policy (even if conceded
In evaluating the DEA COR applications in their entirety, this record as a whole, and considering the totality of the circumstances
As discussed,
Although the egregiousness of the Respondent's material false misrepresentations is certainly enhanced by the fact that it was repeated on three occasions, and (even according to his own testimony) was actively motivated by his desire to avoid drawing negative attention to himself and his practice,
Regarding general deterrence, as the regulator in this field, the Agency bears the responsibility to deter similar misconduct on the part of others for the protection of the public at large.
The evidence of record, which includes material false statements in multiple COR renewal applications and no basis upon which to find that the Respondent has accepted responsibility for his action, compels a recommendation that the Respondent's DEA registration be
On November 23, 2015, the Department of Justice lodged a proposed partial consent decree with the United States District Court for the District of Arizona in
The proposed consent decree would resolve the claims of the United States included in this action for the past response costs incurred by the United States Environmental Protection Agency (“EPA”) in addressing the release or threatened release of hazardous substances at and from 19 historical uranium mines located on the Navajo Nation Reservation in and around Cameron, Arizona (“the Mine Sites”). The Mine Sites are a subset of a larger number of abandoned uranium mines on Navajo lands. The United States included a claim for recovery of its response costs at the Mine Sites under section 107 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in a counterclaim it brought against El Paso Natural Gas Company, LLC (“EPNG”) in this action after EPNG sued the United States under sections 107 and 113 of CERCLA to recover EPNG's response costs at the Mine Sites. Under the consent decree, EPNG will pay the United States $502,500, plus interest, to be deposited in an EPA special account for cleanup of the Mine Sites. In return, the United States agrees not to sue EPNG under section 107 of CERCLA for EPA's past response costs incurred in connection with the Mine Sites. The consent decree is a partial settlement in that it would not resolve, and would be without prejudice to, the claims EPNG asserted against the United States in this action, or the portion of the United States' counterclaim asserting that EPNG is liable to the United States in contribution under section 113 of CERCLA. Nor does the consent decree address response costs incurred and to be incurred in cleaning up hazardous substances at or from other abandoned uranium mines located on the Navajo Nation that are not involved in this action.
The publication of this notice opens a period for public comment on the 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 consent decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $7.75 (25 cents per page reproduction cost) payable to the United States Treasury.
National Aeronautics and Space Administration.
Notice of Intent To Grant Exclusive License.
This notice is issued in accordance with 35 U.S.C. 209(e) and 37 CFR 404.7(a)(1)(i). NASA hereby gives notice of its intent to grant an exclusive license in the United States to practice the inventions described and claimed in USPN 8,343,740, Micro-Organ Device, NASA Case No. MSC-23988-1; USPN 8,580,546, Micro-Organ Device, NASA Case No. MSC-23988-2; and USPN 9,023,642, Miniature Bioreactor System for Long Term Cell Culture, NASA Case No. MSC-24210-1 to GRoK Technologies, LLC, having its principal place of business in Houston, Texas. The patent rights in these inventions have been assigned to the United States of America as represented by the Administrator of the National Aeronautics and Space Administration. The prospective exclusive license will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7.
The prospective exclusive license may be granted unless within fifteen (15) days from the date of this published notice, NASA receives written objections including evidence and argument that establish that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7. Competing applications completed and received by NASA within fifteen (15) days of the date of this published notice will also be treated as objections to the grant of the contemplated exclusive license.
Objections submitted in response to this notice will not be made available to the public for inspection and, to the extent permitted by law, will not be released under the Freedom of Information Act, 5 U.S.C. 552.
Objections relating to the prospective license may be submitted to Patent Counsel, Office of Chief Counsel, NASA Johnson Space Center, 2101 NASA Parkway, Mail Code AL, Houston, Texas 77058; Phone (281) 483-3021; Fax (281) 483-6936.
Ms. Michelle P. Lewis, Technology Transfer and Commercialization Office, NASA Johnson Space Center, 2101 NASA Parkway, Mail Code AO52, Houston, TX 77058, (281) 483-8051. Information about other NASA inventions available for licensing can be found online at
National Aeronautics and Space Administration.
Notice of Intent To Grant a Partially Exclusive Patent License
This notice is issued in accordance with 35 U.S.C. 209(e) and 37 CFR 404.7(a)(1)(i). NASA hereby gives notice of its intent to grant a partially
The prospective partially exclusive license may be granted unless, within fifteen (15) days from the date of this published notice, NASA receives written objections including evidence and argument that establish that the grant of exclusives licenses would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7. Competing applications completed and received by NASA within fifteen (15) days of the date of this published notice will also be treated as objections.
Objections submitted in response to this notice will not be made available to the public for inspection and, to the extent permitted by law, will not be released under the Freedom of Information Act, 5 U.S.C. 552.
Objections relating to the prospective license may be submitted to Mr. Bryan A. Geurts, Chief Patent Counsel, Goddard Space Flight Center, Code 140.1, Greenbelt, MD 20771, (301) 286-7351.
Darryl Mitchell, Innovative Technology Partnerships Office, Goddard Space Flight Center, Code 504, Greenbelt, MD 20771 (301) 286-5810. Information about other NASA inventions available for licensing can be found online at
National Aeronautics and Space Administration (NASA).
Notice of information collection.
The National Aeronautics and Space Administration, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. 3506(c)(2)(A)). This is a request to reinstate OMB control number 2700-0092 with changes to include all NASA financial assistance awards, not just awards to commercial firms.
Consideration will be given to all comments received within 60 days from the date of this publication.
Interested persons are invited to submit written comments on the proposed information collection to Ms. Frances Teel, NASA PRA Clearance Officer, NASA Headquarters, 300 E Street SW., Mail Code JF0000, Washington, DC 20546 or
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Ms. Frances Teel, NASA PRA Clearance Officer, NASA Headquarters, 300 E Street SW., Mail Code JF0000, Washington, DC 20546 or
This is a request to reinstate OMB control number 2700-0092 with changes. This collection is required to ensure proper accounting of Federal funds and property provided under finanical assistance awards (grants and cooperative agreements). Reporting and recordkeeping are prescribed at 2 CFR part 1800 for awards issued to non-profits, institutions of higher educations, government, and commercial firms when cost sharing is not required and 14 CFR part 1274 for awards issued to commercial firms when cost sharing is required. This information collection was formally titled Cooperative Agreements with Commercial Firms.
Proposals are filed through the NASA Solicitation and Proposal Integrated Review and Evaluation System (NSPIRES) or
Comments are invited on (1) whether the proposed collection of information is necessary for the proper performance of the functions of NASA, including whether the information collected has practical utility; (2) the accuracy of NASA's estimate of the burden (including hours and cost) of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including automated collection techniques or the use of other forms of information technology.
Comments submitted in response to this notice will be summarized and included in the request for OMB approval of this information collection. They will also become a matter of public record.
National Aeronautics and Space Administration.
Notice of Intent to Grant Exclusive Patent License.
This notice is issued in accordance with 35 U.S.C. 209(e) and 37 CFR 404.7(a)(1)(i). NASA hereby gives notice of its intent to grant an exclusive patent license in the United to practice the invention described and claimed in the following U.S. Patent Applications by, inter alia, engaging in marketing activities: U.S. Patent Application No. 13/601,194, “Microfluidic Device and Method of Fabricating Microfluidic Devices,” and U.S. Patent Application No. 14/021,812 “MEMS Chip with Microfluid Channel Having Multi-Function Microposts,” to ICAP Patent Brokerage, having its principal place of business in New York, NY.
The patent rights in these inventions have been assigned to the United States of America as represented by the Administrator of the National Aeronautics and Space Administration. The prospective exclusive license will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7. NASA has not yet made a determination to grant exclusive licenses and may deny the requested licenses even if no objections are submitted within the comment period.
The prospective exclusive license may be granted unless, within fifteen (15) days from the date of this published notice, NASA receives written objections including evidence and argument that establish that the grant of exclusives licenses would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7. Competing applications completed and received by NASA within fifteen (15) days of the date of this published notice will also be treated as objections.
Objections submitted in response to this notice will not be made available to the public for inspection and, to the extent permitted by law, will not be released under the Freedom of Information Act, 5 U.S.C. 552.
Objections relating to the prospective license may be submitted to Mr. Bryan A. Geurts, Chief Patent Counsel, Goddard Space Flight Center, Code 140.1, Greenbelt, MD 20771, Phone: (301) 286-7351; Fax (301) 286-9502.
Darryl Mitchell, Innovative Technology Partnerships Office, Goddard Space Flight Center, Code 504, Greenbelt, MD 20771 Phone: (301) 286-5810. Information about other NASA inventions available for licensing can be found online at
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92-463, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Planetary Protection Subcommittee of the NASA Advisory Council (NAC). This Subcommittee reports to the Science Committee of the NAC. The meeting will be held for the purpose of soliciting, from the scientific community and other persons, scientific and technical information relevant to program planning.
Tuesday, December 8, 2015, 8:30 a.m. to 5:00 p.m., EST; and Wednesday, December 9, 2015, 8:30 a.m. to 4:00 p.m., EST.
NASA Headquarters, 300 E Street SW., Washington, DC 20546. The meeting will take place in Room 8Q40 on December 8, and in Room 9H40 on December 9.
Ms. Ann Delo, Science Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358-0750, fax (202) 358-2779, or
The meeting will be open to the public up to the capacity of the room. The meeting will also be available telephonically and by WebEx. Any interested person may call the USA toll free conference call number 888-390-0720, passcode 4737036, on both days, to participate in this meeting by telephone. The WebEx link is
The agenda for the meeting includes the following topics:
Attendees will be requested to sign a register and to comply with NASA security requirements, including the presentation of a valid picture ID to Security before access to NASA
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92-463, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Heliophysics Subcommittee of the NASA Advisory Council (NAC). This Subcommittee reports to the Science Committee of the NAC. The meeting will be held for the purpose of soliciting, from the scientific community and other persons, scientific and technical information relevant to program planning.
Monday, December 7, 2015, 3:00 p.m.-4:30 p.m., EST.
Ms. Ann Delo, Science Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358-0750, fax (202) 358-2779, or
This meeting will be available telephonically and via WebEx. Any interested person may call the USA toll free conference call number 877-918-1347, passcode 1253083, to participate in this meeting by telephone. The WebEx link is
It is imperative that the meeting be held on this date to accommodate the scheduling priorities of the key participants.
November 30, December 7, 14, 21, 28, 2015, January 4, 2016.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of December 7, 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 December 21, 2015.
There are no meetings scheduled for the week of December 28, 2015.
There are no meetings scheduled for the week of January 4, 2016.
The schedule for Commission meetings is subject to change on short notice. For more information or to verify the status of meetings, contact Denise McGovern at 301-415-0681 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
U.S. Office of Personnel Management.
Notice; Routine Use Implementation and Response to Comments.
Pursuant to the provisions of the Privacy Act of 1974, 5 U.S.C. 552a, and Office of Management and Budget (OMB), Circular No. A-130, notice is given that the U.S. Office of Personnel Management is implementing the modification, proposed in 80 FR 42133, to all of its systems of records, as identified in the list below.
On July 16, 2015, OPM published a notice to establish a new Privacy Act routine use which is applicable to all OPM systems of records. The new routine use allows OPM to disclose information to appropriate persons and entities for response and remediation purposes in the event of suspected or confirmed compromise of information in any of its systems. 80 FR 42133 (July 16, 2015). The July 16th notice invited comments on the new routine use until August 17, 2015. OPM received 5 comments during this period. After reviewing and considering the comments, OPM has decided to implement the new routine use without substantive alteration. A description of the comments and OPM's corresponding responses are included below.
Two Federal agencies requested administrative changes that were unrelated to the form or substance of this routine use. In response to one agency comment, OPM re-listed all of the OPM systems to which the new routine use will apply, including OPM/Central-19, which had been inadvertently left out of the prior notice. OPM determined that the other suggested changes do not affect implementation of the newly proposed use because they pertain specifically to other OPM systems of records. Therefore, those suggestions will be considered in future updates to notices regarding those systems.
OPM also received comments from a non-governmental organization regarding the location of certain records in other OPM systems and requesting notice in the event that those systems are compromised. OPM plans to continue fulfilling its breach notification responsibilities whenever appropriate and will respond separately to the organization with regard to its other comments, which seek OPM's response to a previous communication.
Finally, one individual and one Federal employee union sought information about security measures that would be taken to convey information shared outside of OPM pursuant to the new routine use. As with information shared outside the agency pursuant any routine use associated with its systems, OPM will transmit such information in accordance with applicable information security laws, guidelines, and standards including, but not limited to, the Federal Information Security Management Act (Pub. L. 107-296), and associated OMB policies, standards and guidance from the National Institute of Standards and Technology.
The individual commenter and employee union also questioned whether the routine use is appropriately tailored to address activities related to the suspected or confirmed compromise of information, OPM adopted the model language developed by the Office of Management and Budget (OMB Memorandum 07-16, Safeguarding Against and Responding to the Breach of Personally Identifiable Information, Attachment 2) and adopted by a number of other Federal agencies. As drafted, this routine use permits the agency to protect sensitive information contained in OPM's systems while also facilitating mitigation and prevention activities in the event of confirmed or suspected compromise of information. Therefore, OPM has adopted the new routine use, first published on July 16, 2015, without further change.
A description of the modification to the agency's systems of records is provided below. In accordance with 5 U.S.C. 552a(r), the agency has provided a report to OMB and the Congress.
U.S. Office of Personnel Management Privacy Act notices and citations follow. An asterisk (*) designates the last publication of the complete document in the
To appropriate agencies, entities, and persons when (1) OPM suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (2) the agency has determined that as a result of the
U.S. Office of Personnel Management.
Notice.
The U.S. Office of Personnel Management (OPM) has updated its Waiver Policy on the official OPM Web site
Chelsea Ruediger,
Following the Supreme Court's June 26, 2013 decision in
In the ordinary course for a surviving spouse to be enrolled in FEHB after the death of the Federal employee or annuitant, the deceased Federal employee or annuitant must have been enrolled in Self and Family FEHB coverage that covered the surviving spouse at the time of death and the surviving spouse must be entitled to a monthly annuity as the survivor of a deceased Federal employee or annuitant. This means, absent a waiver of the FEHB eligibility requirements codified at 5 U.S.C. 8905(b)(2), individuals who are now receiving a survivor annuity as the surviving same-sex spouse of a deceased employee or annuitant who died on or before June 26, 2013, are not eligible for FEHB enrollment.
This notice outlines the updates to the OPM FEHB Eligibility Waiver Policy and identifies the criteria OPM will consider when reviewing waiver requests from individuals who are receiving a monthly survivor annuity benefit as the surviving same-sex spouse of a Federal employee or annuitant who died on or before June 26, 2013. It also prescribes the requirements and enrollment effective dates for these certain survivor annuitants to receive FEHB coverage.
Section 8905(b) of title 5, U.S. Code allows OPM to waive certain FEHB eligibility requirements for an individual if OPM:
The implementing regulation, promulgated at 5 CFR 890.108, requires the annuitant to provide OPM with evidence of the following in order to be granted a waiver for FEHB enrollment:
(1) The individual intended to have FEHB coverage as an annuitant (retiree);
(2) The circumstances that prevented the individual from meeting the requirements of 5 U.S.C. 8905(b) were beyond the individual's control; and
(3) The individual acted reasonably to protect his or her right to continue coverage into retirement.
OPM does not want to penalize an individual who is receiving a survivor annuity as a same-sex spouse and who was not covered by a FEHB Self and Family plan before his/her spouse's death because prior to June 26, 2013, the provisions of the Defense of Marriage Act (DOMA) prevented OPM from recognizing the same-sex marriage. Therefore, we believe it would be against equity and good conscience not to grant a waiver request submitted by such individual. OPM will consider the criteria in 5 CFR 890.108 satisfied given the circumstances presented in the scope of this notice, provided that the appropriate documentation of marriage and death is submitted.
OPM will accept the following to meet the requirements above:
1. Proof of a legally valid same-sex marriage performed prior to June 26, 2013, to the deceased annuitant,
2. Proof that the deceased annuitant died on or before June 26, 2013, and
3. Proof that the deceased annuitant was enrolled in FEHB at death.
Individuals must submit requests for waiver of the FEHB enrollment eligibility requirements under 5 U.S.C. 8905(b) to OPM in writing. These waiver requests should be mailed to: Office of Personnel Management, Retirement Programs, Attn: Retirement Eligibility Services—HB Waiver Request, 1900 E Street NW.,Room 2416, Washington, DC 20415.
In addition, the individual who is seeking a waiver of the FEHB eligibility requirements must have already been adjudicated eligible for a survivor annuity before he or she may seek a waiver under 5 U.S.C. 8905(b).
After an individual who is receiving a survivor annuity as a same-sex spouse
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Contract 153 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. Request, Attachment B.
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. MC2016-17 and CP2016-23 to consider the Request pertaining to the proposed Priority Mail Contract 153 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 December 1, 2015. The public portions of these filings can be accessed via the Commission's Web site (
The Commission appoints Curtis E. Kidd to serve as Public Representative in these dockets.
1. The Commission establishes Docket Nos. MC2016-17 and CP2016-23 to consider the matters raised in each docket.
2. Pursuant to 39 U.S.C. 505, Curtis E. Kidd is appointed to serve as an officer of the Commission to represent the interests of the general public in these proceedings (Public Representative).
3. Comments are due no later than December 1, 2015.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Request for public comment.
The U.S. Global Change Research Program is three years into the implementation of its National Global Change Research Plan 2012-2021 (
Public comments will be accepted through January 30, 2016.
Comments from the public may be submitted by any of the following methods:
• Electronically via
• If you are unable to submit electronically, comments may be submitted by mail to Attn: Benjamin DeAngelo, U.S. Global Change Research Program, 1800 G Street NW., Suite 9100, Washington, DC 20006. Information submitted by postal mail should allow ample time for processing.
Benjamin DeAngelo, (202) 419-3474,
Background information, additional details, and instructions for submitting comments can be found at
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change would amend the DTC Settlement Service Guide (“Guide”) to provide that any Settling Bank that does not affirmatively acknowledge by the Acknowledgment Cutoff Time (as defined below) its end-of-day net-net settlement balance
In its filing with the Commission, DTC included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. DTC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this proposed rule change is to mitigate a risk to DTC in settlement relating to a Settling Bank's failure to take the action required to acknowledge its end-of-day net-net settlement balance, or notify DTC of a refusal to settle for any Participant for which it is the designated Settling Bank, by the Acknowledgment Cutoff Time (as defined below).
The DTC end-of-day net settlement structure depends upon the use of Settling Banks.
If a Settling Bank notifies DTC that it refuses to settle for a Participant, DTC would recalculate the Settling Bank's net-net settlement balance by excluding the net settlement balance of the Participant for which the Settling Bank refused to settle.
After the Acknowledgment Cutoff Time and any adjustments, DTC will prepare and submit to the National Settlement Service (“NSS”) provided by the Federal Reserve Banks (individually and collectively, the “Fed”) a file (“NSS File”) reflecting the net debits or credits from and to all Settling Banks. NSS will process a debit or credit of each Settling Bank's Fed account (“Fed Account”), as applicable.
Today, failure of a Settling Bank to timely respond to DTC after posting of final settlement figures creates uncertainty with respect to timely completion of settlement at DTC. The proposed rule change is intended to address this issue as discussed below.
To promote settlement certainty, DTC is proposing to treat a Settling Bank that fails to timely provide its affirmative acknowledgement of its end-of-day net-net settlement balance or notify DTC of its refusal to settle for one or more Participants for which it is the designated Settling Bank, as having been deemed to acknowledge its end-of-day net-net settlement balance.
DTC proposes to modify the Guide to provide that a Settling Bank that (i) fails to affirmatively acknowledge its end-of-day net-net settlement balance, or (ii) does not notify DTC of its refusal to settle on behalf of a Participant or Participants for which it is the designated Settling Bank, by the Acknowledgement Cutoff Time, would be deemed to have acknowledged its end-of-day net-net settlement balance.
DTC would continue to maintain flexibility and allow for a Settling Bank to request extra time if the Settling Bank has a reason that it cannot affirmatively acknowledge or refuse its net-net settlement balance so long as the Settling Bank notifies DTC accordingly at or before the Acknowledgement Cutoff Time, or, in the case of a Post-Refusal Adjusted Balance, it notifies DTC immediately where it is unable to affirmatively acknowledge its Post-Refusal Adjusted Balance. In this regard, the Guide would be updated to clarify that the Settling Bank is required to notify DTC of its request for extra time via a dedicated DTC Settlement phone “hotline” prior to the Acknowledgment Cutoff Time. In the event that DTC provides the Settling Bank with a Post-Refusal Adjusted Balance, the Settling Bank would be required to notify DTC of its request for extra time immediately via the hotline. Any Settling Bank that timely complies with this notification requirement would not be deemed to have acknowledged its net-net Settlement Balance or its Post-Refusal Adjusted Balance.
If, after the initial release of final settlement figures, a Settling Bank's net-net settlement balance is adjusted for any reason, other than as a result of the Settling Bank's refusal to settle, then the Acknowledgment Cutoff Time for that Settling Bank would be extended to 30 minutes after DTC advises the Settling Bank of the adjusted net-net settlement balance.
DTC would attempt to contact the Settling Bank if DTC does not receive a response in the form of (i) an acknowledgment or refusal prior to the Acknowledgment Cutoff Time, (ii) an immediate acknowledgment of a Post-Refusal Adjusted Balance, or (iii) a notification from the Settling Bank that it cannot acknowledge or refuse, as described in the preceding paragraph.
DTC would update the Guide to clarify that each Settling Bank must ensure that it maintains accurate contact details with DTC so that DTC may contact the Settling Bank regarding settlement issues. Settling Banks must update any contact details by contacting their DTC Relationship Manager.
The Fed's cutoff for NSS processing, unless extended, is 5:30 p.m. In order to facilitate timely processing of the NSS File, DTC would maintain discretion to exclude a Settling Bank's balance from the NSS File if the Settling Bank (i) (A) does not acknowledge its net-net settlement balance by the Acknowledgment Cutoff Time, or (B) does not immediately acknowledge its Post-Refusal Adjusted Balance; and (ii) is not deemed to have acknowledged its net-net settlement balance or Post-Refusal Adjusted Balance because it has notified DTC that it is unable to affirmatively acknowledge its net-net settlement balance or to refuse to settle on behalf of a Participant. If DTC proceeds to process the NSS File excluding the Settling Bank's debit balance, then the Settling Bank must pay the debit balance via Fedwire. If DTC proceeds to process the NSS File excluding the Settling Bank's credit balance, then DTC would pay the credit balance via Fedwire after the Settling Bank acknowledges its settlement balance.
The text of the Guide would also state that a Settling Bank which settles on behalf of others that timely notifies DTC that it cannot acknowledge or refuse its end-of-day net-net settlement balance would not be assessed a flat fee for failure to acknowledge or notify DTC of its refusal to settle. However, such a Settling Bank would be charged interest with respect to any borrowing DTC is required to make to complete settlement that day for any Participant that the Settling Bank settles on behalf of, if the Settling Bank has not timely refused to settle for that Participant.
Additionally, DTC would revise the Guide to:
(i) clarify that it is DTC's Settlement Operations group that controls and coordinates the settling of Participant and Settling Bank accounts on DTC's systems;
(ii) define the Federal Reserve Banks individually and collectively within the Guide's text as the “Fed” unless indicated otherwise;
(iii) clarify text for descriptive purposes, and consistent with the Rules, that Participants make formal arrangements for a Settling Bank to be designated as the Settling Bank to settle with DTC on the Participant's behalf;
(iv) clarify that certain online reports DTC provides Participants and Settling Banks through the processing day reflect “intraday” gross debits and credits, and net debit and credit balances;
(v) clarify that a Settling Bank's end-of-day net-net settlement balance includes the Settling Bank's own settlement obligations as a Participant if it settles for itself;
(vi) add text for the purpose of context, consistent with the Rules, that each Participant is obligated to settle timely with DTC and if its Settling Bank refuses to settle for it then it must make alternative arrangements to make payment to DTC via Fedwire, [sic]
(vii) add text for the purpose of context, consistent with the Rules, that a Participant that acts as its own Settling Bank may not refuse to settle for itself and that it will be in default if it does not fund its settlement obligation;
(viii) for clarity, change the heading to an existing example of how a Settling Bank's settlement balance is calculated from “Settlement Example” to “Example of the Calculation of a DTC Settling Bank's Net-Net Settlement Balance”;
(ix) remove the provision from the Guide indicating that that a Settling Bank that settles only for itself would need to affirmatively opt out in order to not be required to affirmatively acknowledge its settlement balance, and add text simply stating that a Settling Bank that settles only for itself would not be required to acknowledge its settlement balance;
(x) clarify the interest charged to Participants for a failure to settle;
(xi) delete references to a Settling Bank's failure to timely settle its settlement balance from being referred to as a “failure to settle” and remove references to related procedures as being “failure-to-settle” procedures, as the terminology could be confused with an individual Participant's failure to meet its settlement obligation;
(xii) rewrite text in the Guide in light of the proposed changes, as applicable, including Addendum A of the Guide, to incorporate proposed changes, consolidate text, clarify text for readability and eliminate duplication;
(xiii) clarify certain Settling Bank and settlement processing timeframes;
(xiv) apply initial capitalization as appropriate for the terms “Participant” and “Settling Bank” where they are used as defined terms;
(xv) remove references to Participant Terminal System (PTS) functions, which are no longer used for DTC settlement processing; and
(xvi) insert the title of the Guide on the Guide's front page.
The effective date of the proposed rule change would be announced via a DTC Important Notice.
Section 17A(b)(3)(F)
Rule 17Ad-22(d)(5)
DTC does not believe that the proposed rule change would have any impact, or impose any burden, on competition because the proposed rule change applies to all Settling Banks and would not have an impact on Settling Banks' current ability to timely acknowledge their net-net settlement balances or notify DTC of a refusal to settle on behalf of a Participant.
DTC filed a substantially similar proposed rule change on April 15, 2015 (“April Rule Filing”),
The Commission received a favorable written comment to the April Rule Filing.
With respect to (i) above, in order to avoid wider disruption to the DTC settlement process and the industry, DTC must have the discretion to promptly complete settlement for the Settling Banks that have timely acknowledged or have been deemed to have acknowledged their respective net-net settlement balances. Therefore, although DTC can grant limited extensions, DTC cannot grant an indefinite extension to a Settling Bank to acknowledge its balance prior to DTC processing the NSS File.
With respect to (ii) above, the proposed rule change adds text to the Guide so that a Settling Bank that timely notifies DTC that it cannot acknowledge or refuse its net-net settlement balance will not be charged a flat fee for failure to acknowledge its balance. However the Settling Bank may be charged interest.
To the extent any additional written comments are received by DTC on the proposed rule change, DTC will forward them to the Commission.
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.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94-409, that the Securities and Exchange Commission will hold a Closed Meeting on Thursday, December 3, 2015 at 2:00 p.m.
Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the Closed Meeting. Certain staff members who have an interest in the matters also may be present.
The General Counsel of the Commission, or her designee, has certified that, in her opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR 200.402(a)(3), (5), (7), 9(ii) and (10), permit consideration of the scheduled matter at the Closed Meeting.
Commissioner Aguilar, as duty officer, voted to consider the items listed for the Closed Meeting in closed session.
The subject matter of the Closed Meeting will be:
At times, changes in Commission priorities require alterations in the scheduling of meeting items.
For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at (202) 551-5400.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
ISE proposes to amend the Schedule of Fees as described in more detail below. The text of the proposed rule change is available on the Exchange's Internet Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend the Schedule of Fees to introduce a new set of rebates to the Qualified Contingent Cross (“QCC”) and/or other solicited crossing orders, including solicited orders executed in the Solicitation, Facilitation or Price Improvement Mechanisms, pricing initiative that offers rebates to members who execute a specified volume of QCC and other solicited crossing orders in a month. This new set of rebates, as proposed, offers a lower rebate to members that execute a specified volume of QCC and solicited orders between two Priority Customers
Currently, the Exchange offers members rebates in QCC and/or other solicited crossing orders (including “Customer to Customer” Orders),
The Exchange now proposes to offer a new set of rebates for “Customer to Customer” Orders. These rebates will be provided to members for each originating contract side of a “Customer to Customer” Order in all symbols traded on the Exchange as follows: For Tier 1 the rebate is $0.00, for Tiers 2 through 3 the rebate is $0.01, and for Tiers 4 through 6 the rebate is $0.03.
Finally, the Exchange notes that all originating contract side volume will continue to contribute to the member's Tier level. For example, if a member has 175,000 originating contract sides for Non-“Customer to Customer” Orders and 75,000 originating contract sides for “Customer to Customer” Orders, the member's aggregated volume will be 250,000 placing them in Tier 3 (200,000 to 499,999). As a result, the member will receive a rebate of $0.07 per originating contract side for its Non-“Customer to Customer” Orders and a rebate of $0.01 per originating contract side for its “Customer to Customer” Orders.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
The Exchange believes that it is reasonable and equitable to offer lower rebates for certain “Customer to Customer” Orders because other exchanges, including the CBOE for example, offer no rebate (credit) for customer to customer executions.
In accordance with Section 6(b)(8) of the Act,
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to amend Rule 804(g) to require Clearing Member approval for market makers to resume trading after a market-wide speed bump is triggered. 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 these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend Rule 804(g) on “Automated Quotation Adjustments” to require Clearing Member
Each market maker authorized to trade on the Exchange must obtain from a Clearing Member a “Market Maker Letter of Guarantee” wherein the Clearing Member accepts financial responsibility for all Exchange transactions made by the market maker.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.
The Exchange believes that the proposed rule change removes impediments to and perfects the mechanism of a free and open market by requiring that Clearing Members authorize continued trading by a market maker after that market maker triggers a market-wide speed bump. The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest because it will permit Clearing Members with a financial interest in a market maker's risk management to better monitor and manage the potential risks assumed by that market maker. The Exchange already shares market makers' risk settings with their Clearing Members in order to assist those Clearing Members in monitoring risks at firms on whose behalf they clear trades.
The Exchange believes the proposal is consistent with Section 6(b)(8) of the Act
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
Within 45 days of the publication date 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.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The purpose of this proposed rule change is to permit any Competitive Market Maker (“CMM”) that is appointed to act as an Alternative Primary Market Maker (“Alternative PMM”) to voluntarily act as a Back-Up Primary Market Maker (“Back-Up PMM”). 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 these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
The Exchange proposes to permit any CMM that is approved to act as an Alternative PMM to voluntarily act as a Back-Up PMM in options series in which it is quoting when the appointed PMM fails to have a quote in the System. In doing so, the Exchange would further enhance its markets by having additional Back-Up PMMs to take over a PMM's responsibilities when the appointed PMM faces operational difficulties or ceases operations. The Exchange also proposes to amend the process by which a Back-Up PMM is chosen to replace a PMM that fails to have a quote in the System, when more than one CMM is quoting in the series.
Currently, CMMs that are also PMMs on the Exchange may voluntarily act as Back-Up PMMs when the appointed PMM has technical difficulties that interrupt its participation in the market.
The Exchange's Rules also allow the Exchange to appoint a CMM as an Alternative PMM when a PMM does not wish to trade in an option class.
The Exchange now proposes to permit an Alternative PMM to voluntarily act as a Back-Up PMM in options series in which it is quoting
In situations where a PMM fails to have a quote in the System, the System will choose a Back-Up PMM, from the available CMMs, to replace the PMM. The System will choose the CMM with the lowest offer price in the series at that time. If there are two or more CMMs at the same offer price, the CMM with the highest bid price will be chosen. If there are two or more CMMs at the same bid and offer price, the CMM with the largest offer quantity will be chosen. If there are two or more CMMs with the same offer quantity, the CMM with the largest bid quantity will be chosen. If there remains two or more CMMs with the same bid and offer quantity and prices, the one with the highest time priority on the offer will be chosen as the Back-Up PMM.
The proposed rule change enhances ISE's market because it ensures ISE has an adequate number of willing Members to act as Back-Up PMMs for PMMs that are not participating in the market. Ultimately, having more Back-Up PMMs will further: (1) Reduce the volatility that occurs during, and the duration of, non-firm or “fast market”
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange believes that the proposed rule change would remove impediments to and perfect the mechanism of a free and open market by enhancing the Exchange's market by reducing volatility that occurs during and the duration of non-firm or “fast market” states disseminated by the ISE and allowing for virtually uninterrupted trading even when multiple PMMs experience difficulties that cause PMMs to remove their quotes from the market. Uninterrupted trading is possible because 1) Back-Up PMMs have appropriate systems and procedures in place to undertake the responsibilities of a PMM when necessary and 2) having an adequate amount of Back-Up PMMs means a Back-Up PMM will be available to take over for a PMM, and post firm and accurate quotes when a situation causes a PMM to fail to have a quote in the System. The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest because it enhances the Exchange's ability to disseminate firm markets. Additionally, by amending and explaining the detailed steps for choosing Back-Up PMMs, members will have additional clarity on the process by which a Back-Up PMM is chosen in certain situations.
This proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act because ISE is enhancing its market by allowing additional Members, which have systems built to assume the responsibilities of a PMM on the Exchange to be Backup-PMMs when appointed PMMs face operational difficulties or cease market making operations.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2015-42. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On September 23, 2015, NASDAQ OMX PHLX LLC (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On April 2, 2015, the Exchange submitted a proposed rule change for immediate effectiveness pursuant to Section 19(b)(3)(A)
The Variable Active SQF Port Fees were capped at $42,000 per month.
The Exchange notes that the April 2015 submission proposing to replace the monthly Variable Active SQF Port Fees with a monthly Fixed Active SQF Port Fee was rejected.
According to the Exchange, because the April 2015 submission to replace the Variable Active SQF Port Fees with the Fixed Active SQF Port Fee was rejected, the Exchange is proposing to pay a refund to eligible Specialists and Market Makers for a portion of the Variable Active SQF Port Fees that the Exchange assessed during the month of April 2015 and that these eligible Specialists and Market Makers paid to the Exchange.
The fees that the Exchange proposes to refund to eligible Specialists and Market Makers represent the difference between the Variable Active SQF Port Fees and the Fixed Active SQF Port Fee that became operative on May 1, 2015, each subject to the $42,000 monthly cap.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission notes that the refund the Exchange proposes to pay would have a retroactive effect on eligible Specialists and Market Makers because these members of the Exchange would effectively be subject to the Fixed Active SQF Port Fee during the month of April 2015, which was a month that the Variable Active SQF Port Fees were operative under the Exchange's rules. The Commission further notes that the proposed change from the Variable Active SQF Port Fees to the Fixed Active SQF Port Fee was contained in an April 2015 submission by the Exchange for immediate effectiveness pursuant to Section 19(b)(3)(A)
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to amend Rule 804(g) to require Clearing Member approval for market makers to resume trading after a market-wide speed bump is triggered. 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 these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend Rule 804(g) on “Automated Quotation Adjustments” to
Each market maker authorized to trade on the Exchange must obtain from a Clearing Member a “Market Maker Letter of Guarantee” wherein the Clearing Member accepts financial responsibility for all Exchange transactions made by the market maker.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.
The Exchange believes that the proposed rule change removes impediments to and perfects the mechanism of a free and open market by requiring that Clearing Members authorize continued trading by a market maker after that market maker triggers a market-wide speed bump. The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest because it will permit Clearing Members with a financial interest in a market maker's risk management to better monitor and manage the potential risks assumed by that market maker. The Exchange already shares market makers' risk settings with their Clearing Members in order to assist those Clearing Members in monitoring risks at firms on whose behalf they clear trades.
The Exchange believes the proposal is consistent with Section 6(b)(8) of the Act
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties.
Within 45 days of the publication date 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.
Notice is hereby given that LaSalle Capital Group II-A, L.P. 70 W Madison Street, Suite 5710, Chicago, IL 60602, a Federal Licensee under the Small Business Investment Act of 1958, as amended (“the Act”), in connection with the financing of a small concern, has sought an exemption under Section 312 of the Act and Section 107.730, Financings which Constitute Conflicts of Interest of the Small Business Administration (“SBA”) Rules and Regulations (13 CFR 107.730). LaSalle Capital Group II-A, L.P. proposes to merge Westminster Foods II, LLC, 1 Scale Avenue, Suite 8, Rutland, Vermont 05701 and Dr. Lucy's LLC, 7420 Central Business Park Drive, Suite 1, Norfolk, Virginia 23513 together. The financing is brought within the purview of § 107.730(a)(1) of the Regulations because Westminster Foods II, LLC and Dr. Lucy's, LLC all Associates of LaSalle Capital Group II-A, L.P., will merge together as Westminster Foods II, LLC, and therefore this transaction is considered a financing of an Associate requiring prior SBA approval.
Notice is hereby given that any interested person may submit written comments on the transaction, within fifteen days of the date of this publication, to the Associate Administrator for Investment, U.S. Small Business Administration, 409 Third Street SW., Washington, DC 20416.
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the imported objects, contact the Office of Public Diplomacy and Public Affairs in the Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
Department of State.
Notice.
The Secretary of State determined on November 10, 2015, pursuant to Section 1245(d)(4)(D) of the National Defense Authorization Act for Fiscal Year 2012 (NDAA), (Pub. L. 112-81), as amended, that as of November 10, 2015, the following countries, Malaysia and Singapore, have maintained their crude oil purchases from Iran at zero over the preceding 180-day period.
Katherine Skarsten, Senior Energy Officer, Department of State Bureau of Energy and Natural Resources, 202-647-9526.
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the imported objects, contact the Office of Public Diplomacy and Public Affairs in the Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the imported objects, contact the Office of Public Diplomacy and Public Affairs in the Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
Susquehanna River Basin Commission.
Notice.
This notice lists the approved by rule projects rescinded by the Susquehanna River Basin Commission during the period set forth in “DATES.”
October 1-31, 2015.
Susquehanna River Basin Commission, 4423 North Front Street, Harrisburg, PA 17110-1788.
Jason E. Oyler, General Counsel, telephone: (717) 238-0423, ext. 1312; fax: (717) 238-2436; email:
This notice lists the projects, described below, being rescinded for the consumptive use of water pursuant to the Commission's approval by rule process set forth in 18 CFR 806.22(e) and § 806.22(f) for the time period specified above:
1. Energy Corporation of America, Pad ID: COP 325 A, ABR-201112011, Girard Township, Clearfield County, Pa.; Rescind Date: October 5, 2015.
2. Range Resources-Appalachia, LLC, Pad ID: Rupert, Elton Unit #1H Drilling Pad, ABR-201012047, Penn Township, Lycoming County, Pa.; Rescind Date: October 5, 2015.
3. EXCO Resources (PA), LLC, Pad ID: Cadwalader Pad 2A, ABR-201309006, Cogan
4. EXCO Resources (PA), LLC, Pad ID: Cadwalader Pad 3, ABR-201309010, Cogan House Township, Lycoming County, Pa.; Rescind Date: October 8, 2015.
5. EXCO Resources (PA), LLC, Pad ID: Daisy Barto Unit Well Pad, ABR-201205003, Penn Township, Lycoming County, Pa.; Rescind Date: October 8, 2015.
6. EXCO Resources (PA), LLC, Pad ID: Dale Bower Pad 2, ABR-201212007, Penn Township, Lycoming County, Pa.; Rescind Date: October 8, 2015.
7. EXCO Resources (PA), LLC, Pad ID: Herring Pad 9, ABR-201012027, Graham Township, Clearfield County, Pa.; Rescind Date: October 8, 2015.
8. EXCO Resources (PA), LLC, Pad ID: Kepner Unit Well Pad, ABR-201205013, Penn Township, Lycoming County, Pa.; Rescind Date: October 8, 2015.
9. EXCO Resources (PA), LLC, Pad ID: Murray Unit Pad, ABR-201204005, Penn Township, Lycoming County, Pa.; Rescind Date: October 8, 2015.
10. EXCO Resources (PA), LLC, Pad ID: Painters Den Pad 1, ABR-201202010, Davidson Township, Sullivan County, Pa.; Rescind Date: October 8, 2015.
11. EXCO Resources (PA), LLC, Pad ID: Spotts Unit Drilling Pad 3H, 4H, 5H, 7H, 8H, 9H, ABR-201202003, Miffling Township, Lycoming County, Pa.; Rescind Date: October 8, 2015.
12. Chesapeake Appalachia, LLC, Pad ID: Bumpville, ABR-201202023, Litchfield Township, Bradford County, Pa.; Rescind Date: October 21, 2015.
13. Chesapeake Appalachia, LLC, Pad ID: CMI, ABR-201203021, Wysox Township, Bradford County, Pa.; Rescind Date: October 21, 2015.
14. Chesapeake Appalachia, LLC, Pad ID: Dr. Marone, ABR-201405007, Washington Township, Wyoming County, Pa.; Rescind Date: October 21, 2015.
15. Chesapeake Appalachia, LLC, Pad ID: Ford, ABR-201106004, Orwell Township, Bradford County, Pa.; Rescind Date: October 21, 2015.
16. Chesapeake Appalachia, LLC, Pad ID: Hare Ridge, ABR-201210001, Rush Township, Susquehanna County, Pa.; Rescind Date: October 21, 2015.
17. Chesapeake Appalachia, LLC, Pad ID: Matthews, ABR-201203018, Sheshequin Township, Bradford County, Pa.; Rescind Date: October 21, 2015.
18. Chesapeake Appalachia, LLC, Pad ID: Maurice, ABR-201204006, Herrick Township, Bradford County, Pa.; Rescind Date: October 21, 2015.
19. Chesapeake Appalachia, LLC, Pad ID: Shumhurst, ABR-201205019, Tuscarora Township, Bradford County, Pa.; Rescind Date: October 21, 2015.
20. Chesapeake Appalachia, LLC, Pad ID: Simplex, ABR-201204011, Standing Stone Township, Bradford County, Pa.; Rescind Date: October 21, 2015.
21. Chesapeake Appalachia, LLC, Pad ID: Whitney, ABR-201208006, Rush Township, Susquehanna County, Pa.; Rescind Date: October 21, 2015.
Pub. L. 91-575, 84 Stat. 1509
Federal Highway Administration (FHWA), Wisconsin Department of Transportation (WisDOT).
Federal Notice of Intent to Prepare an Environmental Impact Statement (EIS).
The purpose of this NOI is to update the notice that was issued in the
Johnny Gerbitz, Field Operations Engineer, Federal Highway Administration, 525 Junction Road, Suite 8000, Madison, Wisconsin, 53717-2157, Telephone: (608) 829-7511. You may also contact Steve Krebs, Director, Bureau of Technical Services, Wisconsin Department of Transportation, P.O. Box 7965, Madison, Wisconsin, 53707-7965, Telephone: (608) 246-7930.
The FHWA, in cooperation with the Wisconsin Department of Transportation (WisDOT), will prepare a Tier 1 Environmental Impact Statement (EIS) for proposed improvements in the I-90/94 corridor and adjacent local road systems from the US 12/WIS 16 interchange (2 miles north of Wisconsin Dells) to the I-39/WIS 78 interchange (south of Portage), approximately 25 miles. The project limits include operational areas of influence at each interchange. The preliminary purpose of this project is to address pavement and bridge structural needs; highway and roadside safety issues and design deficiencies; accommodate existing and projected traffic volumes; and improve the transportation system's ability to support local and regional tourism economies.
FHWA's decision to prepare an EIS is based on the initial review that indicates the proposed action is likely to have significant impacts on the environment, including wetlands. The study began preparing a traditional Draft EIS for the corridor, but due to project complexity and funding limitations, FHWA and WisDOT have decided to prepare a Tiered EIS. The Tiered EIS approach will allow FHWA and WisDOT to bring forward portions of the project as needs dictate and as funding becomes available.
The Tier 1 EIS document will analyze the project on a broad scale and identify a preferred corridor location for potential future improvements. The Tier 1 EIS will evaluate the social, economic, and environmental impacts for a range of alternatives within the existing I-90/94 corridor and improvements along other corridors. The Tier 1 EIS will be prepared in accordance with 23 U.S.C. 139, 23 CFR771, and 40 CFR parts 1500-1508. Completion of the Tier 1 EIS and the Record of Decision (ROD) is expected in 2018.
Subsequent Tier 2 environmental documents will be prepared with a greater degree of engineering detail for specific improvements in the remainder of the corridor. The alternative analysis in the Tier 2 documents will include, but is not limited to, the alternatives that have been developed as part of the previous EIS study.
Public involvement is a critical component of the National Environmental Policy Act (NEPA) and will occur throughout the development of the draft and final Tier 1 EIS. All environmental documents will be made available for review by federal and state resource agencies and the public. Specific efforts to encourage involvement by, and solicit comments from, minority and low-income populations in the project study area will be made, with public involvement meetings held throughout the environmental document process. Public notice will be given as to the time and place of public involvement meetings. A public hearing will be held after the completion of the Draft Tier 1 EIS.
Inquiries related to this study can be sent to
Projects receiving Federal funds must comply with Title VI of the Civil Rights Act, and Executive Order 12898 “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations.” Federal law prohibits discrimination on the basis of race, color, age, sex, or country of national origin in the implementation of this project. It is also Federal policy to identify and address any disproportionately high and adverse effects of federal projects on the health or environment of minority and low-income populations to the greatest extent practicable and permitted by law.
Federal Railroad Administration (FRA), United States Department of Transportation (DOT).
Notice of intent to grant Buy America waiver.
FRA is issuing this notice to advise the public that it intends to grant the Illinois Department of Transportation (IDOT) a waiver from FRA's Buy America requirement for the use of 250 Sure Close gate hinges, which are manufactured in Italy. FRA believes a waiver is appropriate because, despite IDOT's best efforts to develop a domestic source for these hinges, domestically-produced gate hinges for pedestrian crossings meeting IDOT's safety specifications and schedule needs remain unavailable in the United States.
Written comments on FRA's determination to grant IDOT's Buy America waiver request should be provided to the FRA on or before December 7, 2015.
Please submit your comments by one of the following means, identifying your submissions by docket number FRA-2012-0033. All electronic submissions must be made to the U.S. Government electronic site at
(1) Web site:
(2) Fax: (202) 493-2251;
(3) Mail: U.S. Department of Transportation, 1200 New Jersey Avenue SE., Docket Operations, M-30, Room W12-140, Washington, DC, 20590-0001; or
(4) Hand Delivery: Room W12-140 on the first floor of the West Building, 1200 New Jersey Avenue SE., Washington, DC, 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
Instructions: All submissions must reference the “Federal Railroad Administration” and include docket number FRA-2012-0033. Due to security procedures in effect since October 2001, mail received through the U.S. Postal Service may be subject to delays. Parties making submissions responsive to this notice should consider using an express mail firm to ensure the prompt filing of any submissions not filed electronically or by hand. Note that all submissions received, including any personal information therein, will be posted without change or alteration to
Mr. John Johnson, Attorney-Advisor, FRA Office of Chief Counsel, 1200 New Jersey Avenue SE., Mail Stop 25, Washington, DC 20590, (202) 493-0078,
FRA is issuing this notice to advise the public that it intends to grant the Illinois Department of Transportation (IDOT) a waiver from FRA's Buy America requirement for the use of 250 Sure Close gate hinges, which are manufactured in Italy. Self-closing, force adjustable gate hinges are one component of the larger construction project to install pedestrian swing gates in connection with the Chicago-St. Louis High Speed Rail (HSR) corridor project. The Chicago-St. Louis HSR project is funded by a $1.33 billion grant from FRA. The value of the 250 hinges is approximately $79,000. FRA believes a waiver is appropriate under 49 U.S.C. 24405(a)(2)(B) because, despite IDOT's best efforts to develop a domestic source for these hinges, domestically-produced gate hinges for pedestrian crossings meeting IDOT's safety specifications and schedule needs remain unavailable in the United States.
The letter granting IDOT's request is quoted below:
Office of Foreign Assets Control, Treasury.
Notice, Publication of a General License.
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing a general license issued in the Foreign Narcotics Kingpin sanctions program.
The Department of the Treasury's Office of Foreign Assets Control: Assistant Director for Licensing, tel.: 202-622-2480, Assistant Director for Regulatory Affairs, tel.: 202-622-4855, Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury's Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410.
This document and additional information concerning OFAC are available from OFAC's Web site (
Recently OFAC issued a general license authorizing certain transactions and activities otherwise prohibited by the sanctions programs OFAC administers. At the time of issuance of the general license, OFAC made that license available on its Web site (
(a) Except as provided in paragraph (b) of this general license, all transactions and activities otherwise prohibited by the Foreign Narcotics Kingpin Sanctions Regulations, 31 CFR part 598, that are for the liquidation and wind down of the Honduran bank, Banco Continental, S.A., including transactions and activities related to the preparation and submission of bids to acquire the assets of Banco Continental, S.A., are authorized through 12:01 a.m. eastern daylight time, December 12, 2015.
(b) This general license does not authorize:
(1) The unblocking of any property blocked pursuant to the Foreign Narcotics Kingpin Sanctions Regulations, 31 CFR part 598; or
(2) Any transactions or dealings otherwise prohibited by any Executive order or any other part of 31 CFR Chapter V, or any transactions or dealings with any individual or entity other than Banco Continental, S.A. that is listed on the Office of Foreign Assets Control's List of Specially Designated Nationals or Blocked Persons or that otherwise constitutes a person whose property and interests in property are blocked.
(c) U.S. persons participating in transactions authorized by this general license are required, within 10 business days after the liquidation and wind-down activities conclude, to file a report, including the parties involved, the type and scope of activities conducted, and the dates of the activities, with the Office of Foreign Assets Control, Licensing Division, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW., Annex, Washington, DC 20220.
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of two individuals whose property and interests in property have been blocked pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act) (21 U.S.C. 1901-1908, 8 U.S.C. 1182).
The designation by the Director of OFAC of the two individuals identified in this notice pursuant to section 805(b) of the Kingpin Act is effective on November 24, 2015.
Assistant Director, Sanctions Compliance & Evaluation, Office of Foreign Assets Control, U.S. Department of the Treasury, Washington, DC 20220, Tel: (202) 622-2490.
This document and additional information concerning OFAC are available on OFAC's Web site at
The Kingpin Act became law on December 3, 1999. The Kingpin Act establishes a program targeting the activities of significant foreign narcotics traffickers and their organizations on a worldwide basis. It provides a statutory framework for the imposition of sanctions against significant foreign narcotics traffickers and their organizations on a worldwide basis, with the objective of denying their businesses and agents access to the U.S. financial system and the benefits of trade and transactions involving U.S. companies and individuals.
The Kingpin Act blocks all property and interests in property, subject to U.S. jurisdiction, owned or controlled by significant foreign narcotics traffickers as identified by the President. In addition, the Secretary of the Treasury, in consultation with the Attorney General, the Director of the Central Intelligence Agency, the Director of the Federal Bureau of Investigation, the Administrator of the Drug Enforcement Administration, the Secretary of Defense, the Secretary of State, and the
On November 24, 2015, the Director of OFAC designated the following two individuals whose property and interests in property are blocked pursuant to section 805(b) of the Kingpin Act.
1. FERNANDEZ VALENCIA, Guadalupe (a.k.a. FERNANDEZ VALENCIA, Ma. Guadalupe; a.k.a. FERNANDEZ VALENCIA, Maria Guadalupe; a.k.a. “DON JULIO”; a.k.a. “JULIA”); DOB 29 Oct 1960; POB Aguililla, Michoacan de Ocampo, Mexico; citizen Mexico; Gender Female; R.F.C. FEVM601029EN3 (Mexico); C.U.R.P. FEVG601029MMNRLD10 (Mexico); alt. C.U.R.P. FEVG601029MMNRLD02 (Mexico) (individual) [SDNTK]. Designated for materially assisting in, or providing financial or technological support for or to, or providing services in support of, the international narcotics trafficking activities of the Sinaloa Cartel, Joaquin Guzman Loera, Ivan Archivaldo Guzman Salazar, and/or Jesus Alfredo Guzman Salazar, and/or being directed by, or acting for or on behalf of, the Sinaloa Cartel, Joaquin Guzman Loera, Ivan Archivaldo Guzman Salazar, and/or Jesus Alfredo Guzman Salazar.
2. VALENZUELA VERDUGO, Jorge Mario (a.k.a. “CHOCLOS”), Antonio Rosales 280, Centro Culiacan, Culiacan, Sinaloa 80000, Mexico; De Las Toronjas 1999, Culiacan, Sinaloa 80060, Mexico; Boulevard Constitucion 257 PTE, Colonia Jorge Almada, Culiacan, Sinaloa 80200, Mexico; Angel Flores 624, Colonia Centro, Culiacan, Sinaloa, Mexico; DOB 23 Oct 1982; POB Distrito Federal, Mexico; citizen Mexico; Gender Male; Cedula No. 09084650 (Mexico); R.F.C. VAVJ821023EL8 (Mexico); National ID No. 23038267151 (Mexico); C.U.R.P. VAVJ821023HDFLRR02 (Mexico) (individual) [SDNTK]. Designated for materially assisting in, or providing financial or technological support for or to, or providing services in support of, the international narcotics trafficking activities of the Sinaloa Cartel, Joaquin Guzman Loera, Ivan Archivaldo Guzman Salazar, Jesus Alfredo Guzman Salazar, and/or Victor Manuel Felix Beltran, and/or being directed by, or acting for or on behalf of, the Sinaloa Cartel, Joaquin Guzman Loera, Ivan Archivaldo Guzman Salazar, Jesus Alfredo Guzman Salazar, and/or Victor Manuel Felix Beltran.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13(44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 4970, Tax on Accumulation Distributions of Trusts.
Written comments should be received on or before January 29, 2016 to be assured of consideration.
Direct all written comments to Christie Preston, Internal Revenue Service, room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to LaNita Van Dyke at Internal Revenue Service, Room 6517, 1111 Constitution Avenue NW., Washington, DC 20224, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Department of the Treasury.
Notice.
The Department of the Treasury will submit the following information collection requests to the Office of
Comments should be received on or before December 30, 2015 to be assured of consideration.
Send comments regarding the burden estimate, or any other aspect of the information collection, including suggestions for reducing the burden, to (1) Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at
Copies of the submission may be obtained by emailing
Financial Services Center, VA.
Notice.
The Department of Veterans Affairs—Financial Services Center (VA-FSC) is announcing an opportunity for the general public and other Federal agencies to comment on a continuing information collection as required by the Paperwork Reduction Act (PRA) of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A). Under the PRA, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before January 29, 2016.
Submit written comments on the collection of information through the Federal Docket Management System (FDMS) at
Valerie H Robinson at (512) 460-5454
Under the PRA of 1995 (Pub. L. 104-13; 44 U.S.C. 3501—3521), Federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VA-FSC invites comments on: (1) whether the proposed collection of information is necessary for the proper performance of VA-FSCs functions, including whether the information will have practical utility; (2) the accuracy of VA-FSCs estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
In 1987, Treasury implemented several initiatives to encourage agencies to convert their vendor and miscellaneous payment activity from checks to the Automated Clearing House (ACH) payments. By 1996, the Debt Collection Improvement Act (DCIA) mandated the use of electronic funds transfer (EFT) for federal payments. In order to comply with these federal requirements, the VA and other Federal Agencies have used OMB # 1510-0056/Standard Form 3881 (SF 3881) to collect the essential payment data from vendors (
The new Vendorizing Form (VA10091) streamlines the data required to establish a vendor record (from the SF 3881 and Vendorizing Cover Sheet) into a single form.
By direction of the Secretary:.
Veterans Health Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521), this notice announces that the Veterans Health Administration (VHA), Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden and includes the actual data collection instrument.
Written comments and recommendations on the proposed collection of information should be received on or before December 30, 2015.
Submit written comments on the collection of information through
Crystal Rennie, Enterprise Records Service (005R1B), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 632-7492 or email
Under the PRA of 1995 (Pub. L. 104-13; 44 U.S.C. 3501-3521), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VHA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VHA's functions, including whether the information will have practical utility; (2) the accuracy of VHA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
By direction of the Secretary.
Office of the Comptroller of the Currency, Treasury (“OCC”); Board of Governors of the Federal Reserve System (“Board”); Federal Deposit Insurance Corporation (“FDIC”); Farm Credit Administration (“FCA”); and the Federal Housing Finance Agency (“FHFA”).
Final rule.
The OCC, Board, FDIC, FCA, and FHFA (each an “Agency” and, collectively, the “Agencies”) are adopting a joint rule to establish minimum margin and capital requirements for registered swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants for which one of the Agencies is the prudential regulator. This final rule implements sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”). Sections 731 and 764 require the Agencies to adopt rules jointly to establish capital requirements and initial and variation margin requirements for such entities on all non-cleared swaps and non-cleared security-based swaps in order to offset the greater risk to such entities and the financial system arising from the use of swaps and security-based swaps that are not cleared.
The final rule is effective April 1, 2016.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act” or “Dodd-Frank Act”) was enacted on July 21, 2010.
As part of this new regulatory framework, sections 731 and 764 of the Dodd-Frank Act add a new section, section 4s, to the Commodity Exchange Act of 1936, as amended (“Commodity Exchange Act”) and a new section, section 15F, to the Securities Exchange Act of 1934, as amended (“Securities Exchange Act”), respectively, which require registration with the U.S. Commodity Futures Trading Commission (the “CFTC”) of swap dealers and major swap participants and the U.S. Securities and Exchange Commission (the “SEC”) of security-based swap dealers and major security-based swap participants (each a “swap entity” and, collectively, “swap entities”).
Sections 731 and 764 of the Dodd-Frank Act also require the CFTC and SEC separately to adopt rules imposing capital and margin requirements to their applicable swap entities for which there is no prudential regulator.
The capital and margin standards for swap entities imposed under sections 731 and 764 of the Dodd-Frank Act are intended to offset the greater risk to the swap entity and the financial system arising from non-cleared swaps.
In addition to the Dodd-Frank Act authorities mentioned above, the Agencies also have safety and soundness authority over the entities they supervise.
The capital and margin requirements for non-cleared swaps under sections 731 and 764 of the Dodd-Frank Act complement other Dodd-Frank Act provisions that require all sufficiently standardized swaps to be cleared through a registered derivatives clearing organization or clearing agency.
In the derivatives clearing process, CCPs manage credit risk through a range of controls and methods, including a margining regime that imposes both initial margin and variation margin requirements on parties to cleared
However, a particular swap may not be cleared either because it is not subject to the mandatory clearing requirement, or because one of the parties to a particular swap is eligible for, and uses, an exception or exemption from the mandatory clearing requirement. Such a swap is a “non-cleared” swap that may be subject to the capital and margin requirements for such transactions established under sections 731 and 764 of the Dodd-Frank Act.
The swaps-related provisions of Title VII of the Dodd-Frank Act, including sections 731 and 764, are intended in general to reduce risk, increase transparency, promote market integrity within the financial system, and, in particular, address a number of weaknesses in the regulation and structure of the swaps markets that were revealed during the financial crisis of 2008 and 2009. During the financial crisis, the opacity of swap transactions among dealers and between dealers and their counterparties created uncertainty about whether market participants were significantly exposed to the risk of a default by a swap counterparty. By imposing a regulatory margin requirement on non-cleared swaps, the Dodd-Frank Act reduces the uncertainty around the possible exposures arising from non-cleared swaps.
Further, the financial crisis revealed that a number of significant participants in the swaps markets had taken on excessive risk through the use of swaps without sufficient financial resources to make good on their contracts. By imposing an initial and variation margin requirement on non-cleared swaps, sections 731 and 764 of the Dodd-Frank Act will reduce the ability of firms to take on excessive risks through swaps without sufficient financial resources. Additionally, the minimum margin requirement will reduce the amount by which firms can leverage the underlying risk associated with the swap contract.
The Agencies originally published proposed rules to implement sections 731 and 764 of the Act in May 2011 (the “2011 proposal”).
The applicability of the Agencies' margin requirements rely in part on regulatory action taken by the CFTC, the SEC, and the Secretary of the Treasury. The margin requirements will apply to any prudentially-regulated entity that: (1) Is registered as a swap dealer or major swap participant with the CFTC, or as a security-based swap dealer, major security-based swap participant with the SEC; and (2) enters into a non-cleared swap. In addition, as a means of ensuring the safety and soundness of the covered swap entity's non-cleared swap activities under the final rule, the requirements would apply to all of a covered swap entity's swap and security-based swap activities without regard to whether the entity has registered as both a swap entity and a security-based swap entity. Thus, for example, for an entity that is a swap dealer but not a security-based swap dealer or major security-based swap participant, the final rule's requirements would apply to all of that swap dealer's non-cleared swaps and non-cleared security-based swaps.
On May 23, 2012, the CFTC and SEC adopted a final joint rule defining “swap dealer,” “major swap participant,” “security-based swap dealer,” and “major security-based swap dealer.” These definitions include quantitative thresholds in the relevant activity that affect whether an entity subject to the “prudential regulator” definition also will be subject to the margin regulations.
On August 13, 2012, the CFTC and SEC adopted a final joint rule defining “swap” and “security-based swap.”
The CFTC has adopted a final rule requiring registration by entities meeting the substantive definition of
On January 12, 2015, the President signed into law TRIPRA. Title III of TRIPRA amends sections 731 and 764 of the Dodd-Frank Act to exempt certain transactions of certain counterparties from the Agencies' margin requirements as set out in this final rule.
Section 303 of TRIPRA requires that the Agencies implement the provisions of Title III by seeking comment on an interim final rule. The Agencies are adopting and, in a separate document published elsewhere in this
In the final rule, the Agencies are adopting a risk-based approach for initial and variation margin requirements for covered swap entities. Consistent with the statutory requirement, the final rule would help ensure the safety and soundness of the covered swap entity and would be appropriate for the risk to the financial system associated with non-cleared swaps held by covered swap entities. The final rule takes into account the risk posed by a covered swap entity's counterparties by establishing the minimum amount of initial and variation margin that the covered swap entity must exchange with its counterparties.
In implementing this risk-based approach, the final rule distinguishes among four separate types of swap counterparties: (i) Counterparties that are themselves swap entities; (ii) counterparties that are financial end users with a material swaps exposure; (iii) counterparties that are financial end users without a material swaps exposure, and (iv) other counterparties, including nonfinancial end users, sovereigns, and multilateral development banks.
The final rule's margin provisions establish only
When a covered swap entity transacts with another swap entity (regardless of whether the other swap entity meets the definition of a “covered swap entity” under the final rule), the covered swap entity must collect at least the amount of initial margin required under the final rule. Likewise, the swap entity counterparty also will be required, under margin rules that are applicable to that swap entity, to collect a minimum amount of initial margin from the covered swap entity. Accordingly, covered swap entities will both collect and post a minimum amount of initial margin when transacting with another swap entity.
The final rule permits a covered swap entity to adopt a maximum initial margin threshold amount of $50 million, below which it need not collect or post initial margin from or to swap entities and financial end users with material swaps exposures. The threshold amount applies on a consolidated basis, and applies both to the consolidated covered swap entity as well as to the consolidated counterparty.
Separate from the transactions exempt from the final rule as a result of the interim final rule, there are also swap transactions with “other counterparties” that are subject to this final rule, but that are not subject to specific, numerical minimum initial or variation margin requirements. As discussed below, these swaps include swaps with counterparties such as foreign sovereigns, as well as swaps with financial end users that do not have a material swaps exposure (with respect to the initial margin requirement). The final rule makes a covered swap entity's collection of margin from these “other counterparties” subject to the judgment of the covered swap entity. That is, under the final rule, a covered swap entity will not be required to collect initial and variation margin from these “other counterparties” as a matter of course.
Eligible collateral for initial margin includes cash, debt securities that are issued or guaranteed by the U.S. Department of Treasury or by another U.S. government agency, the Bank for International Settlements, the International Monetary Fund, the European Central Bank, multilateral development banks, certain U.S. Government-sponsored enterprises' (“GSEs”) debt securities,
Eligible collateral for variation margin depends on the type of counterparty the covered swap entity is facing in its swap transaction. For swaps between a covered swap entity and another swap entity, eligible collateral for variation margin is limited to only immediately available cash funds denominated in U.S. dollars, another major currency, or the currency of settlement for the swap. When a covered swap entity faces financial end user counterparties, on the other hand, a covered swap entity may exchange variation margin in any of the same forms of collateral as the final rule permits for initial margin collateral.
When determining collateral value for purposes of satisfying the final rule's margin requirements, non-cash collateral is subject to an additional “haircut” or “discount” as determined using appendix B of the final rule.
The special rules for affiliates provide that a covered swap entity is not required to post initial margin to an affiliate that is not also a covered swap entity but must calculate the amount of initial margin that would be required to be posted to such an affiliate and provide documentation to each affiliate on a daily basis. In addition, each affiliate may be granted an initial margin threshold of $20 million. A covered swap entity that collects non-cash collateral from an affiliate may serve as the custodian for the collateral or have an affiliate serve as the custodian. In addition, a covered swap entity may use a holding period in its margin model equal to the shorter of five business days or the maturity of the portfolio for any swaps with an affiliate that are subject to an exemption from mandatory clearing, provided that the initial margin amount for these swaps are calculated separately from other swaps. In addition, a covered swap entity must collect and post variation margin with any affiliate counterparty as provided in § __.4 of the final rule.
Sections 731 and 764 of the Dodd-Frank Act also require each Agency to issue, in addition to margin rules, joint rules on capital for covered swap entities for which it is the prudential regulator.
In July 2013 the Board and the OCC issued a final rule (revised capital framework) implementing regulatory capital reforms reflecting agreements reached by the BCBS in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” (Basel III framework).
FHFA's predecessor agencies used a methodology similar to that endorsed by the BCBS prior to the development of the Basel III framework to develop the risk-based capital rules applicable to those entities now regulated by FHFA. Those rules still apply to all FHFA-regulated entities.
The FCA's risk-based capital regulations for Farm Credit System (“FCS”) institutions, except for the Federal Agricultural Mortgage Corporation (“Farmer Mac”), have been in place since 1988 and were last updated in 2005.
As described below, the final rule requires a covered swap entity to comply with regulatory capital rules already made applicable to that covered swap entity as part of its prudential regulatory regime. Given that these existing regulatory capital rules
The Agencies expect that the final rule likely will have minimal impact on community banks. The Agencies anticipate that community banks will not engage in swap activity to the level that would require them to register as a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant; and therefore, are unlikely to fall within the definition of a covered swap entity.
The TRIPRA also excluded certain swaps with community banks from the margin requirements of this rule.
When a community bank with total assets greater than $10 billion enters into a swap with a covered swap entity, the covered swap entity will be required to post and collect initial margin pursuant to the rule only if the community bank had a material swaps exposure and is not otherwise exempt pursuant to TRIPRA.
The final rule requires a covered swap entity to exchange daily variation margin with a community bank with total assets below $10 billion, regardless of whether the community bank has material swaps exposure, provided the swap is not otherwise exempt pursuant to TRIPRA. In addition, the final rule requires a covered swap entity to exchange daily variation margin with a community bank with total assets above $10 billion, regardless of whether the community bank has material swaps exposure. However, the covered swap entity will only be required to collect variation margin from a community bank when the amount of both initial margin and variation margin required to be collected exceeds the minimum transfer amount of $500,000, as provided for in § __.5(b) of the final rule.
The final rule should have a minimal impact on the FCS. Currently, no FCS institution, including Farmer Mac, engages in swap activity at the level that would require them to register as a swap dealer, major swap participant, security-based swap dealer, or a major security-based swap participant. For this reason, no FCS institution, including Farmer Mac, would fall within the definition of a covered swap entity and, therefore, become directly subject to this rule. Further, almost all swaps of FCS institutions are exempt from clearing and the margin requirements of this final rule as a result of TRIPRA. Most FCS institutions have total assets of less than $10 billion and, therefore, they may elect an exception from clearing under a CFTC regulation, 17 CFR 50.50(d), which implements section 2(h)(7)(C)(ii) of the Commodity Exchange Act.
As in the proposal, §§ __.1(a) through (c) of the final rule are Agency-specific. Section __.1(a) of the final rule sets out each Agency's specific authority, and § __.1(b) describes the purpose of the rule, including the specific entities covered by each Agency's rule. Section __.1(c) of the final rule specifies the scope of the transactions to which the margin requirements apply. Under § __.1(c), the margin requirements apply to
Section _.1(d), as added by the interim final rule published elsewhere in this
The proposal applied to all swaps and security-based swaps, consistent with the original provisions of sections 731 and 764 of the Dodd-Frank Act. For certain swaps, however, such as those between a covered swap entity and a “commercial end user” (
As discussed earlier, TRIPRA, which was enacted on January 12, 2015, amends sections 731 and 764 of the Dodd-Frank Act to exempt certain transactions of certain financial and nonfinancial end users from the Agencies' margin requirements set out in this final rule.
(1) A nonfinancial entity, including a captive finance company, that qualifies for the clearing exception under section 2(h)(7)(A) of the Commodity Exchange Act or section 3C(g)(1) of the Securities Exchange Act;
(2) A cooperative entity that qualifies for an exemption from the clearing requirements issued under section 4(c)(1) of the Commodity Exchange Act;
(3) An affiliate that satisfies the criteria for an exception from clearing in section 2(h)(7)(D) of the Commodity Exchange Act or section 3C(g)(4) of the Securities Exchange Act.
The Agencies have implemented the TRIPRA exemptions in § __.1(d) of the interim final rule. These exemptions are transaction-based, as opposed to counterparty-based. For example, if a commercial end user enters into a non-cleared swap with a covered swap entity and the transaction is
Section 303 of TRIPRA requires that the Agencies implement the provisions of Title III, “Business Risk Mitigation and Price Stabilization Act of 2015,” by promulgating an interim final rule, and seeking public comment on the interim final rule. The Agencies are adopting § __.1(d) as part of a companion interim final rule, and will be requesting comment, as required by TRIPRA, in a separate publication in the
Section __.1(e) of the final rule sets forth the compliance dates by which covered swap entities must comply with the minimum margin requirements for non-cleared swaps that are entered into on or after the applicable compliance date. The compliance dates are consistent with the modified compliance dates associated with the 2013 international framework.
Under the 2014 proposal, the implementation of both initial and variation margin requirements would have started on December 1, 2015. With respect to initial margin requirements, the requirements would have been phased-in between December 1, 2015 and December 1, 2019. Variation margin requirements for all covered swap entities with respect to covered swaps with any counterparty would have been effective as of December 1, 2015. This proposed set of compliance dates was consistent with those set forth in the 2013 international framework. On March 18, 2015, the BCBS and IOSCO issued a press release announcing that the implementation of the 2013 international framework would be delayed by nine months.
The changes to the proposed compliance dates in the final rule should help address concerns raised by commenters. For example, the proposal was revised, in part, to respond to commenters who stated that, to the extent practicable, there should be international harmonization of implementation dates for margin and capital requirements. While one commenter supported the proposed compliance date schedules set out in the 2014 proposal, a number of commenters argued that compliance with the final rule should be delayed for 18 months to two years in order to allow for operational changes that will be required for covered swaps entities to comply with the rule. With respect to phasing-in the implementation of the initial margin requirements, a commenter stated that the phase-in provisions should be revised to apply only to non-cleared swaps between covered swap entities. The commenter further stated that non-covered swap entities should not be required to comply with the initial margin requirements until December 2019. The Agencies also received a comment stating that the implementation of the compliance date schedule should not coincide with code freezes—
The Agencies agree that the international harmonization of margin and capital requirements is prudent. In light of the concerns raised by the commenters and the delay of the implementation of the 2013 international framework, the Agencies have incorporated into the final rule provisions reflecting the implementation schedule for the 2013 international framework that was recently set out by the BCBS and IOSCO.
For purposes of initial margin, as reflected in the table below, the compliance dates range from September 1, 2016, to September 1, 2020, depending on the average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps (“covered swaps”) of the covered swap entity and its counterparty (accounting for their respective affiliates) for each business day in March, April and May of that year.
In calculating the amount of covered swaps as set forth in the table above, the final rule provides that a covered swap entity shall count the average daily aggregate notional amount of a non-cleared swap, a non-cleared security-
The Agencies expect that covered swap entities likely will need to make a number of operational and legal changes to their current swaps business operations in order to achieve compliance with the provisions of the final rule relating to the initial margin requirements, including potential changes to internal risk management and other systems, trading documentation, collateral arrangements, and operational technology and infrastructure. In addition, the Agencies expect that covered swap entities that wish to calculate initial margin using an initial margin model will need sufficient time to develop such models and obtain regulatory approval for their use. Accordingly, the compliance dates have been structured to ensure that the largest and most sophisticated covered swap entities and counterparties that present the greatest potential risk to the financial system comply with the requirements first. These swap market participants should be able to make the required operational and legal changes more rapidly and easily than smaller entities that engage in swaps less frequently and pose less risk to the financial system.
For purposes of variation margin, the compliance dates are September 1, 2016 and March 1, 2017. As set out in the table below, these compliance dates also depend on the average daily aggregate notional amount of covered swaps of the covered swap entity combined with its affiliates and each of its counterparties (combined with that counterparty's affiliates) for each business day in March, April and May of that year (the “calculation period”).
Calculating the amount of covered swaps set forth in the table above for the purposes of determining variation margin is done in the same manner as calculating the amount of covered swaps for purposes of determining initial margin.
The final rule adopts a phase-in arrangement for variation margin requirements that is different from the 2014 proposal. Several commenters urged that the compliance date for variation margin requirements be phased in, in a manner similar to the compliance dates for the initial margin requirements. These commenters argued, among other things, that the phase-in of the variation margin requirements would allow covered swap entities the time to re-document all necessary swap contracts at one time. One commenter stated that variation margin requirements should be phased in based on decreasing notional amount thresholds over a two-year period commencing upon the latter of the publication of the margin rules for OTC derivatives in the United States, the EU and Japan or the publication of the Agencies' comparability determinations with respect to the EU and Japan. In response to these comments, the Agencies believe that a phase-in of variation margin requirements similar to the phase-in of initial margin requirements is not necessary because the collection of daily variation margin is currently an industry best practice and will not require many changes in current swaps business operations for covered swaps entities. However, the Agencies have revised the 2014 proposal to include the phase-in of compliance dates for variation margin as set forth above to align with the dates suggested by the BCBS and IOSCO on March 18, 2015.
The rule's margin requirements apply to non-cleared swaps entered into on or after the applicable compliance date. Certain commenters also requested that the Agencies consider the following swaps as entered into prior to the compliance date: (1) swaps entered into prior to the applicable compliance date (legacy swaps) that are amended in a non-material manner; (2) novations; and (3) new derivatives that result from portfolio compression of legacy
Notwithstanding these comments, the Agencies believe that classifying new swap transactions as “swaps entered into prior to the compliance date” could create significant incentives to engage in amendments and novations for the purpose of evading the margin requirements. Moreover, limiting the extension to “material” amendments or “legitimate” novations is difficult to effect within the final rule as the specific motivation for an amendment or novation is generally not observable. Finally, the Agencies believe that classifying some new swap transactions as transactions entered into prior to the compliance date would make the process of identifying those swaps to which the rule applies overly complex and non-transparent. Accordingly, the Agencies have elected not to extend the meaning of swaps entered into prior to the compliance date as was requested by some commenters.
Section __.1(f) provides that once a covered swap entity and its counterparty must comply with the margin requirements for non-cleared swaps based on the compliance dates set forth in § __.1(e), the covered swap entity and its counterparty shall remain subject to the margin requirements from that point forward. For example, September 1, 2017 is the relevant compliance date where both the covered swap entity combined with all its affiliates and its counterparty combined with all its affiliates have an average aggregate daily notional amount of covered swaps that exceed $2.25 trillion must comply with these margin requirements. If the notional amount of the swap activity for the covered swap entity or the counterparty drops below that threshold amount of covered swaps in subsequent years, their swaps would nonetheless remain subject to the margin requirements. On September 1, 2020, any covered swap entity/counterparty combination that did not have an earlier compliance date will become subject to the initial margin requirements with respect to any non-cleared swaps.
One commenter urged that, during the phase-in period, only entities whose swap volume currently exceeds the applicable threshold should be subject to the margin requirements. The commenter stated that, if the swap activity of either party to a swap declines below the applicable threshold, that party should cease being subject to the initial margin requirements until such time as it exceeds the applicable threshold. The Agencies have declined to make this change to the final rule. The Agencies believe that allowing entities' coverage status to change over time results in additional complexity with little benefit since all entities will in any event be subject to the rule as of September 1, 2020. Accordingly, allowing an entity's coverage status to fluctuate would only be consequential for a limited period of time.
One commenter asked how the margin requirements would apply in the event of a change in status of the counterparty. The Agencies have added § __.1(g) to the final rule to clarify the applicability of the margin requirements in the event a covered swap entity's counterparty changes its status (for example, if the counterparty is a financial end user without material swaps exposure and becomes a financial end user with material swaps exposure).
As discussed in further detail below in § ___.5, a covered swap entity may enter into swaps on or after the final rule's compliance date pursuant to the same master netting agreement that governs existing swaps entered into with a counterparty prior to the compliance date. The final rule permits a covered swap entity to (1) calculate initial margin requirements for swaps under an eligible master netting agreement (“EMNA”) with the counterparty on a portfolio basis in certain circumstances, if it does so using an initial margin model; and (2) calculate variation margin requirements under the final rule on an aggregate, net basis under an EMNA with the counterparty. Applying the final rule in such a way would, in some cases, have the effect of applying it retroactively to swaps entered into prior to the compliance date under the EMNA.
The Agencies received several comments expressing concern that the 2014 proposal might require swaps entered into before the compliance dates to be documented under a different EMNA than swaps entered into after the compliance dates in order for the margin requirements not to apply to the pre-compliance dates swaps. As described further in § ___.5, the Agencies have revised the final rule to allow for the establishment of separate netting sets under a single ENMA to avoid this outcome.
The 2014 proposal contained a number of numerical amounts that are expressed in U.S. dollar terms. The amounts include the effective date phase-in thresholds, the initial margin threshold amount, the material swaps exposure amount, and the minimum transfer amount. These numerical amounts are expressed in the 2013 international framework in terms of Euros. In the 2014 proposal, the Agencies translated the Euro amounts from the 2013 international framework
In the proposal, the Agencies sought comment on how to deal with fluctuations in exchange rates and how such fluctuations may create inconsistencies in the numerical amounts that are established across differing jurisdictions. One commenter suggested using an average exchange rate calculated over a period of time. Another commenter suggested that the Agencies should periodically recalibrate these amounts in response to broad movements in underlying exchange rates.
The Agencies believe that persistent and significant fluctuations in exchange rates could result in significant differences across jurisdictions that would complicate cross-border transactions and create competitive inequities. The Agencies do not agree, however, that the final rule's numerical amounts should be mechanically linked to either prevailing exchange rates or average exchange rates over a period of time as short term fluctuations in exchange rates would result in high frequency changes that would create significant operational and logistical burdens. Rather, and consistent with the view of one commenter, the Agencies expect to consider periodically the numerical amounts expressed in the final rule and their relation to amounts denominated in other currencies in differing jurisdictions. The Agencies will then propose adjustments, as appropriate, to these amounts.
In the final rule, the Agencies are adjusting the numerical amounts described above in light of significant shifts in the Euro-U.S. Dollar exchange rates since the publication of the 2014 proposal. Specifically, the Agencies are reducing the value of each numerical quantity expressed in dollars to be consistent with a one-for-one exchange rate with the Euro. As a specific example, the amount of the initial margin threshold is being changed from $65 million in the 2014 proposal to $50 million in the final rule. This change will align the U.S dollar denominated numerical amounts in the final rule with those in the 2013 international framework, will be consistent with amounts that have been proposed in margin rules by the European and Japanese authorities and will be more consistent with the Euro-U.S. Dollar exchange rate prevailing at the time the final rule is published.
Section __.2 of the final rule defines its key terms.
Section __.2 defines key terms used in the final rule, including the types of counterparties that form the basis of the rule's risk-based approach to margin requirements and other key terms needed to calculate the required amount of initial margin and variation margin.
In the final rule, the Agencies have revised the definition of “swap entity” to clarify that the term applies to persons that have registered with the CFTC as a swap dealer or major swap participant or with the SEC as a security-based swap dealer or major security-based swap participant. The term “swap entity” is used in the final rule in the definition of “covered swap entity” to refer to such an entity that is supervised by one of the Agencies. The term “swap entity” is also used in describing requirements that apply when a covered swap entity engages in non-cleared swaps with a counterparty that is registered with the CFTC or SEC as a dealer or major participant in non-cleared swaps or security-based swaps but is not supervised by one of the Agencies.
The registration status with the CFTC or SEC is central to the scope of the rule's applicability to an entity that is supervised by one of the Agencies. The Commodity Exchange Act requires that “each registered swap dealer and major swap participant for which there is a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the prudential regulator shall by rule or regulation prescribe . . . .”
For a person that meets the qualitative elements of one or more of the dealer or major participant definitions, whether it is required to register with the applicable Commission will require an application of the minimum thresholds that the Commissions established in their joint regulation. For purposes of this margin rule, “swap entity” refers only to those persons that have actually registered with the applicable Commission as a dealer or major participant in non-cleared swaps or security-based swaps.
In order to provide certainty and clarity to counterparties as to whether they would be financial end users for purposes of this final rule, the financial
Under the final rule, financial end user includes a counterparty that is not a swap entity but is:
• A bank holding company or an affiliate thereof; a savings and loan holding company; a U.S. intermediate holding company established or designated for purposes of compliance with 12 CFR 252.153; a nonbank financial institution supervised by the Board of Governors of the Federal Reserve System under Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323);
• A depository institution; a foreign bank; a Federal credit union, a State credit union as defined in section 2 of the Federal Credit Union Act (12 U.S.C. 1752(1) & (6)); an institution that functions solely in a trust or fiduciary capacity as described in section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(D)); an industrial loan company, an industrial bank, or other similar institution described in section 2(c)(2)(H) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(H));
• An entity that is state-licensed or registered as a credit or lending entity, including a finance company; money lender; installment lender; consumer lender or lending company; mortgage lender, broker, or bank; motor vehicle title pledge lender; payday or deferred deposit lender; premium finance company; commercial finance or lending company; or commercial mortgage company; but excluding entities registered or licensed solely on account of financing the entity's direct sales of goods or services to customers;
• A money services business, including a check casher; money transmitter; currency dealer or exchange; or money order or traveler's check issuer;
• A regulated entity as defined in section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (12 U.S.C. 4502(20)) and any entity for which the Federal Housing Finance Agency or its successor is the primary federal regulator;
• Any institution chartered in accordance with the Farm Credit Act of 1971, as amended, 12 U.S.C. 2001
• A securities holding company; a broker or dealer; an investment adviser as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)); an investment company registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1
• A private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80-b-2(a)); an entity that would be an investment company under section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3) but for section 3(c)(5)(C); or an entity that is deemed not to be an investment company under section 3 of the Investment Company Act of 1940 pursuant to Investment Company Act Rule 3a-7 of the Securities and Exchange Commission (17 CFR 270.3a-7);
• A commodity pool, a commodity pool operator, or a commodity trading advisor as defined in, respectively, sections 1a(10), 1a(11), and 1a(12) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(10), 7 U.S.C. 1a(11), 7 U.S.C 1a(12)); a floor broker, a floor trader, or introducing broker as defined, respectively, in 1a(22), 1a(23) and 1a(31) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(22), 1a(23), and 1a(31)); or a futures commission merchant as defined in 1a(28) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(28));
• An employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income and Security Act of 1974 (29 U.S.C. 1002);
• An entity that is organized as an insurance company, primarily engaged in writing insurance or reinsuring risks underwritten by insurance companies, or is subject to supervision as such by a State insurance regulator or foreign insurance regulator;
• An entity, person or arrangement that is, or holds itself out as being, an entity, person or arrangement that raises money from investors, accepts money from clients, or uses its own money primarily for the purpose of investing or trading or facilitating the investing or trading in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets; or
• An entity that is or would be a financial end user or swap entity, if it were organized under the laws of the United States or any State.
In developing this definition of financial end user, the Agencies sought to provide certainty and clarity to covered swap entities and their counterparties regarding whether particular counterparties would qualify as financial end users and be subject to the margin requirements of the final rule. The Agencies tried to strike a balance between the desire to capture all financial counterparties, without being overly broad and capturing commercial firms and sovereigns. This approach is consistent with the risk-based approach of the final rule, as financial firms present a higher level of risk than other types of counterparties because the profitability and viability of financial firms is more tightly linked to the health of the financial system than is the case for other types of counterparties.
In developing the list of financial entities, the Agencies sought to include entities that engage in financial activities that give rise to Federal or State registration or chartering requirements, such as deposit taking and lending, securities and swaps dealing, or investment advisory activities. The list also includes asset management and securitization entities. For example, certain investment funds as well as securitization vehicles are covered, to the extent those entities would qualify as private funds defined in section 202(a) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”). In addition, certain real estate investment companies would be included as financial end users as entities that would be investment companies under section 3 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), but for section 3(c)(5)(C), and certain other securitization vehicles would be included as entities deemed not to be investment companies pursuant to Rule 3a-7 of the Investment Company Act.
Because Federal law largely looks to the States for the regulation of the business of insurance, the definition of financial end user in the final rule broadly includes entities organized as insurance companies or supervised as such by a State insurance regulator. This element of the final rule's definition would extend to reinsurance and monoline insurance firms, as well as insurance firms supervised by a foreign insurance regulator.
The Agencies intend to cover, as financial end users, the broad variety and number of nonbank lending and retail payment firms that operate in the market. To this end, the Agencies have included State-licensed or registered credit or lending entities and money services businesses under the final rule's provision incorporating an inclusive list of the types of firms subject to State law. However, the Agencies recognize that the licensing of nonbank lenders in some states extends to commercial firms that provide credit to the firm's customers in the ordinary course of business. Accordingly, the Agencies are excluding an entity registered or licensed solely on account of financing the entity's direct sales of goods or services to customers.
Under the final rule, those cooperatives that are financial institutions,
In order to address concerns, now or in the future, that one or more types of financial entities might escape classification under the specific Federal or State regulatory regimes included in the definition of a “financial end user,” the Agencies have inserted language that would cover an entity, person, or arrangement that is, or holds itself out as an entity, person or arrangement that raises money from investors, accepts money from clients, or uses its own money primarily for the purpose of investing or trading or facilitating the investing or trading in loans, securities, swaps, funds or other assets for resale or other disposition, or otherwise trading in loans, securities, swaps, funds or other assets.
The final rule's definition of “financial end user” is largely similar to the proposed definition, with a few modifications. In the final rule, the Agencies added as a financial end user a U.S. intermediate holding company (“IHC”) established or designated for purposes of compliance with the Board's Regulation YY (12 CFR 252.153). Pursuant to Regulation YY, a foreign banking organization with U.S. non-branch assets of $50 billion or more must establish a U.S. IHC and transfer its ownership interest in the majority of its U.S. subsidiaries to the IHC by July 1, 2016. As not all IHCs will be bank holding companies, the Agencies are explicitly identifying IHCs in the list of financial end users to clarify that they are included. To the extent an IHC that is not itself registered as a swap entity enters into non-cleared swaps with a covered swap entity, the IHC would be treated as a financial end user like other types of holding companies that are not swap entities (
In order to address concerns raised by commenters, the final rule removes the provision in the definition of “financial end user” that included any other entity that the relevant Agency has determined should be treated as a financial end user. A few commenters urged the Agencies to remove this provision due to concerns that it created uncertainty. In response to this concern, the Agencies have removed this provision from the final rule's definition of “financial end user.” The Agencies will monitor the margin arrangements of swap transactions of covered swap entities to determine if certain types of counterparties, in fact, are financial entities that some reason are not covered by the definition of “financial end user” in the final rule. In the event that the Agencies find that one or more types of financial entities escape classification as financial end users under the final rule, the Agencies may consider another rulemaking that would amend the definition of “financial end user” to cover such entities.
Many of the provisions in the financial end user definitions rely on whether an entity's financial activities trigger Federal or State registration or chartering requirements. The Agencies proposed to include foreign financial entities that are not subject to U.S. law but are engaged in the same types of activities as U.S. financial end users. The proposed definition of “financial end user” included any entity that would be a financial end user if it were organized under the laws of the United States or any State. A few commenters argued that the proposed test is difficult to apply because it would require a covered swap entity to analyze a foreign counterparty's business activities in light of a broad array of U.S. regulatory requirements.
The Agencies have not modified this provision of the final rule in response to these concerns raised by commenters. Although the Agencies acknowledge that the proposed test imposes a greater
As explained above, in an attempt to provide a level of certainty to financial participants and to clarify the definition of a financial end user, the Agencies proposed an enumerated list which included several CFTC-registered entities. In the final rule, the Agencies have added three other CFTC-registered entities to the enumerated list, floor brokers, floor traders, and introducing brokers.
As defined in section 1a(22) of the Commodity Exchange Act, a floor broker generally provides brokering services on an exchange to clients in purchasing or selling any future, security future, swap, or commodity option. As defined in section 1a(23) of the Commodity Exchange Act, a floor trader generally purchases or sells on an exchange solely for that person's account, any future, security future, swap, or commodity option. As defined in section 1a(31) of the Commodity Exchange Act, an introducing broker generally means any person who engages in soliciting or in accepting orders for the purchase and sale of any future, security future, commodity option, or swap. In addition, it also includes anyone that is registered with the CFTC as an introducing broker.
In deciding to add these entities to the definition of financial end-user, the Agencies determined that these entities' services and activities are financial in nature and that these entities provide services, engage in activities, or have sources of income that are similar to financial entities already included in the definition. The Agencies believe that by including these financial entities in the definition of financial end user, the definition provides additional clarity to covered swap entities when engaging in non-cleared swaps with these entities. As noted above, financial entities are considered to pose greater systemic risk than nonfinancial entities and as such, the Agencies believe that these entities, whose activities, services, and sources of income are financial in nature, should be included in the definition of financial end user.
In the proposal, the Agencies included in the definition of a financial end user “an entity that is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets.” In addition to asking whether the definition was too broad or narrow, as noted above, the Agencies asked questions as to whether this prong of the definition was broad enough to capture other types of pooled investment vehicles that should be treated as financial end users.
After reviewing all comments, the Agencies are broadening this prong of the definition to include other types of entities and persons that primarily engage in trading, investing, or in facilitating the trading or investing in loans, securities, swaps, funds or other assets. In broadening the definition, the Agencies believe that the enumerated list in the proposal of financial end users was not inclusive enough to cover certain financial entities that were not organized as pooled investment vehicles but that traded or invested their own or client funds (
As noted above, the Agencies believe that financial firms present a higher level of risk than other types of counterparties because the profitability and viability of financial firms is more tightly linked to the health of the financial system than other types of counterparties. Accordingly, the Agencies have adopted a definition of financial end user that includes the types of firms that engage in the activities described above.
The final rule, like the proposal, excludes certain types of counterparties from the definition of financial end user. In particular, the final rule states that the term “financial end user” does not generally include any counterparty that is:
• A sovereign entity;
• A multilateral development bank;
• The Bank for International Settlements;
• A captive finance company that qualifies for the exemption from clearing under section 2(h)(7)(C)(iii) of the Commodity Exchange Act of 1936 and implementing regulations; or
• A person that qualifies for the affiliate exemption from clearing pursuant to section 2(h)(7)(D) of the Commodity Exchange Act of 1936 or section 3C(g)(4) of the Securities Exchange Act of 1934 and implementing regulations.
The Agencies believe that this approach is appropriate as these entities generally pose less systemic risk to the financial system in addition to posing less counterparty risk to a covered swap entity. Thus, the Agencies believe that the application of margin requirements to swaps with these counterparties is not necessary to achieve the safety and soundness objectives of this rule.
A few commenters argued that the exclusion from financial end user for a person that qualifies for the affiliate exemption from clearing pursuant to section 2(h)(7)(D) of the Commodity Exchange Act requires an entity to be acting
A few commenters requested that the Agencies exclude from the definition of financial end user those entities guaranteed by a foreign sovereign or multilateral development bank.
Similarly, the Agencies note that States would not be excluded from the definition of financial end user in the final rule, as the term “sovereign entity” includes only central governments. This does not mean, however, that States are categorically classified as financial end users. Whether a State or particular part of a State (
With respect to employee benefit plans, commenters generally argued that these plans should not be subject to margin requirements because they are highly regulated, highly creditworthy, have low leveraged and are prudently managed counterparties whose swaps are used primarily for hedging and, as such, pose little risk to their counterparties or the broader financial system. One commenter urged the Agencies to exclude both U.S. and non-U.S. public and private employee benefit plans where swaps are hedging risk. This commenter also contended that there may be ambiguity whether certain pension plans are financial end users if they are not subject to ERISA. Another commenter argued that current market practice is not to require initial margin for pension plans. The Agencies have considered these comments in light of the purpose and intent of the statute and continue to believe that pension plans should be covered as financial end users under the final rule. Congress explicitly listed an employee benefit plan as defined in paragraph (3) and (32) of section 3 of ERISA in the definition of “financial entity” in the Dodd-Frank Act, meaning that a pension plan would not benefit from an exclusion from clearing even if the pension plan uses swaps to hedge or mitigate commercial risk. The Agencies believe that, similarly, when a pension plan enters into a non-cleared swap with a covered swap entity, the pension plan should be treated as a financial end user and subject to the requirements of the final rule.
The definition of employee benefit plan in the final rule is the same as in the proposal and is defined by reference to paragraphs (3) and (32) of ERISA. Paragraph (3) provides that the term “employee benefit plan” or “plan” means an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan. Paragraph (32) describes certain governmental plans. In response to concerns raised by commenters, the Agencies believe that these broad definitions would cover all pension plans regardless of whether the pension plan is subject to ERISA. In addition, non-U.S. employee benefit plans would be included as an entity that would be a financial end user, if it were organized under the laws of the United States or any State thereof.
A number of commenters also requested that the Agencies exclude from financial end user structured finance vehicles including securitization special purpose vehicles (“SPVs”) and covered bond issuers. These commenters argued that imposing margin requirements on structured finance vehicles would restrict their ability to hedge interest rate and currency risk and potentially force these vehicles to exit swaps markets since these vehicles generally do not have ready access to liquid collateral. Certain of these commenters also expressed concerns about consistency with the treatment under the EU proposal. One commenter stated that the EU proposal has special criteria for covered bond issuers and that covered bond issuers should be able to use collateral arrangements other than the requirements in the Agencies' proposal. Moreover, commenters argued that covered swap entities that enter into a swap may be protected by other means—
The Agencies have not modified the definition of financial end user to exclude structured finance vehicles or covered bonds issuers. The Agencies believe that all of these entities should be classified as financial end users; their financial and market activities comprise the same range of activities as the other entities encompassed by the final rule's definition of financial end user. The Agencies note that the increased material swaps exposure in the final rule should address some of the concerns raised by these commenters with respect to the applicability of initial margin requirements.
The final rule, like the proposal, distinguishes between swaps with financial end user counterparties depending on whether the counterparty has a “material swaps exposure.” In the final rule, “material swaps exposure” for an entity means that an entity and its affiliates have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps with all counterparties for June, July, and August of the previous calendar year that exceeds $8 billion, where such amount is calculated only for business days.
The final rule increases the level of the aggregate notional amount of transactions that gives rise to material swaps exposure to $8 billion from the proposed level of $3 billion. A number of commenters argued that the Agencies should raise the level of material swaps exposure to the threshold of €8 billion set out in the 2013 international framework to be consistent with the EU and Japanese proposals.
The material swaps exposure threshold of $8 billion in the final rule is broadly consistent with the €8 billion established by the 2013 international framework and has been calibrated relative to this level in the manner described previously. At this time, the Agencies believe the better course is to calibrate the final rule's material swaps exposure threshold to the higher international amount, in recognition of each financial end user's overall potential future swaps exposure to the market rather than its potential future exposure to one dealer. In this regard, the Agencies note that variation margin will still be exchanged without any threshold, and further that the $8 billion threshold may warrant further discussion among international regulators in future years, if implementation of the threshold proves to create concerns about market coverage for initial margin.
The time period for measuring material swaps exposure is June, July, and August of the previous calendar year under the final rule, the same period as in the proposal.
The definition of “material swaps exposure” also clarifies questions raised about the treatment of affiliates in the proposed definition. Commenters urged the Agencies to make clear that inter-affiliate swaps would not be included for purposes of determining the material swaps exposure. Some of these commenters also expressed concern that the proposal could require an entity to double count inter-affiliate swaps in assessing material swaps exposure. In order to address concerns about double counting affiliate swaps, the final rule provides that an entity shall count the average daily aggregate notional amount of a non-cleared swap, a non-cleared security-based swap, a foreign exchange forward or a foreign exchange swap between the entity and an affiliate only one time. The purpose of this modification is to clarify that an entity should not double count swaps with an affiliate in calculating material swaps exposure.
The final rule's definition of material swaps exposure also states that for purposes of this calculation, an entity shall not count a swap that is exempt pursuant to § __.1(d), as added by the interim final rule.
Commenters argued that certain other swaps should not be counted for purposes of the material swaps exposure calculation. A few commenters argued that foreign exchange swaps and foreign exchange forwards that are exempt from the definition of swap by Treasury determination should not be included for purposes of determining material swaps exposure.
One commenter urged the Agencies to clarify what happens when a financial end user counterparty that had a material swaps exposure falls below the threshold. Because the material swaps exposure determination applies to a financial end user for an entire calendar year, depending on whether the financial end user exceeded the threshold during the third calendar quarter of the previous year, it is possible for a covered swap entity to have a portfolio of swaps with a financial end user whose status under the material swaps exposure test changes from time to time. New § ___.1(g) of the final rule addresses this concern and explains what happens upon a change in counterparty status. For example, if a financial end user is moving below the threshold for the upcoming calendar year, the covered swap entity is not obligated under the final rule to exchange initial margin with that end user during that calendar year, either for new swaps entered into that year or existing swaps from a prior year. Financial end users without material swaps exposure are treated as “other counterparties” for purposes of the initial margin requirements in the final rule. Moreover, any margin that had previously collected while the counterparty had a material swaps exposure would not be required under the final rule for as long as the counterparty did not have a material swaps exposure. In addition, a covered swap entity's swaps with a financial end user without material swaps exposure would continue to be subject to the variation margin requirements of the final rule. If a financial end user is moving above the threshold for the upcoming calendar year, the treatment of the existing swaps and the new swaps is the same as described for swaps before and after the rule's compliance implementation date. As described in more detail below under § ___.5, the parties have the option to document the old and new swaps as separate portfolios for netting purposes under an EMNA, and exchange initial margin
The requirements of this rule are, as a threshold matter, applicable to non-cleared swaps between covered swap entities and their counterparties. The final rule defines “non-cleared swap” to mean a swap that is not cleared by a derivatives clearing organization registered with the Commodity Futures Trading Commission pursuant to section 5b(a) of the Commodity Exchange Act of 1936 (7 U.S.C. 7a-1(a)) or by a clearing organization that the Commodity Futures Trading Commission has exempted from registration by rule or order pursuant to section 5b(h) of the Commodity Exchange Act of 1936 (7 U.S.C. 7a-1(h)). The final rule defines “non-cleared security-based swap” to mean a security-based swap that is not, directly or indirectly, submitted to and cleared by a clearing agency registered with the U.S. Securities and Exchange Commission pursuant to section 17A(b)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1(b)(1)) or by a clearing agency that the U.S. Securities and Exchange Commission has exempted from registration by rule or order pursuant to section 17A(k) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1(k)).
In the proposal, the Agencies defined a “non-cleared swap” as a swap that is not a cleared swap as defined in section 1a(7) of the Commodity Exchange Act. Under section 1a(7) of the Commodity Exchange Act, the term “cleared swap” means any swap that is, directly or indirectly, submitted to and cleared by a derivatives clearing organization registered with the CFTC. “Non-cleared security-based swap” was defined in the proposal to mean a security-based swap that is not, directly or indirectly, submitted to and cleared by a clearing agency registered with the SEC.
A few commenters urged the Agencies to define non-cleared swaps and non-cleared security-based swaps to exclude swaps cleared through non-U.S. clearing organizations that are not registered with the CFTC or SEC. The Agencies have modified the definition of these terms in the final rule to address these comments.
Under sections 731 and 764, the Agencies are directed to impose initial and variation margin requirements on all swaps that are not cleared by a registered derivatives clearing organization and on all security-based swaps that are not cleared by a registered clearing agency. The Agencies are interpreting this statutory language to mean all swaps that are not cleared by a registered derivatives clearing organization or registered clearing agency or a derivatives clearing organization or clearing agency that the CFTC or SEC has exempted from registration as provided under the Commodity Exchange Act and Securities Exchange Act, respectively. In particular, the Commodity Exchange Act prohibits persons from engaging in a swap that is required to be cleared unless they submit such swaps for clearing to a derivatives clearing organization that is either registered with the CFTC as a derivatives clearing organization or exempt from registration. Section 5b(h) of the Commodity Exchange Act allows the CFTC to exempt, conditionally or unconditionally, a derivatives clearing organization from registration for the clearing of swaps, where the derivatives clearing organization is subject to “comparable, comprehensive supervision and regulation” by the appropriate government authorities in its home country. The Agencies understand that the CFTC has granted, by order, relief from registration to a derivatives clearing organization pursuant to section 5b(h)
In the final rule, the Agencies have revised the definition of “foreign bank” to clarify that the term applies only to an organization that is organized under the laws of a foreign country and that engages directly in the business of banking outside of the United States. The proposed definition, which cross-referenced section 1 of the International Banking Act of 1978 (12 U.S.C. 3101), was broader in scope since it included any subsidiary or affiliate of any such organization.
The final rule also defines a number of other terms, including several that were not defined in the proposal. The Agencies believe that these definitions will help provide additional clarity regarding the application of the margin requirements contained in the final rule.
The final rule defines a company to be an “affiliate” of another company
• Either company consolidates the other on financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles, the International Financial Reporting Standards, or other similar standards;
• Both companies are consolidated with a third company's on a financial statement prepared in accordance with such principles or standards;
• For a company that is not subject to such principles or standards, if consolidation as described in the first or second paragraph would have occurred if such principles or standards had applied; or
• [Agency] has determined that a company is an affiliate of other company, based on [Agency's] conclusion that either company provides significant support to, or is materially subject to the risks of losses of, the other company.
Similarly, the final rule defines a company to be a “subsidiary” of another company if:
• The company is consolidated by the other company on financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles, the International Financial Reporting Standards, or other similar standards;
• For a company that is not subject to such principles or standards, if consolidation as described in the first
• [Agency] has determined that the company is a subsidiary of another company, based on [Agency's] conclusion that either company provides significant support to, or is materially subject to the risks of loss of, the other company.
Section __.11 is a special section of the rule that applies to affiliate swaps. In addition, the term “affiliate” is used in a number of other places in the rule, including the definition of initial margin threshold amount. That definition refers to a credit exposure of $50 million that is applicable to non-cleared swaps between a covered swap entity and its affiliates with a counterparty and its affiliates. The inclusion of affiliates in this definition is meant to make clear that the initial margin threshold amount applies to an entity and its affiliates. Similarly, the term “affiliate” is also used in the definition of “material swaps exposure,” because material swaps exposure takes into account the exposures of an entity and its affiliates. The term “affiliate” is also used for determining the compliance date for a covered swap entity and its counterparty in § __.1(e) of the final rule. The term “subsidiary” is used throughout the cross-border provisions in § __.9 to describe certain entities that are eligible for an exclusion from the rules as well as substituted compliance.
The proposed rule defined “affiliate” to mean any company that controls, is controlled by, or is under common control with another company, while “subsidiary” meant a company that is controlled by another company.
Commenters raised a number of concerns with the proposal's definitions of “affiliate” and “subsidiary,” and most of these concerns centered on both definitions' reliance on the definition of “control.” The Agencies have responded to the commenters' concerns by omitting the proposed definition of “control” from the final rule. The term “control” is no longer used in the definitions of “affiliate” and “subsidiary.”
While one commenter expressed support for the proposal's definition of control, the vast majority of commenters argued for a modified definition of control that did not use the 25 percent threshold. One suggestion was that these terms should be defined by reference to whether an affiliate or subsidiary is consolidated under accounting standards. A number of these commenters urged the Agencies to use a majority ownership test (51 percent or more) for determining control.
Commenters also expressed particular concerns about the application of these definitions to investment funds, including during the seeding period. A number of commenters urged the Agencies to use the same criteria as the 2013 international framework as the basis for determining whether or not an investment fund is an affiliate of a fund sponsor.
Commenters also expressed particular concerns about how the definitions applied to pension funds. One commenter argued that the sponsor of a pension should not be an affiliate of the pension fund by virtue of appointing trustees or directors of the pension fund. This commenter urged that pension plans should not be deemed to have any affiliates other than those entities to whom a covered swap entity has recourse for swap transactions with the pension fund. Other commenters argued that pension plans should be exempted from the definition of affiliate, expressing concerns that it could conflict with fiduciary obligations under ERISA.
Using financial accounting as the trigger for affiliation, rather than a legal control test, should address many of the concerns raised by commenters. Although consolidation tests under relevant accounting standards must also be applied on a case-by-case basis, like the proposed rule's “control” test, the analysis has already been performed for companies that prepare their financial statements in accordance with relevant accounting standards. For companies that do not prepare these statements, the Agencies believe industry participants are more familiar with the relevant accounting standards and tests, and they will be less burdensome to apply. Additionally, the accounting consolidation analysis typically results in a positive outcome (consolidation) at a higher level of an affiliation relationship than the 25 percent voting interest standard of the legal control test, which is responsive to commenters' concerns that the proposed definitions were over-inclusive. Because there are circumstances where an entity holds a majority ownership interest and would not consolidate, the Agencies have reserved the right to include any other entity as an affiliate or subsidiary based on an Agency's conclusion that either company provides significant support to, or is materially subject to the risks or losses of, the other company. This provision is meant to leave discretion to the Agencies in order to prevent evasion—for example, where a swap dealer sets up shell joint ventures that are not consolidated in order to execute swap transactions and avoid the requirements of this rule.
The Agencies believe that the modifications to the definitions of affiliate and subsidiary will address some of the concerns raised by commenters, including with respect to investment and pension funds. Investment funds generally are not consolidated with the asset manager other than during the seeding period or other periods in which the manager holds an outsized portion of the fund's interests though this may depend on the facts and circumstances. The Agencies believe that during these periods, when an entity may own up to 100 percent of the ownership interest of an investment fund, the investment fund should be treated as an affiliate. This approach to investment funds is similar to that in the 2013 international framework. The Agencies acknowledge that some accounting standards, such as GAAP
The final rule defines a cross-currency swap with only minor modifications from the definition in the proposal, as a swap in which one party exchanges with another party principal and interest rate payments in one currency for principal and interest rate payments in another currency, and the exchange of principal occurs on the date the swap is entered into, with a reversal of the exchange at a later date that is agreed upon when the swap is entered into.
“Major currency” is defined in the proposed and final rules to mean: (i) United States Dollar (USD); (ii) Canadian Dollar (CAD); (iii) Euro (EUR); (iv) United Kingdom Pound (GBP); (v) Japanese Yen (JPY); (vi) Swiss Franc (CHF); (vii) New Zealand Dollar (NZD); (viii) Australian Dollar (AUD); (ix) Swedish Kronor (SEK); (x) Danish Kroner (DKK); (xi) Norwegian Krone (NOK); or (xii) any other currency as determined by the relevant Agency.
Both the proposed and final rules define prudential regulator to have the meaning specified in section 1a(39) of the Commodity Exchange Act.
The final rule defines eligible master netting agreement as any written, legally enforceable netting agreement that creates a single legal obligation for all individual transactions covered by the agreement upon an event of default (including conservatorship, receivership, insolvency, liquidation, or similar proceeding) provided that certain conditions are met. These conditions include requirements with respect to the covered swap entity's right to terminate the contract and liquidate collateral and certain standards with respect to legal review of the agreement to ensure it meets the criteria in the definition. The legal review must be sufficient so that the covered swap entity has a well-founded basis to conclude that, among other things, the contract would be found legal, binding, and enforceable under the law of the relevant jurisdiction and that the contract meets the other requirements of the definition.
Since the proposal was issued, the Board and the OCC have issued an interim final rule (“QMNA IFR”) that became effective January 1, 2015, that modifies the definition of qualifying master netting agreement (“QMNA”) used in their risk-based capital rules.
Like the QMNA definition, the EMNA definition, includes a requirement that the agreement not include a walkaway clause, which is defined as a provision that permits a non-defaulting counterparty to make a lower payment than it otherwise would make under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement.
The proposed EMNA definition included additional language in the definition of walkaway clause that would expressly preclude an EMNA from including a clause that permits a non-defaulting counterparty to “suspend or condition payment” to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is or otherwise would be, a net creditor under the agreement. In the interest of aligning the EMNA definition with the QMNA definition, this additional language is not being included in the final rule's definition of EMNA.
Several commenters argued that the “suspend or condition payment” language should be removed because it would prohibit an existing provision in the ISDA Master Agreement that permits a non-defaulting party to suspend payment to a defaulting counterparty. Because the Agencies have decided to delete the “suspend or condition payment” language in order to align the EMNA and QMNA definitions, these commenters' concerns regarding the impact of the additional proposed language on current provisions in the ISDA Master Agreement are moot.
Commenters generally expressed support for the recognition of foreign stays in the proposal's definition of EMNA.
A few commenters argued that a limited stay under State insolvency and receivership laws applicable to insurance companies also should be recognized under this provision. The Agencies are not, at this time, modifying the final rule's definition of EMNA to recognize stays under State insolvency and receivership laws for insurance companies. Such a change would be inconsistent with the QMNA definition in the capital rules.
Finally, a number of commenters expressed various concerns with the provision of the EMNA that requires a covered swap entity to conduct sufficient legal review to conclude with a well-founded basis (and to maintain sufficient written documentation of that legal review) that the agreement meets the requirements with respect to the covered swap entity's right to terminate the contract and liquidate collateral and that in the event of a legal challenge (including one resulting from default or from receivership, insolvency, liquidation, or similar proceeding), the relevant court and administrative authorities would find the agreement to be legal, valid, binding, and enforceable under the law of the relevant jurisdictions.
“State” is defined in both the proposal and final rule to mean any State, commonwealth, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, or the United States Virgin Islands. No comments were received on this definition. The purpose of this definition is to make clear these jurisdictions are within the United States for purposes of § __.9, which addresses the cross-border application of margin requirements.
Under the final rule, “U.S. Government-sponsored enterprise” means an entity established or chartered by the U.S. government to serve public purposes specified by Federal statute, but whose debt obligations are not explicitly guaranteed by the full faith and credit of the United States. This definition in the final rule is the same as that in the proposal, and no comments were received on this definition. U.S. Government-sponsored enterprises currently include FCS banks, associations, and service corporations, Farmer Mac, the Federal Home Loan Banks, Fannie Mae, Freddie Mac, the Financing Corporation, and the Resolution Funding Corporation. In the future, Congress may create new U.S Government-sponsored enterprises, or terminate the status of existing U.S. Government-sponsored entities. This term is used in the definition of eligible collateral as described further in § __.6.
The Agencies are including a number of other definitions including “bank holding company,” “broker,” “dealer,” “depository institution,” “futures commission merchant,” “savings and loan holding company,” and “securities holding company” that are defined by cross-reference to the relevant statute. Many of these terms are also used in the definition of “financial end user” or “market intermediary,” which is defined to mean a securities holding company, a broker, a dealer, a futures commission merchant, a swap dealer, or a security-based swap dealer. No comments were received on these definitions, and the Agencies have adopted them as proposed.
The terms “business day” and “day of execution” are newly defined terms in the final rule that were not defined in the proposal. “Business day” is defined to mean any day other than a Saturday, Sunday, or legal holiday. “Day of execution” is defined with reference to the time at which the parties enter into a non-cleared swap. Because the location of the covered swap entity may be in a different time zone than the location of the counterparty, the “day of execution” definition provides special accommodations for the difference. The definition of “day of execution” is discussed in greater detail below under § __.3. These terms, which are used in §§ __.3 and __.4, are meant to provide additional clarity regarding the timing of margin requirements and address related concerns raised by commenters, as described in those sections below.
After reviewing the comments to the 2014 proposal, the Agencies have decided to adopt § __.3 of the rule largely as proposed, albeit with a limited number of changes to address concerns raised by commenters with respect to the calculation, collection, and posting of initial margin.
Consistent with the 2014 proposal, the final rule requires a covered swap entity to collect initial margin when it engages in a non-cleared swap with another covered swap entity. Because all swap entities will be subject to a prudential regulator, CFTC, or SEC margin rule that requires them to collect initial margin, the proposed rule will result in a collect-and-post system for all non-cleared swaps between swap entities.
When a covered swap entity engages in a non-cleared swap with a financial end user with material swaps exposure,
The Agencies are not adopting a “collect only” approach for financial end user counterparties recommended by a number of financial industry commenters. The posting requirement under the final rule is one way in which the Agencies seek to reduce overall risk to the financial system, by providing initial margin to non-dealer swap market counterparties that are interconnected participants in the financial markets.
The final rule permits a covered swap entity to select from two methods (the standardized look-up table or the internal margin model) for calculating its initial margin requirements as described in more detail in § __.8. In all cases, the initial margin amount required under the final rule is a minimum requirement; covered swap entities are not precluded from collecting additional initial margin (whether by contract or subsequent agreement with the counterparty) in such forms and amounts as the covered swap entity believes is appropriate.
The final rule does not require a covered swap entity to collect or post initial margin collateral to the extent that the aggregate un-margined exposure either to or from its counterparty remains below $50 million.
The Agencies believe that allowing covered swap entities to apply initial margin thresholds of up to $50 million is consistent with the rule's risk-based approach, as it will provide relief to smaller and less systemically risky counterparties while ensuring that initial margin is collected from those counterparties that pose greater systemic risk to the financial system. The initial margin threshold also should serve to reduce the aggregate amount of initial margin collateral required by the final rule.
Under the final rule, the initial margin threshold applies on a consolidated entity level. It will be calculated across all non-exempted
The Agencies note that the initial margin threshold represents a minimum requirement and should not be viewed as preventing parties from contracting with each other to require the collection of initial margin even when their exposures to one another are less than $50 million. For such transactions, the Agencies expect covered swap entities to make their own internal credit assessments when making determinations as to the credit and other risks presented by their specific counterparties. Therefore, a covered swap entity dealing with a counterparty it judges to be of high credit quality may determine that a counterparty-specific threshold of up to $50 million is appropriate.
In response to commenters, and to clarify the Agencies' intent, the Agencies note that the $50 million threshold is measured as the amount of initial margin for the relevant portfolio of non-cleared swaps and non-cleared security-based swaps, pursuant to either the internal model or standardized initial margin table used by the covered swap entity.
In addition, the Agencies have not incorporated suggestions by commenters for separate treatment of various arrangements under which the assets of a single investment fund vehicle or pension plan are treated as separate portfolios or accounts, each assigned some portion of the fund's or plan's total assets for purposes of managing them pursuant to different investment strategies or by different investment managers as agent for the fund or plan.
The final rule establishes the timing under which a covered swap entity must comply with the initial margin requirements set out in § __.3(a) and (b). Under § __.3(c) of the final rule, a covered swap entity, with respect to any non-cleared swap to which it is a party, must, on each business day, comply with the initial margin requirements for a period beginning on or before the business day following the day of execution of the swap and ending on the date the non-cleared swap is terminated or expires. “Business day” is defined in § __.2 to mean any day other than a Saturday, Sunday, or legal holiday.
In practice, each covered swap entity typically will have a portfolio of swaps with a specific counterparty, and the covered swap entity will collect and post initial margin for that portfolio with that counterparty on a rolling basis. The final rule requires the covered swap entity to collect and post initial margin each business day for this portfolio of swaps, based on the initial margin amount calculated for that portfolio by the covered swap entity on the previous business day.
As the covered swap entity and its counterparty enter into new swaps, adding them to the portfolio, these new swaps need to be incorporated into the covered swap entity's calculation of initial margin amounts to be posted and collected on this daily cycle. When a covered swap entity and its counterparty are located in the same or adjacent time zones, this is a straightforward process. However, when the covered swap entity is located in a distant time zone from the counterparty, or the two parties observe different sets of legal holidays, this can be less straightforward.
The Agencies have added new provisions to the final rule to accommodate practical considerations that arise in these circumstances.
First, if at the time the parties enter into the swap, it is a different calendar day at the location of each party, the day of execution is deemed to be the latter of the two calendar days. For example, if a covered swap entity located in New York enters into a swap at 3:30 p.m. on Monday with a counterparty located in Japan, in the Japanese counterparty's location, it is 4:30 a.m. on Tuesday, and the day of execution (for both parties) will be deemed to be Tuesday.
Second, if a non-cleared swap is entered into between 4:00 p.m. and midnight in the location of a party, then such non-cleared swap shall be deemed to have been entered into on the immediately succeeding day that is a business day for both parties, and both parties shall determine the day of execution with reference to that business day. For example, if a covered swap entity located in New York enters into a swap at noon on Friday with a counterparty located in the U.K., in the U.K. counterparty's location, it is 5:00 p.m. on Friday, and the U.K. counterparty will be deemed to enter into the swap the following Monday. Or, if a covered swap entity located in New York enters into a swap at noon on Friday with a counterparty located in Japan, in the Japanese counterparty's location, it is 1:00 a.m. on Saturday, and the Japanese counterparty will be deemed to enter into the swap the following Monday. In both examples, the day of execution (for both parties) will be Monday.
Third, if the day of execution determined under the foregoing rules is not a business day for both parties, the day of execution shall be deemed to be the immediately succeeding day that is a business day for both parties. For example, this addresses the outcome arising from a non-cleared swap entered into by a covered swap entity in New York at noon on Friday with a counterparty in Japan, where it would be 1:00 a.m. on Saturday. Under the first provision, the latter calendar day would be deemed the day of execution, which would be Saturday. Accordingly, this third provision would operate to move the deemed day of execution to the next business day for both parties,
When a covered swap entity adds a new non-cleared swap to its portfolio with a specific counterparty, these three provisions may result in different outcomes as to the “day of execution” for that swap pursuant to the definition in § __.2. However, § __.3(c) consistently requires the covered swap entity to begin posting and collecting initial margin reflecting that swap no later than the end of the business day following that day of execution and thereafter collect and post on a daily basis. The Agencies believe the final rule should provide adequate time for the covered swap entity to include the new swap in the regular initial margin cycle, under which the covered swap entity calculates the initial margin posting and collection requirements each business day for a portfolio of swaps covered by an EMNA with a counterparty, and the independent custodian(s) for both parties to hold segregated eligible margin collateral in those amounts by the end of the next business day, pursuant to the respective instructions of the parties. The covered swap entity is required to continue including the swap in its determination of the initial margin posting and collection requirements for that portfolio until the date the swap expires or is terminated.
All commenters that addressed the Agencies' proposed timing requirement for initial margin collection opposed it as unworkable. The basis for these objections included the fact that the settlement and delivery periods for many types of eligible margin securities are longer than the time allowed for margin collection under the proposed rule; the potential inability of financial end users to arrange for collateral transfers under the proposed rule's timeframes; and the difficulties encountered where the parties are in distant time zones. Other concerns included the fact that valuations are typically determined after market close and that the proposed rule did not include time for portfolio reconciliation and dispute resolution. Commenters proposed a number of alternatives, including moving to a T+2 basis; requiring prompt margin calls no later than a T+1 or T+2 basis, with margin transfer occurring one or two days thereafter or according to the standard settlement cycle for the type of collateral; requiring margin collection and settlement weekly; or simply requiring margin collection on a prompt or reasonable basis.
The Agencies have made limited adjustments to the final rule to accommodate operational concerns created by differences in time zones and legal holidays between the counterparties, but otherwise have retained the proposed approach. The Agencies recognize that the final rule requires initial margin to be posted and collected so quickly that covered swap entities and their counterparties may be required to take steps such as pre-positioning eligible margin collateral securities at the custodian and using readily-transferrable forms of eligible collateral, such as cash, to place additional margin quickly with the custodian from time to time, or to initially supply readily-transferrable forms of eligible collateral and subsequently arrange to substitute other eligible margin collateral securities after the initial margin collateral has been delivered to the custodian and the minimum margin requirements have been satisfied. The Agencies also recognize that the final rule will require portfolio reconciliation and dispute resolution to be performed after initial margin has been collected, as adjustments to the original margin call, rather than before. While the Agencies recognize the incremental regulatory burden embedded in the final rule's timing requirement, the Agencies believe the additional delay that would be introduced by the commenters' alternatives would reduce the overall effectiveness of the margin requirements.
The provisions of the final rule requiring a covered swap entity to collect initial margin amounts calculated under the standardized approach or an improved internal model apply only with respect to counterparties that are financial end users with material swaps exposure or swap entities.
Consistent with the proposed rule, the types of counterparties covered by § __.3(d) are financial end users
Some commenters representing public interest groups raised concerns about the proposed rule's treatment of other counterparties. These concerns ranged from fears that large market players (such as the type of entities that once included Enron, among others) would be able to participate in the markets on an unmargined basis to disappointment that the Agencies did not at least include a prudential requirement for a specific internal exposure limit for commercial counterparties.
After carefully reviewing the comments to the 2014 proposal, the Agencies have decided to adopt § __.4 of the rule largely as proposed, but also make a limited number of changes in the final rule to address concerns raised by commenters with respect to the calculation and exchange of variation margin.
Consistent with the 2014 proposal and the final rule's provisions on initial margin, § ___.4 of the final rule requires a covered swap entity to collect variation margin when it engages in a non-cleared swap transaction with another covered swap entity. Because all swap entities will be subject to a prudential regulator, CFTC, or SEC margin rule that requires them to collect variation margin, the final rule will result in a collect-and-post system for all non-cleared swaps between swap entities.
When a covered swap entity engages in a non-cleared swap transaction with a financial end user, regardless of whether or not the financial end user has a material swaps exposure, the final rule will require the covered swap entity to collect
Consistent with the 2014 proposal, a covered swap entity may
The Agencies believe the bilateral exchange of variation margin will support the safety and soundness of the covered swap entity as well as effectively reduce systemic risk by protecting both the covered swap entity and its counterparty from the effects of a counterparty default.
Unlike the 2014 proposal, which used the terms “pay” and “paid” to refer to the transfer of variation margin, the final rule refers to variation margin in terms of “post” and “collect.” After carefully reviewing the comments on the 2014 proposal that addressed the appropriate characterization of the transfer of variation margin, the Agencies have determined that it is more appropriate to refer to variation margin collateral as having been “posted,” rather than “paid,” consistent with the treatment of initial margin.
Among the reasons underlying the Agencies' proposal to refer to variation margin in terms of payment was the existing market practice of swap dealers to exchange variation margin with other swap dealers in the form of cash. As is discussed below in the final rule's provisions on eligible collateral, the Agencies have concluded that it is appropriate to permit financial end users to use other, non-cash forms of collateral for variation margin. This revision to the nomenclature of the final rule is consistent with the Agencies' inclusion of eligible non-cash collateral for variation margin.
In the context of cash variation margin, commenters also expressed concerns that the Agencies' choice of the “pay” nomenclature reflected an underlying premise of current settlement that may be inconsistent with various operational, accounting, tax, legal, and market practices. The Agencies use of the “post” and “collect” nomenclature for the final rule is not intended to reflect upon or alter the characterization of variation margin exchanges—either as a transfer and settlement or a provisional form of collateral—for other purposes in the market.
Under the final rule, “variation margin” means the collateral provided by one party to its counterparty to meet the performance of its obligations under one or more non-cleared swaps or non-cleared security-based swaps between
Several financial end user commenters stated that this aspect of the 2014 proposal was unclear with regard to the calculation of minimum variation margin requirements. Specifically, these commenters stated that the 2014 proposal appeared to require a covered swap entity to determine minimum variation margin requirements based on the market value of a swap calculated only from the covered swap entity's own perspective, rather than at a mid-market price consistent with current market practice. Commenters stated that the proposed approach would result in dealer exposures being over-collateralized and their counterparties' exposures being under-collateralized.
The Agencies wish to clarify that the reference in the rule text to the “cumulative mark-to-market change in value to a covered swap entity of a non-cleared swap or non-cleared security-based swap” is not designed or intended to have the effect suggested by commenters. The market value used to determine the cumulative mark-to-market change will be mid-market prices, if that is consistent with the agreement of the parties.
The final rule also permits the calculation of variation margin amounts to recognize netting across the portfolio of non-cleared swaps transacted between the covered swap entity and its counterparty, subject to a number of conditions. These provisions of the rule have been relocated to § __.5 of the final rule, as discussed later in this
The final rule largely retains the proposed rule's requirement for variation margin to be posted or collected on a T+1 timeframe. The final rule requires variation margin to be posted or collected no less than once per business day, beginning on the business day following the day of execution. These provisions of the final rule operate in the same way as those discussed earlier in this
Consistent with the 2014 proposal, the final rule requires a covered swap entity to exchange variation margin for non-cleared swaps with swap entities, and financial end users (regardless of whether the financial end user has a material swaps exposure). However, as discussed earlier in this
Overall, this aspect of the variation margin provisions of the final rule is consistent with those for initial margin. The one difference is that all transactions with financial end user counterparties are subject to the variation margin requirements, while only financial end user counterparties with material swaps exposure are subject to initial margin requirements. The Agencies generally believe it is appropriate to apply the minimum variation margin requirements to transactions with all financial entity counterparties, not just those with a material swaps exposure, because the daily exchange of variation margin is an important risk mitigant that (i) reduces the build-up of risk that may ultimately pose systemic risk; (ii) imposes a lesser liquidity burden than does initial margin; and (iii) reflects both current market practice and a risk management best practice.
Section __.5(a) of the final rule permits a covered swap entity to calculate initial margin (using an initial margin model) or variation margin on an aggregate net basis across non-cleared swap transactions with a counterparty that are executed under an EMNA.
However, as discussed by several commenters, the Agencies recognize that covered swap entities and their counterparties may wish to separate netting portfolios under a single EMNA. Accordingly, the final rule provides that an EMNA may identify one or more separate netting portfolios that independently meet the requirement for close-out netting
The netting provisions of the final rule also address the implications of status changes for counterparties. As discussed above, the final rule imposes a requirement to exchange initial margin only with respect to financial end users whose swap portfolios exceed the material swaps exposure threshold. This means a covered swap entity may accumulate a portfolio of swaps with a financial end user below the threshold, subject to a variation margin requirement, and later if the financial end user crosses the threshold, additional swaps entered into after that change in the financial end user's status will be subject to both initial and variation margin requirements. To address this possibility, the final rule extends the treatment of separate netting portfolios under a single ENMA beyond pre-compliance-date swaps to include separate netting portfolios for swaps entered into before and after a financial end user's change into a higher risk status.
Also, to address circumstances in which, for example, a covered swap entity enters into a netting agreement with a counterparty whose liquidation regime is somewhat specialized and the covered swap entity cannot conclude after sufficient legal review on a well-founded basis that a netting agreement meets the definition of EMNA in § __.2, § __.5(a)(4) of the final rule requires the covered swap entity to collect the gross margin amount required but may still apply the netting provisions of the rule in determining the amount of margin it must post to the counterparty.
The netting provisions in the final rule are modified from the proposal in order to provide clarifications that address implementation concerns raised by commenters. The proposed rule provided that if non-cleared swaps entered into prior to the applicable compliance date were included in the EMNA, those swaps would be subject to the margin requirements.
A few commenters also contended that counterparties should be able to exchange margin on a net basis even where a counterparty is subject to an insolvency regime that may not satisfy the EMNA definition (
Certain commenters urged that non-cleared swaps should be permitted to be netted against any other products and exposures if such netting is legally enforceable. The Agencies declined to incorporate this request in the final rule. The Agencies do not believe that it
The final rule provides for a minimum transfer amount for the collection and posting of margin by covered swap entities. The final rule does not require a covered swap entity to collect or post margin from or to any individual counterparty unless and until the combined amount of initial and variation margin that must be collected or posted under the final rule, but has not yet been exchanged with the counterparty, is greater than $500,000.
The Agencies received a few comments suggesting that the minimum transfer amount should be applied separately to initial margin and variation margin. The final rule has been modified from the proposal to make clear that the minimum transfer amount applies to the combined amount of initial and variation margin. The Agencies believe that the proposal's minimum transfer amount of $500,000 is appropriately sized to generally alleviate the operational burdens associated with making
Under § __.5(c) of the final rule, a covered swap entity shall not be deemed to have violated its obligation to collect or post initial or variation margin from or to a counterparty if: (1) The counterparty has refused or otherwise failed to provide or accept the required margin to or from the covered swap entity; and (2) the covered swap entity has (i) made the necessary efforts to collect or post the required margin, or has otherwise demonstrated upon request to the satisfaction of the appropriate Agency that it has made appropriate efforts to collect or post the required margin, or (ii) commenced termination of the non-cleared swap with the counterparty promptly following the applicable cure period and notification requirements.
The Agencies received a comment on this provision suggesting that, since financial end users would be required to exchange margin with a covered swap entity in amounts determined by the covered swap entity's models, the final rule should allow for a dispute resolution process acceptable to both the covered swap entity and its counterparty. Under the final rule, disputes that may arise between a covered swap entity and its counterparty should be handled pursuant to the terms of the relevant contract or agreement and in the normal course of business. A covered swap entity would not be deemed to have violated its obligation to collect or post initial or variation margin from, or to a counterparty, if the counterparty is acting in accordance with agreed-upon practices to settle a disputed trade.
After reviewing the comments to the 2014 proposal, the Agencies have decided to make a number of changes to the final rule with respect to the list of eligible collateral.
With respect to variation margin, the 2014 proposal would have limited eligible collateral to immediately available cash funds, denominated either in USD or in the currency in which payment obligations under the non-cleared swap are required to be settled. However, after reviewing comments from financial end users of derivatives, such as insurance companies, mutual funds, and pension funds, the Agencies have expanded the list of eligible variation margin for non-cleared swaps between a covered swap entity and financial end users. These commenters generally argued that limiting variation margin to cash is inconsistent with current market practice for financial end users; is incompatible with the 2013 international framework agreement; and would drain the liquidity of these financial end users by forcing them to hold more cash. In response to these comments, the final rule permits assets that are eligible as initial margin to also be eligible as variation margin for swap transactions between a covered swap entity and financial end user, subject to the applicable haircuts for each type of eligible collateral.
This change aligns the rule more closely with market practice. Commenters indicated many types of financial end users exchange variation margin with their swap dealers in the form of non-cash collateral that is compatible with the assets they hold as investments. This practice permits them to maximize their investment income and minimize margin costs, even though these assets are subject to valuation haircuts when posted as variation margin.
The Agencies note however (as described in the 2014 proposal) that most of the variation margin by total volume continues to be in the form of cash exchanged between swap dealers.
However, for reasons discussed below, the Agencies are revising the final rule to expand the denominations of immediately available cash funds that are eligible. Whereas the 2014 proposal only recognized USD or the currency of settlement, the final rule expands the category to include any major currency.
With respect to initial margin, the final rule includes an expansive list of eligible collateral that is largely consistent with the list set forth in the 2014 proposal.
• A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury;
• A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a U.S. government agency (other than the U.S. Department of the Treasury) whose obligations are fully guaranteed by the full faith and credit of the U.S. government;
• A security that is issued by, or fully guaranteed as to the timely payment of principal and interest by, the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under applicable regulatory capital rules;
• A publicly traded debt security issued by, or an asset-backed security fully guaranteed as to the timely payment of principal and interest by a U.S. Government-sponsored enterprise that is operating with capital support or another form of direct financial assistance from the U.S. government that enables the repayments of the U.S. Government-sponsored enterprise's eligible securities;
• A publicly traded debt security, but not an asset-backed security, that is issued by a U.S. Government-sponsored enterprise not operating with capital support or another form of direct financial assistance from the U.S. government and that the covered swap entity determines is “investment grade” (as defined by the appropriate prudential regulator);
• A security that is issued by or unconditionally guaranteed as to the timely payment of principal and interest by the Bank for International Settlements, the International Monetary Fund, or a multilateral development bank;
• A publicly traded debt security that the covered swap entity determines is “investment grade” (as defined by the appropriate prudential regulator);
• A publicly traded common equity security that is included in the Standard and Poor's Composite 1500 Index, an index that a covered swap entity's supervisor in a foreign jurisdiction recognizes for the purposes of including publicly traded common equity as initial margin, or any other index for which a covered swap entity can demonstrate that the equities represented are as liquid and readily marketable as those included in the Standard and Poor's Composite 1500 Index;
• Certain redeemable government bond funds, described below; and
• Gold.
In contrast to broad commenter concerns about the proposal's restrictive treatment of eligible collateral for variation margin, commenters addressing initial margin eligible collateral either generally supported the proposed asset categories or sought limited modifications. Commenters representing public interest groups supported the Agencies' rationale in the 2014 proposal of limiting initial margin collateral so as to exclude assets prone to excessive exposures to credit, market, or foreign exchange risk in times of market stress. Some of these commenters questioned the Agencies' inclusion of equities, expressing concern about the idiosyncratic risks of equity issuers. The Agencies are preserving this aspect of the proposal in the final rule, including the requirement for a minimum 15 percent haircut on equities in the S&P 500 Index and a minimum 25 percent haircut for those in the S&P 1500 Composite Index but not in the S&P 500 Index.
Commenters representing the interests of asset managers, mutual funds, and other institutional asset managers asked the Agencies to expand the list of eligible collateral to include money market mutual funds and bank certificates of deposit, in the interests of providing financial end users with a higher yield than cash held by the margin custodian and more liquidity than direct holdings of government or corporate bonds. To accommodate this concern, the final rule adds redeemable securities in a pooled investment fund that holds only securities that are issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury, and cash funds denominated in USD. To provide a parallel collateral option for non-cleared swap portfolios in denominations other than USD, the pooled investment fund may be structured to invest in a pool of securities that are denominated in a common currency and issued by, or fully guaranteed as to the timely payment of principal and interest by, the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under applicable regulatory capital rules, and cash denominated in the same currency.
The final rule requires these pooled investment vehicles to issue redeemable securities representing the holder's proportional interest in the fund's net assets, issued and redeemed only on the basis of the fund's net assets prepared each business day after the holder
Consistent with the 2014 proposal, the final rule generally does not include asset-backed securities (“ABS”), including mortgage-backed securities (“MBS”), within the permissible category of publicly traded debt securities. However, ABS are included as eligible collateral if they are issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury or another U.S. government agency whose obligations are fully guaranteed by the full faith and credit of the United States government; or if they are fully guaranteed by a U.S. GSE that is operating with capital support or another form of direct financial assistance received from the U.S. government that enables repayment of the securities.
Publicly traded debt securities (that are not ABS) issued by GSEs are included in eligible collateral as long as the issuing GSE is either operating with capital support or another form of direct financial assistance received from the U.S. government that enables full repayment of principal and interest on these securities, or the covered swap entity determines the securities are “investment grade” (as defined by the appropriate prudential regulator).
Although the Agencies received several comments concerning the proposal's treatment of GSE securities, only modest changes have been made in the final rule. Commenters who asked the Agencies to consider GSE securities as eligible collateral for variation margin joined many others who opposed limiting variation margin collateral to cash only, a topic that was addressed in greater detail above.
Commenters stated that GSE debt securities already are widely used as collateral for non-cleared swaps and should continue to be eligible under the final rule given their historically low levels of volatility. A smaller number of the commenters argued that GSE MBS also should be eligible collateral given that markets have accepted GSE MBS as liquid, high-quality securities along with other GSE debt. A number of commenters suggested that GSE debt securities and MBS should qualify as eligible collateral, regardless of whether or not the GSE is operating with capital support or another form of financial assistance from the United States. Some commenters also questioned why the minimum haircut for debt securities of GSEs (operating without capital support or other financial assistance from the United States) is not lower than the minimum haircuts applicable to corporate debt. Another concern that some commenters raised is that the capital and margin rule for non-cleared swaps differs in its treatment of GSE securities from the liquidity coverage ratio rule that the Board, OCC, and FDIC issued in 2014.
In the final rule, the Agencies recognize the unique nature of GSE securities by placing them in a category separate from both securities issued directly by U.S. government agencies and those from non-GSE, private sector issuers. However, the Agencies continue to believe the final rule should treat GSE securities differently depending on whether or not the GSE enjoys explicit government support, in the interests of both the safety and soundness of covered swap entities and the stability of the financial system. GSE debt obligations are not explicitly guaranteed by the full faith and credit of the U.S. government. Existing law, however, authorizes the U.S. Treasury to provide lines of credit, up to a specified amount, to certain GSEs in the event they face specific financial difficulties. An act of Congress would be required to provide adequate support if, for example, a GSE were to experience severe difficulty in selling its securities in financial markets because investors doubted its ability to meet its financial obligations.
To avoid so-called “wrong-way risk,” the final rule retains the 2014 proposal's provision excluding any securities issued by the counterparty or any of its affiliates. To avoid general wrong-way risk, the final rule continues to exclude securities issued by a bank holding company, a savings and loan holding company, a foreign bank, a depository institution, a market intermediary, or any company that would be one of the foregoing if it were organized under the laws of the United States or any State, or an affiliate of one of the foregoing institutions. For the same reason, the Agencies have expanded this restriction in the final rule also to exclude securities issued by a non-bank systemically important financial institution designated by the Financial Stability Oversight Council. These entities are financial in nature and, like banks or market intermediaries, would be expected to come under significant financial stress in the event of a period of financial stress. Accordingly, the Agencies believe that it is also appropriate to restrict securities issued by these entities as eligible margin collateral to ensure that collected collateral is free from significant sources of “wrong-way risk”.
The final rule does not allow a covered swap entity to fulfill the rule's minimum margin requirements with any assets not included in the eligible collateral list, which is comprised of assets that should remain liquid and readily marketable during times of financial stress. The use of alternative types of collateral to fulfill regulatory margin requirements would introduce concerns with pro-cyclicality (for example, the changes in the liquidity, price volatility, or wrong-way risk of collateral during a period of financial stress could exacerbate that stress) and could undermine efforts to ensure that collateral is subject to low credit, market, and liquidity risk. Therefore,
Counterparties that wish to make use of assets that do not qualify as eligible collateral under the final rule still would be able to pledge those assets with a lender in a separate collateral transformation arrangement, using the cash or other eligible collateral received from that separate arrangement to meet the minimum margin requirements.
For those assets whose values may show volatility during times of stress, the final rule imposes an 8 percent cross-currency haircut, and standardized prudential supervisory haircuts that vary by asset class. When determining how much collateral will be necessary to satisfy the minimum initial margin requirement for a particular transaction, a covered swap entity must apply the relevant standardized prudential supervisory haircut to the value of the eligible collateral. The final rule's haircuts guard against the possibility that the value of non-cash eligible margin collateral could decline during the period between when a counterparty defaults and when the covered swap entity closes out that counterparty's swap positions.
The Agencies have revised the cross-currency haircut applicable to eligible collateral under the final rule. The cross-currency haircut will apply whenever the eligible collateral posted (as either variation or initial margin) is denominated in a currency other than the currency of settlement, except that in the case of variation margin in immediately available cash funds in any major currency are never subject to the haircut. The amount of the cross-currency haircut remains 8 percent, as it was in the 2014 proposal. The Agencies' have decided to eliminate the haircut on variation margin provided in immediately available cash funds denominated in all major currencies because the cash funds are liquid at the point of counterparty default, and there are robust markets in the major currencies that allow conversion or hedging to the currency of settlement or termination at relatively low cost. The Agencies are including in the final rule the cross-currency haircut for all eligible non-cash variation and initial margin collateral, in consideration of the limitations on market liquidity that can frequently arise on those assets in periods of market stress.
In response to commenters' request for clarification, the Agencies have revised the final rule text for the cross-currency haircut to refer to the “currency of settlement,” and have eliminated the corresponding formulation offered for comment in the 2014 proposal.
In identifying the “currency of settlement” for purposes of this final rule, the Agencies will look to the contractual and operational practice of the parties in liquidating their periodic settlement obligations for a non-cleared swap in the ordinary course, absent a default by either party. To provide greater clarity, the Agencies have added a new definition of “currency of settlement” to the rule. The Agencies have defined “currency of settlement” to mean a currency in which a party has agreed to discharge payment obligations related to a non-cleared swap, a non-cleared security-based swap, a group of non-cleared swaps, or a group of non-cleared security-based swaps subject to a master agreement at the regularly occurring dates on which such payments are due in the ordinary course.
For eligible non-cash initial margin collateral, the final rule expressly carves out of the cross-currency haircut assets denominated in a single termination currency designated as payable to the non-posting counterparty as part of the EMNA. The final rule accommodates agreements under which each party has a different termination currency. If the non-posting counterparty has the option to select among more than one termination currency as part of the agreed-upon termination and close-out process, the agreement does not meet the final rule's single termination currency condition. However, the single termination currency condition does not rule out an EMNA establishing more than one discrete netting set and establishing separate margining and early termination provisions for such a select netting set with its own single termination currency.
As an alternative to the 8 percent cross-currency haircut, commenters urged the Agencies to permit any cross-currency sensitivity between the swap portfolio credit exposure and the margin collateral provided against that exposure to be measured as a component of the margin required to be exchanged under the rule. The Agencies are concerned this alternative presupposes the covered swap entity's certain knowledge, at the time margin amounts must be determined, of the collateral denomination to be posted by the counterparty in response to the margin call and the denomination of future settlement payments. The likelihood of such information being predictably available to the covered swap entity is not consistent with commenters' depiction of the amount of optionality exercised with respect to these factors by swap market participants in current market practice.
The 8 percent foreign currency haircut—to the extent it arises in application of the final rule—is additive to the final rule's standardized prudential supervisory haircuts that vary by asset class. These haircuts—set forth in Appendix B to the final rule—are unchanged from the 2014 proposal. They have been calibrated to be broadly consistent with valuation changes observed during periods of financial stress, as noted above. Although commenters suggested the Agencies permit covered swap entities to determine haircuts through the firm's internal models, the Agencies believe the simpler and more transparent approach of the standardized haircuts is more than adequate to establish appropriately conservative discounts on eligible collateral. The final rule permits initial margin calculations to be performed using an initial margin model in recognition of the fact that swaps and swap portfolios are characterized by a number of complex and inter-related risks that depend on the specifics of the swap and swap portfolio composition and are difficult to quantify in a simple, transparent and cost-effective manner. The exercise of establishing appropriate haircuts based on asset class of eligible collateral across long exposure periods is much simpler as the risk associated
Finally, because the value of collateral may change, a covered swap entity must monitor the value and quality of collateral previously collected or posted to satisfy minimum initial margin requirements. If the value of such collateral has decreased, or if the quality of the collateral has deteriorated so that it no longer qualifies as eligible collateral, the covered swap entity must collect or post additional collateral of sufficient value and quality to ensure that all applicable minimum margin requirements remain satisfied on a daily basis.
Commenters representing commercial end users, such as energy sector firms, agricultural producers and processors, and manufacturing firms, requested that the Agencies confirm that these counterparties, which were not subject to minimum initial margin determined under the standardized approach or internal model of the covered swap entity in the 2014 proposal, could continue using the diverse types of assets and guarantees they currently employ in securing and supporting their non-cleared swap transactions with swap dealers. Consistent with the 2014 proposal, § __.6(f) of the final rule states that covered swap entities may collect or post initial variation margin that is not required pursuant to the rule in any form of collateral.
The Dodd-Frank Act provides that in prescribing margin requirements, the Agencies shall permit the use of noncash collateral, as the Agencies determine to be consistent with (1) preserving the financial integrity of markets trading swaps; and (2) preserving the stability of the U.S. financial system. The Agencies believe that the eligibility of certain non-cash collateral, subject to the conditions and restrictions contained in the final rule, is consistent with the Dodd-Frank Act, because the use of such non-cash collateral is consistent with preserving the financial integrity of markets by trading swaps and preserving the stability of the U.S. financial system. The non-cash collateral permitted is highly liquid and resilient in times of stress and the rule does not permit collateral exhibiting significant wrong-way risk. The use of different types of eligible collateral pursuant to the requirements of the final rule should also incrementally increase liquidity in the financial system.
The final rule establishes minimum standards for the safekeeping of collateral. Section __.7(a) addresses requirements for when a covered swap entity posts any collateral other than variation margin. Posting collateral to a counterparty exposes a covered swap entity to risks in recovering such collateral in the event of its counterparty's insolvency. To address these risks and to protect the safety and soundness of the covered swap entity, § __.7(a) requires a covered swap entity that posts any collateral other than variation margin with respect to a non-cleared swap to require that such collateral be held by one or more custodians that are not the covered swap entity, its counterparty, or an affiliate of either counterparty. This requirement applies to initial margin posted by a covered swap entity pursuant to § __.3(b), as well as other collateral that is not variation margin that is not required by this rule but is posted by a covered swap entity for other reasons, including negotiated arrangement with its counterparty, such as initial margin posted to a financial end user that does not have material swaps exposure or initial margin posted to another covered swap entity even though the amount was less than the $50 million initial margin threshold amount.
Section __.7(b) addresses requirements for when a covered swap entity collects initial margin required by § __.3(a). Under § __.7(b), the covered swap entity shall require that initial margin collateral collected pursuant to § __.3(a) be held at one or more custodians that are not the covered swap entity, its counterparty, or an affiliate of either counterparty. Because the collection of initial margin does not expose the covered swap entity to the same risk of counterparty default as when a covered swap entity posts collateral, the segregation requirements for initial margin that a covered swap entity collects are less stringent than the requirements for posting collateral. As a result, § __.7(b) applies only to initial margin that a covered swap entity collects as required by § __.3(a), rather than all collateral collected.
For collateral subject to § __.7(a) or (b), § __.7(c) requires the custodian to act pursuant to a custodial agreement that is legal, valid, binding, and enforceable under the laws of all relevant jurisdictions, including in the event of bankruptcy, insolvency, or similar proceedings. Such a custodial agreement must prohibit the custodian from rehypothecating, repledging, reusing or otherwise transferring (through securities lending, securities borrowing, repurchase agreement, reverse repurchase agreement, or other means) the funds or other property held by the custodian. Cash collateral may be held in a general deposit account with the custodian if the funds in the account are used to purchase other forms of eligible collateral, such eligible noncash collateral is segregated pursuant to §__.7, and such purchase takes place within a time period reasonably necessary to consummate such purchase after the cash collateral is posted as initial margin.
Section ___.7(d) provides that, notwithstanding this prohibition on rehypothecating, repledging, reusing or otherwise transferring the funds or property held by the custodian, the posting party may substitute or direct any reinvestment of collateral, including, under certain conditions, collateral collected pursuant to § __.3(a) or posted pursuant to § __.3(b).
In particular, for initial margin collected pursuant to § ___.3(a) or posted pursuant to § ___.3(b), the posting party may substitute only funds or other property that meet the requirements for eligible collateral under § __.6 and where the amount net of applicable discounts described in Appendix B would be sufficient to meet the requirements of § __.3. The posting party also may direct the custodian to reinvest funds only in assets that would qualify as eligible collateral under § __.6 and ensure that the amount net of applicable discounts described in Appendix B would be sufficient to meet the initial margin requirements of § __.3. In the cases of both substitution and reinvestment, the final rule requires the covered swap entity to ensure that the value of eligible collateral net of discounts that is collected or posted remains equal to or above the minimum requirements contained in § __.3. In addition, the restrictions on the substitution and reinvestment of collateral described above do not apply to cases where a covered swap entity has posted or collected more collateral than is required under §__.3. In such cases, the initial margin that has been posted or collected in satisfaction of § __.3 is subject to the restrictions, but any additional collateral that has been posted is not subject to the restrictions. As noted above, any additional collateral that has been
Section __.6(b) of the final rule permits eligible non-cash collateral to be posted as variation margin for swaps between a covered swap entity and a financial end user. In such circumstances, a covered swap entity or its financial end user counterparty could reach an agreement under which either party could itself hold non-cash collateral posted by the other and such non-cash collateral could be rehypothecated, repledged, or reused.
The Agencies received several comments regarding § __.7. Several commenters that operate as custodian banks requested clarification whether the final rule's prohibition against the custodian rehypothecating, repledging, reusing or otherwise transferring initial margin funds or property means that a custodian bank is not permitted to accept cash funds that it holds pursuant to § __.7 as a general deposit, and use such funds as it would any other funds placed on deposit with it.
Under § __.6, eligible collateral for initial margin includes “immediately available cash funds” that are denominated in a major currency or the currency of settlement for the non-cleared swap. It is not practical for cash funds to be held by a custodian as currency that remains the property of the posting party with a security interest being granted to its counterparty,
Posting a general deposit account as initial margin raises unique concerns that are not present when eligible non-cash collateral is posted as initial margin. Permitting initial margin collateral to be held in the form of a deposit liability of the custodian bank is inconsistent with the final rule's prohibition against rehypothecation of such collateral. In addition, employing a deposit liability of the custodian bank—or another depository institution—is inconsistent with the final rule's prohibition in § __.6(d) against use of obligations issued by a financial firm, because of “wrong way” risk. On the other hand, as a practical matter, it is very difficult to eliminate cash entirely. For example, the final rule's T+1 margin collection requirement means that it will often be necessary to use cash to cover the first days of a margin call. In addition, income generated by non-cash assets in custody will be paid in cash. Collateral reinvestments involving replacement of one category of non-cash asset with another category of non-cash asset may create cash balances between settlements. While the parties all have strong business incentives to manage and limit these cash fund balances, eliminating them entirely would result in a number of inefficiencies.
To address these concerns, the Agencies have revised the final rule to allow cash funds that are placed with a custodian bank in return for a general deposit obligation to serve as eligible initial margin collateral only in specified circumstances. However, the rule requires the posting party to direct the custodian to re-invest the deposited funds into eligible non-cash collateral of some type, or the posting party to deliver eligible non-cash collateral to substitute for the deposited funds. As noted above, the appropriate haircut must be applied. This reinvestment must occur within a reasonable period of time after the initial placement of cash collateral to satisfy the initial margin requirement, and the amount of eligible collateral must be sufficient to cover the initial margin amount in light of the applicable haircut on the non-cash collateral pursuant to Appendix B of the final rule.
Covered swap entities must appropriately oversee their own initial margin collateral posting and that of their counterparties in order to constrain the use of cash funds, and achieve efficient reinvestment of cash funds in excess of operational and liquidity needs into eligible margin securities. The banking agencies have long required banking organizations that engage in material swaps activities to create and maintain counterparty credit risk exposure management practices, including policies and procedures appropriate to evaluate and manage exposures that could arise not only from margin collateral liquidity and operational concerns, but also collateral-product correlations, volatility, and concentrations.
Several commenters supported the requirement that initial margin be held at a third party custodian that was not affiliated with either the covered swap entity or its counterparty. Some commenters, however, requested that the final rule allow affiliated custodians. These commenters expressed concern about complexities that additional parties bring to the relationship, as well as reservations about the capacity and availability of established custodians in the marketplace. After considering these comments, the Agencies have retained the requirement that the custodian be unaffiliated with either the covered swap entity or its counterparty. On balance, the Agencies are more concerned that customer confidence in a particular covered swap entity could be correlated with customer confidence in the affiliated custodian, especially in times of high market stress, whereas the use of independent custodians should offer counterparties a greater measure of confidence. Thus, the Agencies believe
Section __.7(c)(2) requires that the custodial agreement be a legal, valid, binding, and enforceable agreement under the laws of all relevant jurisdictions. Some commenters requested that the final rule clarify that the only relevant jurisdiction is that of the custodian. The ultimate purpose of the custody agreement is twofold: (1) that the initial margin be available to a covered swap entity when its counterparty defaults and a loss is realized that exceeds the amount of variation margin that has been collected as of the time of default; and (2) that the initial margin be returned to the covered swap entity after its swap obligations have been fully discharged.
The jurisdiction of the custodian is one of the relevant jurisdictions for these purposes. Thus, a covered swap entity must conduct sufficient legal review to conclude with a well-founded basis and maintain sufficient written documentation of that legal review that in the event of a legal challenge, including one resulting from default or from receivership, conservatorship, insolvency, liquidation, or similar proceedings of the custodian, the relevant court or administrative authorities would find the custodial agreement to be legal, valid, binding, and enforceable by the covered swap entity under the law applicable to the custodian. A covered swap entity would also be expected to establish and maintain written procedures to monitor possible changes in relevant law and to ensure that the agreement continues to be legal, valid, binding, and enforceable under that law.
The jurisdiction of a covered swap entity's counterparty, however, is also a relevant jurisdiction. The covered swap entity would need to ascertain whether, if a counterparty were to become insolvent, or otherwise be placed under the control of a resolution authority, there would be a legal basis to set aside the custodial arrangement, allowing the resolution authority to reclaim for the estate assets that the counterparty had placed with the custodian. Thus, the covered swap entity would have to conduct a sufficient legal review to conclude with a well-founded basis that in the event of a legal challenge, including one resulting from default or from receivership, conservatorship, insolvency, liquidation, or similar proceedings of the counterparty, the relevant court or administrative authorities would find the custodial agreement to be legal, valid, binding, and enforceable by the covered swap entity under the law applicable to the counterparty.
Several commenters requested that the segregation requirement be optional, rather than required. The Agencies proposed the mandatory custodian requirements in § __.7 aware that sections 4s(l) of the Commodity Exchange Act and section 3E(f) of the Securities Exchange Act require a swap dealer and security-based swap dealer, respectively, to provide a counterparty with the option of requiring that its funds or other property supplied as initial margin be held in a segregated account at an independent third-party custodian. The Agencies continue to believe that requiring initial margin collateral to be segregated at an independent third-party custodian will help to ensure the safety and soundness of covered swap entities subject to the rule and offset the risk to the financial system arising from the use of non-cleared swaps.
The Agencies believe that requiring a covered swap entity to place initial margin collateral it collects at an independent third party custodian will provide greater customer confidence that the collateral will be available to be returned upon the closeout of a swap, particularly in times of financial stress. Additionally, the Agencies believe requiring a covered swap entity to ensure that any initial margin collateral it posts is placed at an independent third-party custodian will enhance the safety and soundness of the covered swap entity by protecting it from the risk that initial margin collateral could be held as part of the counterparty's estate in the event of the counterparty's failure.
Several commenters requested that the final rule allow greater flexibility in segregation arrangements. These commenters requested that the final rule permit arrangements such as title transfer and charge-back of margin, segregation of margin on the books of the covered swap entity or within an affiliate if such collateral is insulated from the covered swap entity's insolvency. The Agencies do not believe that the alternative arrangements suggested by the commenters adequately ensure the safety and soundness of the covered swap entity nor adequately offset the risk to the financial system arising from the use of non-cleared swaps.
One commenter recommended that the final rule allow limited rehypothecation that would meet the requirements of the 2013 international framework if a model for such rehypothecation could be developed for use by counterparties. The commenter also noted that other regulators may permit rehypothecation and, if so, a prohibition would create a competitive disadvantage for market participants subject to the Agencies' rule. However the commenter did not propose a specific model for limited rehypothecation. The Agencies have not revised the proposed regulation to accommodate a potential future model that may be developed. Should such a model be developed, the Agencies could consider such a model at that time.
One commenter requested that the final rule clarify that the required custodian arrangements be tri-party,
As in the proposed rule, the final rule adopts an approach whereby covered swap entities may calculate initial margin requirements using an approved initial margin model. As in the case of the proposal, the final rule also requires that the initial margin amount be set equal to a model's calculation of the potential future exposure of the non-cleared swap consistent with a one-tailed 99 percent confidence level over a 10-day close-out period. More specifically, under the final rule, initial margin models must capture all of the material risks that affect the non-cleared swap including material non-linear
The Agencies' belief is that these modeling standards should ensure a robust initial margin regime for non-cleared swaps that sufficiently limits systemic risk and reduces potential counterparty exposures.
Some commenters suggested that the proposal's requirement that the model include all material non-linear price characteristics in the underlying non-cleared swap was too stringent and should be relaxed. The Agencies have decided to retain this aspect of the quantitative modeling requirements in the final rule. The Agencies are concerned that the non-cleared swap market will be comprised of a large number of complex and bespoke swaps that will display significant non-linear price characteristics that will have a direct effect on their risk exposure. Accordingly, the final rule requires that all
All initial margin models must be approved by a covered swap entity's prudential regulator before being used for margin calculation purposes. In the event that a model is not approved, initial margin calculations would have to be performed according to the standardized initial margin approach that is detailed in appendix A and discussed below.
In addition to the requirement that the models appropriately capture all material sources of risk, as discussed above, the final rule contains a number of standards and criteria that must be satisfied by initial margin models. These standards relate to the technical aspects of the model as well as broader oversight and governance standards. These standards are broadly similar to modeling standards that are already required for internal regulatory capital models of banks.
More specifically, under the final rule a covered swap entity must periodically, and no less than annually, review its initial margin model in light of developments in financial markets and modeling technologies and make appropriate adjustments to the model. Relatedly, the data used to calibrate and execute the initial margin model must also be reviewed no less frequently than annually to ensure that the data is appropriate for the products for which initial margin is being calculated. Different, additional or more granular data series may, at certain times, become available that would provide more accurate measurements of the risks that the initial margin model is intended to capture.
In addition to this regular review process, the final rule also requires that robust oversight, control and validation mechanisms be in place to ensure the integrity and validity of the initial margin model and related processes. More specifically, the final rule requires that the model be independently validated prior to implementation and on an ongoing basis which would also include a monitoring process that includes back-tests of the model and related analyses to ensure that the level of initial margin being calculated is consistent with the underlying risk of the swap being margined. Initial margin models must also be subject to explicit escalation procedures that would make any significant changes to the model subject to internal review and approval before taking effect. Under the final rule, any such review and approval must be based on demonstrable analysis that the change to the model results in a model that is consistent with the requirements of § __.8. Furthermore, under the final rule, any such changes or extensions of the initial margin model must be communicated to the relevant Agency 60 days prior to taking effect to give the Agency the opportunity to rescind its prior approval or subject it to additional conditions.
Some commenters suggested that the model governance, control and oversight standards of the proposed rule were too strict and should not be so closely aligned with the model governance requirements for bank capital models. One commenter suggested that since initial margin amounts must be agreed to between counterparties, it is not practical to require strict model governance standards.
The Agencies believe that strong model governance, oversight and control standards are crucial to ensuring the integrity of the initial margin model so as to provide for margin requirements that are commensurate with the risk of non-cleared swaps. Moreover, the Agencies are aware that there will be incentives to economize on initial margin and that strong governance standards that are intended to result in robust and risk-appropriate initial margin amounts is of critical importance. One commenter suggested that the initial margin model not be required to be back-tested against the initial margin requirements for similar cleared swaps. In light of the clear competitive forces that will exist between cleared and non-cleared swaps, the Agencies believe that it is appropriate to compare the initial margin requirements of non-cleared swaps to those of similar cleared swaps. Further, the Agencies understand that comparable cleared swaps with observable initial margin standards may not always be available given the complexity and variety of non-cleared swaps. Nevertheless, the Agencies believe that where similar swaps trade on a cleared and non-cleared basis, such comparisons are useful and informative.
One commenter suggested that where a covered swap entity is regulated by a foreign regulator and the foreign regulator has approved an initial margin model on the basis of comparable standards, the Agencies should defer to the approval of the foreign regulator and should not require Agency approval of the initial margin model. While the Agencies appreciate the global nature of the swaps market as well as the requirement to engage in close cross-border coordination with foreign regulators, the Agencies are required by statute to require initial and variation margin requirements that are appropriate for the risk of the non-cleared swaps. Accordingly, each Agency must find that any covered swap entity subject to its regulation is in compliance with all aspects of that Agency's margin requirements including the standards for initial margin models. Accordingly, while the
One commenter suggested that the frequency with which data must be reviewed and revised as necessary should be annual rather than monthly to better align with other aspects of the proposal that require certain governance processes to be conducted on an annual rather than monthly basis. The Agencies believe that harmonizing the frequency with which certain model governance processes must be performed will reduce the costs associated with the regular oversight and maintenance of the initial margin model without meaningfully altering the overall standards for model governance. Accordingly, the final rule requires that data used in the initial margin model be reviewed and revised as necessary on an annual rather than monthly basis.
Initial margin models will be reviewed for approval by the appropriate Agency upon the request of a covered swap entity. Models that are reviewed for approval will be analyzed and subjected to a number of tests by the appropriate Agency to ensure that the model complies with the requirements of the final rule. Given that covered swap entities may engage in highly specialized business lines with varying degrees of intensity, it is expected that specific initial margin models may vary across covered swap entities. Accordingly, the specific analyses that will be undertaken in the context of any single model review may have to be tailored to the specific uses for which the model is intended. The nature and scope of initial margin model reviews are expected to be generally similar to reviews that are conducted in the context of other model review processes such as those relating to the approval of internal models for bank regulatory capital purposes. Initial margin models will also undergo periodic supervisory reviews to ensure that they remain compliant with the requirements of the proposed rule and are consistent with existing best practices over time.
Given the complexity and diverse nature of non-cleared swaps it is expected that covered swap entities may choose to make use of vendor supplied products and services in developing their own initial margin models. The final rule does not place any limits or restrictions on the use of vendor supplied model components such as specific data feeds, computing environments or calculation engines beyond those requirements that must be satisfied by any initial margin model. In particular, the relevant Agency will conduct a holistic review of the entire initial margin model and assess whether the model and related inputs and processes meet the requirements of the final rule.
To the extent that a covered swap entity uses vendor supplied inputs in conjunction with its own internal inputs and processes, an Agency's model approval decision will apply to the specific initial margin model used by a covered swap entity and not to a generally available vendor supplied model. To the extent that one or more vendors provide models or model-related inputs (
Since non-cleared swaps are expected to be less liquid than cleared swaps, the final rule specifies a minimum close-out period for the initial margin model of 10 business days, compared with a typical requirement of 3 to 5 business days used by CCPs.
Under the final rule, the initial margin model calculation must be performed directly over a 10-day close out period. In the context of bank regulatory capital rules, a long horizon calculation (such as 10 days) may, under certain circumstances, be indirectly computed by making a calculation over a shorter horizon (such as 1 day) and then scaled to the longer 10-day horizon according to a fixed rule to be consistent with the longer 10-day horizon. The rule does not provide this option to covered swap entities using an approved initial margin model. The Agencies' view is that the rationale for allowing such indirect calculations that rely on scaling shorter horizon calculations to longer horizons has largely been based on computational and cost considerations that were material in the past but are much less now, in light of advances in computational speeds and reduced computing costs.
The Agencies received a number of comments concerning the length of the assumed close-out period used in the initial margin calculations. One commenter suggested the 10-day period was too long and suggested a close-out period of three to five days was adequate to ensure sufficient time to close out or hedge a defaulting counterparty's swap contract. Another commenter suggested a 10-day close-out period was too short and the resulting initial margins would not always be larger and more conservative than initial margins charged on cleared swaps.
The Agencies believe that a ten-day close-out period is appropriate for determining the level of initial margin in the final rule. Non-cleared swaps are expected to be less liquid and less frequently traded than cleared swaps which typically require initial margin amounts consistent with a three to five day close-out period. Accordingly, it is appropriate that the close-out period applied to non-cleared swaps be longer than that which is generally applied to cleared swaps. At the same time, the Agencies are aware that it may not be the case that the regulatory minimum required initial margin on a non-cleared swap will always be larger than the initial margin required on any related cleared swap as margining practices at CCPs vary from one CCP to another and may exceed minimum required margin levels due to the specific risk of the swap in question or the margining practices of the CCP. Moreover, given the complexity and diversity of the non-cleared swap market, the Agencies believe that it is not possible and unnecessary to prescribe a specific and different close-out horizon for each type of non-cleared swap that may exist in the marketplace. The Agencies do believe that it is appropriate for a covered swap entity to use a close-out period longer than ten-days in those
The final rule permits a covered swap entity to use an internal initial margin model that reflects offsetting exposures, diversification, and other hedging benefits within four broad risk categories: commodities, credit, equity, and foreign exchange and interest rates (considered together as a single asset class) when calculating initial margin for a particular counterparty if the non-cleared swaps are executed under the same EMNA.
The Agencies received comments on a range of issues that broadly relate to the recognition of portfolio risk offsets.
One commenter requested that the rule specify only a single commodity asset class rather than the four separate asset classes that were specified in the proposal (agricultural commodities, energy commodities, metal commodities and other commodities). Under the proposal, initial margin on non-cleared commodity swaps would be calculated separately for each sub-asset class within the broader commodities asset class. The commenter suggested that there are significant and relatively stable correlations across related commodity categories that should not be ignored for hedging and margining purposes. The commenter also noted that commodity index swaps are a significant source of non-cleared commodity swap activity and that these swaps comprise exposures to each of the four commodity sub-asset classes that were identified in the proposal. Accordingly, the commenter suggested, implementing the proposal's four separate sub-asset class categories would not be appropriately risk sensitive and would be difficult and burdensome to implement for a significant class of commodity swaps.
The Agencies have considered this comment and have decided to group all non-cleared commodity swaps into a single asset class for initial margin calculation purposes. The Agencies believe that there is enough commonality across different commodity categories to warrant recognition of conceptually sound and empirically justified risk offsets. Moreover, the Agencies note that both the proposal and the final rule take a relatively broad view of the other asset classes: Equity, credit, interest rates and foreign exchange. In prescribing the granularity of the asset classes there is a clear trade-off between simplicity and certainty around the stability of hedging relationships in narrowly defined asset classes and the greater flexibility and risk sensitivity that is provided by broader asset class distinctions. Therefore, the Agencies have decided to adopt a commodity asset class definition that is consistent with the other three asset classes and is appropriate in light of current market practices and conventions.
One commenter suggested that the margin requirements should be more reflective of risk offsets that exist between disparate asset classes such as equity and commodities. As was expressed in the proposal, however, the Agencies are of the view that the qualitative and quantitative basis for allowing for risk offsets among non-cleared swaps within a given, and relatively broad, asset class such as equities is conceptually stronger and better supported by historical data and experience than is the basis for recognizing such offsets across disparate asset classes such as foreign exchange and commodities. Non-cleared swaps that trade within a given asset class, such as equities, are likely to be subject to similar market fundamentals and dynamics as the underlying instruments themselves trade in related markets and represent claims on related financial assets. In such cases, it is more likely that a stable and systematic relationship exists that can form the conceptual and empirical basis for applying risk offsets.
To the contrary, non-cleared swaps in disparate asset classes such as foreign exchange and commodities are generally unlikely to be influenced by similar market fundamentals and dynamics that would generally suggest a stable relationship upon which reasonable risk offsets could be based. Rather, to the extent that empirical data and analysis suggest some degree of risk offset exists between swaps in disparate asset classes, this relationship may change unexpectedly over time in ways that could demonstrably change and weaken the assumed risk offset. Accordingly, the Agencies have decided to allow for risk offsets that have a sound conceptual and empirical basis across non-cleared swaps within the broad asset classes of equity, credit, commodity, and interest rates and foreign exchange but not to allow risk offsets across swaps in differing asset classes. Moreover, the Agencies note that the final asset class described above is interest rates and foreign exchange taken as a group. Accordingly, the final rule will allow conceptually sound and empirically supported risk offsets between an interest rate swap on a foreign interest rate and a currency swap in a foreign currency.
Some commenters suggested that initial margin models should allow for offsets across risk factors even if these risk factors are present in non-cleared swaps across multiple asset classes such as equity and credit. For example, the commenters stated that both an equity swap and a credit swap may be exposed to some amount of interest rate risk. The commenters suggested that the interest rate risk inherent in the equity and credit swaps should be recognized on a portfolio basis so that any offsetting interest rate exposure across the two swaps could be recognized in the initial margin model. This approach would effectively require that all non-cleared swaps be described in terms of a number of “risk factors” and the initial margin model would consider the exposure to each risk factor separately. The initial margin amount required on a portfolio of non-cleared swaps would then be computed as the sum of the amounts required for each risk factor.
This “risk factor” based approach described above is different from the Agencies' proposal. Under the proposal,
The Agencies have considered the commenters' “risk factor” based approach described above and have decided not to adopt this approach, but to adopt the Agencies' proposed approach in the final rule for a number of reasons.
First, a product-based approach to calculating initial margin is clear and transparent. In many market segments it is quite common to report and measure swap exposures on a product-level basis.
While it is the case that some swaps may have hybrid features that make it challenging to assign them to one specific asset class, the Agencies believe that the incidence of this occurrence will be relatively uncommon and can be dealt with under the final rule. In particular, as of December 2014, the Bank for International Settlements reported that of the roughly $630 trillion in gross notional outstanding, roughly 3.6 percent of these contracts cannot be allocated to one of the following broad asset categories: Foreign exchange, interest rate, equity, commodity and credit. The Agencies also note that this fraction has declined from roughly 6.6 percent in June 2012 which suggests that the challenges associated with such hybrid swaps are declining over time. In such cases where the allocation of a particular non-cleared swap to a specific asset class is not uncontroversial, the Agencies expect an allocation to be made based on whichever broad asset class represents the preponderance of the non-cleared swap's overall risk profile.
Second, a product-level initial margin model is well aligned with current practice for cleared swaps. Some clearinghouses that offer multiple swaps for clearing, such as the CME, do allow for risk offsets within an asset class but do not generally allow for any risk offsets across asset classes. Again, as a specific example, the CME offers both cleared interest rate and credit default swaps. The CME's initial margin model is a highly sophisticated risk management model that does allow for offsetting among different credit swaps and among different interest rate swaps but does not allow for risk offsets between interest rate and credit swaps. This approach to calculating initial margin also provides a significant amount of transparency as market participants, regulators and the public can assess the extent to which trading activity in specific asset classes generates counterparty exposures that require initial margin. To the extent that some risk factors may cut across more than one asset class, the use of a risk-factor-based margining approach would make evaluating the quantum of risk posed by the trading activity in any one set of products difficult to measure and manage on a systematic basis which poses significant challenges to users of non-cleared swaps as well as regulators and the broader public who have an interest in monitoring and evaluating the risks of different non-cleared swap activities.
Third, the Agencies note that the final rule's product-level approach to initial margin explicitly allows for risk offsets though the precise form of these offsets differs from a “risk factor” based approach. The Agencies believe that conceptually sound and empirically justified risk offsets for initial margin are appropriate and have included such offsets in the final rule. In general, there are a large number of possible approaches that could be taken to allow for such offsets. The Agencies have considered the alternatives raised by the commenters and have adopted in the final rule an approach to recognizing risk offsets that provides for a significant amount of hedging and diversification benefits while also promoting transparency and simplicity in the margining framework.
Some commenters suggested that for the purposes of calculating model-based initial margin amounts, portfolio offsets should be recognized between non-cleared swaps, cleared swaps and other products such as positions in securities. The Agencies' authority under the Dodd-Frank Act for prescribing margin requirements on non-cleared swaps relates only to non-cleared swaps and not to other products even if those products are themselves, at times, traded in conjunction with non-cleared swaps. In particular, sections 731 and 764 of the Dodd-Frank Act require that the margin requirements be “imposed on all swaps that are not cleared” and that those requirements “be appropriate for the risk associated with non-cleared swaps held as a swap dealer or major swap participant.”
In addition to a time horizon of 10 trading days and a one-tailed confidence level of 99 percent, the final rule requires the initial margin model to be calibrated to a period of financial stress.
Calibration to a stress period helps to ensure that the resulting initial margin requirement is robust to a period of financial stress during which swap entities and financial end user counterparties are more likely to default, and counterparties handling a default are more likely to be under pressure. The stress calibration requirement also reduces the systemic risk associated with any increase in margin requirements that might occur in response to an abrupt increase in volatility during a period of financial stress, as initial margin requirements will already reflect a historical stress event.
One commenter suggested that the overall level of the proposed initial margin requirements were too high and that the proposed requirement to calibrate the initial margin model to a period of financial stress was too conservative. The Agencies have considered this comment but continue to believe that the overall level of the initial margin requirements is consistent with the goals of prescribing margin requirements that are appropriate for the risk of non-cleared swaps and the safety and soundness of the covered swap entity. Moreover, the requirement to calibrate the initial margin model to a period of financial stress has two important benefits. First, margin requirements that are consistent with a period of financial stress will help to ensure that counterparties are sufficiently protected against the type of severe financial stresses that are most likely to have systemic consequences. Second, calibrating margins to a period of financial stress should have the effect of reducing the extent to which margins are pro-cyclical. Specifically, since margin levels will be consistent with a period of above average market volatility and risk, a moderate rise in risk levels should not require any increase or re-evaluation of margin levels. In this sense, margin requirements will be less likely to increase abruptly following a market shock. There may be circumstances in which the financial system experiences a significant financial stress that is even greater than the stress to which initial margins have been calibrated. In these cases, initial margin requirements will rise as margin levels are re-calibrated to be consistent with the new and greater stress level. The Agencies expect such occurrences to be relatively infrequent and, ultimately, any risk-sensitive and empirically-based method for calibrating a risk model must exhibit some sensitivity to changing financial market risks and conditions.
As discussed above, an approved initial margin model must generally account for all of the material risks that affect the non-cleared swap. An exception to this requirement has been made in the specific case of cross-currency swaps. In a cross-currency swap, one party exchanges with another party principal and interest rate payments in one currency for principal and interest rate payments in another currency, and the exchange of principal occurs upon the inception of the swap, with a reversal of the exchange of principal at a later date that is agreed upon at the inception of the swap.
Under the final rule, an initial margin model need not recognize any risks or risk factors associated with the foreign exchange transactions associated with the fixed exchange of principal embedded in a cross-currency swap as defined in § __.2 of the final rule. The initial margin model must recognize all risks and risk factors associated with all other payments and cash flows that occur during the life of the cross-currency swap. In the context of the standardized margin approach, described in Appendix A and further below, the gross initial margin rates have been set equal to those for interest rate swaps. This treatment recognizes that cross-currency swaps are subject to risks arising from fluctuations in interest rates but does not recognize any risks associated with the fixed exchange of principal since principal is typically not exchanged on interest rate swaps.
The final rule requires that an approved initial margin model be used to calculate the required initial margin collection amount on a
The use of an approved initial margin model may result in changes to the initial margin collection amount on a
Under the final rule, covered swap entities that are either unable or unwilling to make the technology and related infrastructure investments necessary to maintain an initial margin model may elect to use standardized initial margins. The standardized initial margins are detailed in Appendix A of the final rule.
Under the final rule, standardized initial margins depend on the asset class (commodity, equity, credit, foreign exchange and interest rate) and, in the case of credit and interest rate asset classes, further depend on the duration of the underlying non-cleared swap.
In addition, the standardized initial margin requirement allows for the recognition of risk offsets through the use of a net-to-gross ratio in cases where a portfolio of non-cleared swaps is executed under an EMNA. The net-to-gross ratio compares the net current replacement cost of the non-cleared portfolio (in the numerator) with the gross current replacement cost of the non-cleared portfolio (in the denominator). The net current replacement cost is the cost of replacing the entire portfolio of swaps that are covered under the EMNA. The gross current replacement cost is the cost of replacing those swaps that have a strictly positive replacement cost under the EMNA. As an example, consider a portfolio that consists of two non-cleared swaps under an EMNA in which the mark-to-market value of the first swap is $10 (
The net-to-gross ratio and gross standardized initial margin amounts (provided in Appendix A) are used in conjunction with the notional amount of the transactions in the underlying swap portfolio to arrive at the total initial margin requirement as follows: Standardized Initial Margin=0.4 × Gross Initial Margin + 0.6 × NGR × Gross Initial Margin where:
[0.4 × (100 × 0.05 + 100 × 0.15) + 0.6 × 0.5 × (100 × 0.05 + 100 × 0.15)]=8+6=14.
The Agencies further note that the calculation of the net-to-gross ratio for margin purposes must be applied only to swaps subject to the same EMNA and that the calculation is performed
The Agencies have decided not to adopt this approach in the final rule for several reasons. First, the standardized approach for counterparty credit risk has been developed for counterparty capital requirement purposes and, while clearly related to the issue of initial margin for non-cleared swaps, it is not entirely clear that this framework can be transferred to a simple and transparent standardized initial margin framework without modification. Second, the standardized counterparty credit risk approach that has been published by the BCBS is not intended to become effective until January 2017 which follows the initial compliance date of the final rule. Accordingly, the Agencies expect that some form of the standardized approach will be proposed by U.S. banking regulators prior to January 2017. Following the notice and comment period, a final rule for capitalizing counterparty credit risk exposures will be finalized in the United States. Once these rules are in place and effective it may be appropriate to consider adjusting the approach in this rule to standardized initial margins. Prior to the new capital rules being effective in the United States for the purpose for which they were intended, the Agencies do not believe it would be appropriate to incorporate the standardized approach to counterparty credit risk that has been published by the BCBS into the final margin requirements for non-cleared swaps.
One commenter suggested modifying the proposed approach to standardized initial margin amounts to reflect greater granularity. Among other things, this commenter suggested increasing the number of asset categories recognized by the standardized initial margin table. In the final rule, the Agencies have adopted the proposed approach to standardized initial margins. The Agencies acknowledge the desire to reflect greater granularity in the standardized approach but also note that the approach in the final rule distinguishes among four separate asset classes and various maturities. The Agencies also note that no commenter
The final rule's standardized approach to initial margin depends on the calculation of a net-to-gross ratio. In the context of performing margin calculations, it must be recognized that at the time non-cleared swaps are entered into it is often the case that both the net and gross current replacement cost is zero. This precludes the calculation of the net-to-gross ratio. In cases where a new swap is being added to an existing portfolio that is being executed under an existing EMNA, the net-to-gross ratio may be calculated with respect to the existing portfolio of swaps. In cases where an entirely new swap portfolio is being established, the initial value of the net-to-gross ratio should be set to 1.0. After the first day's mark-to-market valuation has been recorded for the portfolio, the net-to-gross ratio may be re-calculated and the initial margin amount may be adjusted based on the revised net-to-gross ratio.
The final rule requires that the standardized initial margin collection amount be calculated on a
As in the case of internal-model-generated initial margins, the margin calculation under the standardized approach must also be performed on a daily basis. Since the standardized initial margin calculation depends on a standardized look-up table (presented in appendix A), there is somewhat less scope for the initial margin collection amounts to vary on a daily basis. At the same time, however, there are some factors that may result in daily changes in the initial margin collection amount resulting from standardized margin calculations. First, any changes to the notional size of the swap portfolio that arise from any addition or deletion of swaps from the portfolio would result in a change in the standardized margin amount. As an example, if the notional amount of the swap portfolio increases as a result of adding a new swap to the portfolio then the standardized initial margin collection amount would increase. Second, changes in the net-to-gross ratio that result from changes in the mark-to-market valuation of the underlying swaps would result in a change in the standardized initial margin collection amount. Third, changes to characteristics of the swap that determine the gross initial margin (presented in appendix A) would result in a change in the standardized initial margin collection amount. As an example, the gross initial margin applied to interest rate swaps depends on the duration of the swap. An interest rate swap with a duration between zero and two years has a gross initial margin of one percent while an interest rate swap with duration of greater than two years and less than five years has a gross initial margin of two percent. Accordingly, if an interest rate swap's duration declines from above two years to below two years, the gross initial margin applied to it would decline from two to one percent. Accordingly, the standardized initial margin collection amount will need to be computed on a
The Agencies expect that some covered swap entities may choose to adopt a mix of internal models and standardized approaches to calculating initial margin requirements. For example, it may be the case that a covered swap entity engages in some swap transactions on an infrequent basis to meet client demands but the level of activity does not warrant all of the costs associated with building, maintaining and overseeing a quantitative initial margin model. Further, some covered swap entity clients may value the transparency and simplicity of the standardized approach. In such cases, the Agencies expect that it would be acceptable to use the standardized approach to margin such swaps.
Under certain circumstances it may be appropriate to employ both a model based and standardized approach to calculating initial margins. At the same time, the Agencies are aware that differences between the standardized approach and internal model based margins across different types of swaps could be used to “cherry pick” the method that results in the lowest margin requirement. Rather, the choice to use one method over the other should be based on fundamental considerations apart from which method produces the most favorable margin results. Similarly, the Agencies do not anticipate there should be a need for covered swap entities to switch between the standardized or model-based margin method for a particular counterparty, absent a significant change in the nature of the entity's swap activities. The Agencies expect covered swap entities to provide a rationale for changing methodologies to their supervisory Agency if requested. The Agencies will monitor for evasion of the swap margin requirements through selective application of the model and standardized approach as a means of lowering the margin requirements.
In global markets, counterparties organized in different jurisdictions often transact in non-cleared swaps. Section 9 of the final rule addresses the cross-border applicability of the proposed margin rules to covered swap entities.
Section __.9 of the final rule excludes from coverage of the rule's margin requirements any foreign non-cleared swap of a foreign covered swap
The final rule's definition of “foreign non-cleared swap or foreign non-cleared security-based swap” covers any non-cleared swap of a foreign covered swap entity to which neither the counterparty nor any guarantor (on either side) is (i) an entity organized under U.S. or State law, including a U.S. branch, agency, or subsidiary of a foreign bank or a natural person who is a resident of the United States; (ii) a branch or office of an entity organized under U.S. or State law; or (iii) a swap entity that is a subsidiary of an entity organized under U.S. or State law. As a result, foreign non-cleared swaps could include swaps with a foreign bank or with a foreign subsidiary of a U.S. bank or bank holding company, so long as neither the subsidiary nor the U.S. parent is a covered swap entity. A foreign swap would not include a swap with a foreign branch of a U.S. bank or a U.S. branch or subsidiary of a foreign bank.
The final rule's approach to excluded swaps largely follows the proposed approach with a few minor modifications. The foreign non-cleared swap definition has been modified to make clear that a natural person resident of the United States cannot be the guarantor of a swap that would qualify for the foreign exclusion. In addition, this definition has been modified to make clear that neither the counterparty nor the guarantor can be a swap entity (as opposed to a covered swap entity, as proposed) that is a subsidiary of an entity that is organized under the laws of the United States or any State.
One commenter urged that U.S. branches and agencies of foreign banks transacting with foreign counterparties with no guarantee from a U.S. entity should be able to treat their non-cleared swaps as excluded foreign swap transactions that are not subject to this rule because the branch is part of the same legal entity as its foreign parent.
Another commenter urged that the final rule should not apply to a covered swap entity that is a subsidiary of a U.S. parent where the subsidiary is not guaranteed by the U.S. entity. The Agencies have not modified the rule in this manner, as subsidiaries of a U.S. covered swap entity could pose risk to the U.S. covered swap entity and the U.S. financial system. As described more fully below, however, these subsidiaries may be able to take advantage of substituted compliance determinations under the final rule.
In the proposed rule, the definitions of foreign covered swap entity and foreign non-cleared swap included a test that looked to the existence of “control” by an entity organized under the laws of the United States. One commenter expressed concern about the proposal's lack of clarity with respect to the meaning of “control” in these circumstances. The final rule has been modified in these two provisions to replace “controlled by” with the term “subsidiary” which is defined by reference to financial consolidation in section 2 of the final rule.
Certain commenters also expressed concern that the proposed rule did not make clear when a counterparty was a U.S. person for purposes of determining whether a swap qualified as a foreign non-cleared swap, which would be excluded under the proposed rule. One commenter, for example, suggested that the final rule adopt a “U.S. person” definition to make clear how foreign covered swap entities can determine whether a counterparty that is a financial end user is either a U.S. or foreign entity.
The requirement that no U.S. entity may guarantee either party's obligation under the swap in order for the swap to
Section __.9(g) of the final rule defines “guarantee” to mean an arrangement pursuant to which one party to a non-cleared swap has rights of recourse against a third-party guarantor, with respect to its counterparty's obligations under the non-cleared swap. For these purposes, a party to a non-cleared swap has rights of recourse against a guarantor if the party has a conditional or unconditional legally enforceable right to receive or otherwise collect, in whole or in part, payments from the guarantor with respect to its counterparty's obligations under the swap. In addition, any arrangement pursuant to which the guarantor has a conditional or unconditional legally enforceable right to receive or otherwise collect, in whole or in part, payments from any other third-party guarantor with respect to the counterparty's obligations under the non-cleared swap, such arrangement will be deemed a guarantee of the counterparty's obligations under the swap by the other guarantor. The definition of guarantee has implications for the swaps that are excluded from the rule as well as for the swaps that are eligible for a compliance determination under § __.9(d) and the ability to meet the requirements of § __.9(f) in jurisdictions where segregation is unavailable.
In the proposal, the Agencies requested comment on whether the rule should clarify and define the concept of “guarantee” to better ensure that those swaps that pose risks to U.S. insured depository institutions would be included within the scope of the rule. Some commenters urged the Agencies to define the term “guarantee.” While one commenter supported use of a broad definition of guarantee that includes cross-default provisions, keepwell arrangements or liquidity puts, another commenter argued that a guarantee should be defined to constitute an express, legally enforceable arrangement providing foreign counterparties with recourse to the U.S. guarantor. Another commenter argued that cross-default provisions would not generally give a swap counterparty any direct right of access against the specified entity and should not be treated as a guarantee.
In order to provide additional clarity on the meaning of guarantee for purposes of § __. 9, the final rule requires one party to have rights of recourse against a third-party guarantor; however, in order to address potential concerns about evasion, the Agencies will deem a guarantee to exist, if the third-party guarantor has a guarantee from one or more additional third-party guarantors, with respect to the obligations under the non-cleared swap. The Agencies believe that a definition of “guarantee” that is narrowly targeted to the particular swap obligation provides clarity through a bright-line test that can be applied consistently and is appropriately limited in scope. For example, if a foreign registered German Bank covered swap entity (“Party W”) enters into a swap with a non-covered swap entity, foreign subsidiary of a U.S. covered swap entity (“Party X”), and Party X has a guarantee from a third-party guarantor that is a foreign affiliate of Party X (“Party Y”), who then, in turn has a guarantee from its U.S. covered swap entity parent entity (“Parent Z”), the Agencies would deem a guarantee to exist between Party X and Parent Z, on Party X's swap obligations.
In addition to the exclusion for certain swaps described above, the final rule would permit certain covered swap entities to comply with a foreign regulatory framework for non-cleared swaps if the Agencies jointly determine that such foreign regulatory framework is comparable to the requirements of the Agencies' rule. The development of the 2013 international framework makes it more likely that regulators in multiple jurisdictions will adopt margin rules for non-cleared swaps that are comparable. In light of the 2013 international framework, the final rule would allow certain non-U.S. covered swap entities to comply with the margin requirements of the final rule by complying with a foreign jurisdiction's margin requirements, subject to the Agencies' determination that the foreign rule is comparable to this final rule and appropriate for the safe and sound operation of the covered swap entity, taking into account the risks associated with the non-cleared swaps. These determinations would be made on a jurisdiction-by-jurisdiction basis. Furthermore, the Agencies' determination may be conditional or unconditional. The Agencies could, for example, determine that certain provisions of the foreign regulatory framework are comparable to the requirements of the final rule but that other aspects are not comparable for purposes of substituted compliance.
Under the final rule, certain types of covered swap entities operating in foreign jurisdictions would be able to meet the requirement of the final rule by complying with the foreign requirement in the event that a comparability determination is made by the Agencies, regardless of the location of the counterparty, provided that the covered swap entity's obligations under the swap are not guaranteed by a U.S. entity (other than a U.S. branch, agency, or subsidiary of a foreign bank) or by a natural person who is a U.S. resident. If a covered swap entity's obligations under a swap are guaranteed by a U.S. entity or natural person who is a U.S. resident, the swap would not be eligible for substituted compliance. Foreign covered swap entities (defined as discussed above) and foreign subsidiaries of U.S. depository institutions or Edge or agreement corporations would be eligible to take advantage of a comparability determination.
In addition, U.S. branches and agencies of foreign banks would be permitted to comply with the foreign requirement for which a determination was made, provided their obligations under the swap are not guaranteed by a U.S. entity or by a natural person who is a resident of the United States. While such branches and agencies clearly operate within the United States, this treatment reflects the principle that branches and agencies are part of the parent organization. Under this approach, foreign branches and agencies of U.S. banks would not be eligible for substituted compliance and would be required to comply with the U.S. requirement for the same reason. The Agencies are aware of concerns regarding potential competitive disadvantages that could arise as U.S. covered swap entities compete with U.S. branches and agencies of foreign banks in the market for non-cleared swaps. The Agencies' believe that this concern would be addressed through the comparability determination process. A foreign jurisdiction with a substantially different margin requirement that resulted in a demonstrable competitive advantage over U.S. covered swap entities is unlikely to have processes that are comparable to the U.S. compliance requirements. Moreover, a foreign margin requirement that provides significant competitive advantages to
Certain commenters urged the Agencies to permit substituted compliance for comparable rules to the greatest possible degree in order to mitigate cross-border conflicts and inconsistencies in the application of margin requirements. A number of comments expressed concern about the application of multiple different sets of rules on cross-border swap transactions, which they argued could deter cross-border swap transactions. A few commenters argued that counterparties should be able to agree which of their jurisdictions' margin requirements will apply to a swap, as long as both jurisdictions' requirements are consistent with international standards. The Agencies believe that the availability of substituted compliance determinations in the final rule serve to mitigate these concerns while at the same time ensuring that applicable margin rules in a foreign jurisdiction would be comparable to this final rule.
Some commenters argued that foreign branches of U.S. swap entities as well as foreign covered swap entities that are guaranteed by a U.S. entity
The Agencies have, however, modified the final rule to make clear that there is no restriction on the U.S. branch, or agency of a foreign bank providing a guarantee to a covered swap entity eligible for compliance with a foreign margin regime. The Agencies believe that since a U.S. branch or agency of a foreign bank can be the covered swap entity eligible for substituted compliance, there should be no restriction on guarantees by these entities.
Under the final rule, if a foreign counterparty is subject to a foreign regulatory framework that has been determined to be comparable by the Agencies, a covered swap entity's posting requirement would be satisfied by posting (in amount, form, and at such time) as required by the foreign counterparty's margin collection requirement, provided that the foreign counterparty does not have a guarantee from an entity organized under the laws of the United States or any State (including a U.S. branch, agency, or subsidiary of a foreign bank) or a natural person who is resident of the United States or a branch or office of an entity organized under the laws of the United States or any State. In these cases, the collection requirement of the foreign counterparty would suffice to ensure two-way exchange of margin. For example, if a U.S. bank that is a covered swap entity enters into a swap with a foreign hedge fund that does not have a U.S. guarantee and that is subject to a foreign regulatory framework for which the Agencies have made a comparability determination, the U.S. bank must collect the amount of margin as required under the U.S. rule, but need post only the amount of margin that the foreign hedge fund is required to collect under the foreign regulatory framework.
One commenter argued that allowing a U.S. entity to rely on substituted compliance only in connection with its obligation to post initial margin would make a U.S. covered swap entity uncompetitive in foreign markets. Certain commenters suggested that if one counterparty to a swap is subject to a comparable foreign regulation, the entire transaction should be eligible for substituted compliance.
The final rule is modified from the proposal to contain the additional limitation that the counterparty cannot have a guarantee from a U.S. entity. The purpose of this change was to align with the CFTC cross-border proposal. The Agencies also believe that, in order for a counterparty to be able to collect pursuant to a foreign margin framework, the counterparty should not be guaranteed by a U.S. entity. This modification is also in alignment with the CFTC's cross-border proposal.
The final rule provides that the Agencies will jointly make a determination regarding the comparability of a foreign regulatory framework that will focus on the outcomes produced by the foreign framework as compared to the U.S. framework. Moreover, as margin requirements are complex and have a number of related aspects (
The Agencies would accept requests for a comparability determination for a foreign regulatory framework from a covered swap entity that is eligible for substituted compliance under the final rule. Once the Agencies make a favorable comparability determination for a foreign regulatory framework, any covered swap entity that could comply with the foreign framework will be allowed to do so (
Certain commenters expressed support for the Agencies' proposal to take a holistic view of the foreign regulatory framework that considers outcomes produced by the entire framework. A few commenters urged the Agencies to evaluate foreign regulations based on the 2013 international framework when making substituted compliance determinations. One commenter urged the Agencies to provide specific standards and conditions that will be used in determinations. The Agencies expect that substituted compliance determinations will be on a case-by-case basis, would consider a number of aspects related to margin requirements, and could be partial.
One commenter argued that trade associations and foreign regulators should be allowed to make requests for a substituted compliance determination with respect to a foreign regulatory framework. The Agencies continue to believe it is appropriate to accept such requests only from covered swap entities that are subject to the requirements under the final rule and have not modified the final rule to accept requests from trade groups or foreign regulators. Moreover, and as explained above, the Agencies plan to consult with the relevant foreign regulatory authorities prior to making a determination with respect to substituted compliance.
Section __.9(f) is a new provision in the final rule that is meant to address concerns raised by commenters on the proposal. A number of commenters argued that the Agencies should incorporate a de minimis exception for swap activities conducted in jurisdictions for which substituted compliance is not available, including in jurisdictions that do not have a legal framework to support netting and segregation.
Section __.9(f) provides that the requirements to post and segregate collateral do not apply to a non-cleared swap entered into by a foreign branch of a U.S. depository institution or a foreign subsidiary of a U.S. depository institution, Edge corporation, or agreement corporation if certain requirements are met, including:
• Inherent limitations in the legal or operational infrastructure in the foreign jurisdiction make it impracticable for the covered swap entity and the counterparty to post any form of eligible initial margin collateral recognized pursuant to § __.6(b) in compliance with the segregation requirements of § __.7;
• The covered swap entity is subject to foreign regulatory restrictions that require the covered swap entity to transact [in] the non-cleared swap or non-cleared security-based swap with the counterparty through an establishment within the foreign jurisdiction and do not accommodate the posting of collateral for the non-cleared swap or non-cleared security-based swap outside the jurisdiction;
• The counterparty to the non-cleared swap or non-cleared security-based swap is not, and the counterparty's obligations under the non-cleared swap or non-cleared security-based swap are not guaranteed by: (i) An entity organized under the laws of the United States or any State or a natural person who is a resident of the United States; or (ii) A branch or office of an entity organized under the laws of the United States or any State;
• The covered swap entity collects initial margin for the non-cleared swap or non-cleared security-based swap in accordance with § __.3(a) in the form of cash pursuant to § __.6(b)(1), and posts and collects variation margin in accordance with § __.4(a) in the form of cash pursuant to § __.6(b)(1); and
• The [Agency] provides the covered swap entity with prior written approval for the covered swap entity's reliance on this subsection for the foreign jurisdiction.
An Agency would only provide a covered swap entity with prior written approval to engage in swap transactions pursuant to this § __. 9(f) where the swap entity met all of the conditions described above. In particular, a covered swap entity would need to demonstrate that foreign regulatory restrictions would not allow the swap to occur in another jurisdiction that would accommodate the posting and segregation of collateral.
Certain commenters suggested a transition period between when a comparability determination is published and when the margin rules go into effect so that substituted compliance determinations are made prior to implementation of the final rule.
Under the final rule, a covered swap entity must execute trading documentation with each counterparty that is a swap entity or a financial end
In the proposed rule, the Agencies requested comment on whether the final rule should deem compliance with the applicable CFTC or SEC documentation requirement as compliance with this rule. A few commenters recommended against deferring to the CFTC documentation requirements, arguing that those requirements are deficient for purposes of resolving disputes related to initial margin, while other commenters recommended that the documentation requirements be removed or simplified because the issue is already addressed in CFTC regulations.
The Agencies have decided to include the proposed documentation standards in the final rule with certain revisions in light of comments. The Dodd-Frank Act amended the Commodity Exchange Act and the Securities Exchange Act to require the Commissions to adopt documentation standards for the swap entities they regulate.
While the CFTC has established requirements regarding documentation for swap dealers and major swap participants that are similar to those being adopted by the Agencies, important differences remain.
Certain commenters recommended against requiring parties to lock in either at the inception of their trading relationship or upon the relevant compliance date for margin requirements on non-cleared swaps dispositive valuation methods as opposed to agreed steps and processes for arriving at valuations. Other commenters wrote that the documentation section is overly prescriptive in requiring that the documentation specify inputs used in determining initial and variation margin because the inputs may vary from swap to swap and will change over the lifetime of the swap. Instead, the commenter recommended that the focus should be on requiring parties to share the actual inputs being used to determine initial margin and variation margin at any particular point in time upon request. To address these concerns, in the final rule, a covered swap entity's documentation would need to describe its methods, procedures, rules, and inputs for determining the value of non-cleared swaps, rather than specify such elements for initial margin.
The final rule contains a special section for swaps between a covered swap entity and its affiliates. This section provides that the requirements of the rule generally apply to a non-cleared swap or non-cleared security-based swap with an affiliate unless the swap is excluded from coverage under § __.1(d) or a special rule applies. This section also makes clear that to the extent of any inconsistency between this section and any other provision of the final rule, this special section will apply.
As an example, collection of initial margin is not addressed in this special section. Since there is no special provision for collection of margin for affiliate swaps, the requirements of § _.3(a) apply and a covered swap entity is required to collect initial margin from its affiliate pursuant to § _.3(a) under the final rule. When a covered swap entity transacts with another swap entity that is an affiliate, the covered swap entity must collect at least the amount of initial margin required under the final rule.
Section __.11(b)(1) provides that the requirement for a covered swap entity to post initial margin under § __.3(b) does not apply with respect to any non-cleared swap or non-cleared security-based swap with a counterparty that is an affiliate. As § __.3(b) generally requires posting to financial end user counterparties with material swaps exposures, covered swap entities would not need to post initial margin to affiliate counterparties that are financial end users with material swaps exposure. However, the final rule requires that a covered swap entity calculate the amount of initial margin that would be required to be posted to an affiliate that is a financial end user with material swaps exposure pursuant to § __.3(b) and provide documentation of such amount to each affiliate on a daily basis.
In addition, under the final rule, each affiliate may be granted an initial margin threshold of $20 million for purposes of calculating the amount of initial margin to be collected from an affiliate counterparty in accordance with § __.3(a) or for calculating the amount of initial margin that would have been posted to an affiliate counterparty in order to provide documentation of this amount to the affiliate. The final rule also provides that, for purposes of this calculation, an entity shall not count a non-cleared
To the extent that a covered swap entity collects from an affiliate initial margin required by § __.3(a) in the form of collateral other than cash, the covered swap entity may serve as the custodian for the non-cash collateral or have an affiliate serve as the custodian. Such non-cash initial margin collateral collected by a covered swap entity would be subject to all the other requirements of the rule. However, initial margin collateral collected from an affiliate in cash would be subject to all of the requirements of the rule, including the requirement in § __.7 for a third-party custodian that is not an affiliate of the covered swap entity. Altering the requirement in § __.7(b) that non-cash initial margin collateral be held at a custodian that is neither the covered swap entity or the affiliate, or an affiliate of either party, for non-cleared swaps between a covered swap entity and its affiliate is appropriate because the Agencies expect there will be increased transparency for inter-affiliate transactions, use of common valuation modeling, which will lower the likelihood of valuation discrepancies, and greater ease in transferring non-cash collateral between affiliates than would otherwise be the case for swaps with an unaffiliated counterparty.
The final rule also provides that an inter-affiliate swap that would have been required to be cleared but for a clearing exemption will be subject to the initial margin collection requirement. The covered swap entity may, however, choose to calculate the initial margin amount using a 5-day margin period of risk instead of a 10-day margin period of risk under § __.8(d)(1). The final rule permits a covered swap entity using the standardized approach to reduce the initial margin amount on these transactions by 30 percent, in line with the general provision that risk and initial margin increase with the square root of the holding period horizon and the square root of five divided by 10 is roughly 0.7. However, the final rule does not permit a covered swap entity to compute its initial margin requirement on a portfolio basis with swaps that are margined on a 5-day basis with those swaps that are margined on a 10-day basis. Rather, the covered swap entity must calculate initial margin separately for those swaps margined on a 5-day basis and those swaps margined on a 10-day basis.
For additional clarity, this section of the rule also provides that a covered swap entity shall collect and post variation margin with respect to a non-cleared swap or non-cleared security-based swap with any counterparty that is an affiliate as provided in § __.4. As in the case of initial margin, the final rule provides that variation margin is not required on any swap that is exempt pursuant to § __.1(d), as added by the interim final rule.
The proposal would have covered swaps between banks that are covered swap entities and their affiliates that are financial end users, including affiliates that are subsidiaries of a bank, such as operating subsidiaries, Edge Act subsidiaries, agreement corporation subsidiaries, financial subsidiaries, and lower-tier subsidiaries of such subsidiaries. In the preamble to the proposal, the Agencies noted that other applicable laws require transactions between banks and their affiliates to be on an arm's length basis. In particular, section 23B of the Federal Reserve Act provides that many transactions between a bank and its affiliates (as defined under that rule)
Commenters including members of Congress were generally critical of this aspect of the proposal. Specifically, a significant number of commenters argued that requiring margin generally, and initial margin in particular, on all inter-affiliate swaps was unnecessary for systemic stability. These commenters asserted that inter-affiliate swaps are often conducted for internal risk management reasons, and such swaps do not increase the overall risk profile or leverage of the group. Instead, commenters argued, requiring margin on inter-affiliate swaps could discourage effective risk-management, increase group-wide third-party credit risk, and reduce liquidity. Commenters also argued for consistency with other international swap margin proposals that generally would not require margin on inter-affiliate swaps. Commenters also argued that requiring margin for inter-affiliate swaps would undermine the exemption from clearing requirements for such swaps. Finally, commenters criticized the proposal's coverage of affiliate swaps as duplicative of the restrictions and requirements under sections 23A and 23B of the Federal Reserve Act.
While some commenters urged that any required margin for inter-affiliate swaps should be limited to variation margin, which is already generally exchanged among affiliate counterparties, certain commenters suggested alternatives to a full two-way collect-and-post regime for initial margin for affiliate swaps. For example, a number of commenters proposed that instead of each covered swap entity posting and collecting segregated initial margin to and from its affiliate, the covered swap entity would only collect from its affiliate (subject to a wholly owned subsidiary exemption and a de minimis exemption) and the covered swap entity would be permitted to segregate the initial margin within its group, so as to prevent undue third-party custodial risk. These commenters further argued that certain highly regulated affiliates like U.S. bank holding companies should benefit from an exception to initial margin requirements. These commenters further urged that if the Agencies decided a one-way initial margin requirement is not adequate, the Agencies should permit the common parent of an affiliate pair to post a single amount of segregated initial margin in which each affiliate would have a security interest. The Agencies believe that the modifications in the final rule address many of the concerns raised by commenters with respect to the treatment of inter-affiliate swaps. The final rule requires a covered swap entity to collect initial margin from swap entity and financial end user affiliates as suggested by some commenters. As noted above, this will result in a collect-and-post regime where two covered swap entities that are affiliates transact with each other. However, a covered swap entity would not be required to post initial margin to affiliates that are financial end users. A covered swap entity would, however, be required to calculate the amount of initial margin
In addition, two-way variation margin, which many commenters indicated was already market practice, would be required on inter-affiliate swaps where a covered swap entity transacts with a swap entity or financial end user affiliate. The Agencies believe that these modifications, combined with the revised definitions of affiliate and subsidiary, should address many of the concerns raised by commenters on the proposed rule.
The final rule also modifies the initial margin threshold requirement of the proposal for affiliate swaps. Commenters requested clarification on how the proposed rule's $65 million initial margin threshold would be applied for inter-affiliate transactions with a covered swap entity. The final rule provides that a covered swap entity may apply a $20 million initial margin threshold to each of its affiliates. For example, if a covered swap entity engages in three inter-affiliate swaps with an initial margin amount of $100 million each with three separate affiliates, the total amount of initial margin that the covered swap entity would be required to collect would be (($100m−$20m) + ($100m−$20m) + ($100m−$20m)) = $240m.
In addition, as suggested by commenters, a covered swap entity may elect to use an affiliated custodian bank to hold non-cash collateral received as initial margin, provided that the restrictions on rehypothecating, repledging, or reusing such collateral in § __.7(c) of the final rule will also apply to such non-cash collateral. However, the affiliated custodian bank will not be permitted to hold initial margin cash collateral, which must be held at a third-party custodian and promptly reinvested in non-cash collateral pursuant to § __.6.
Some commenters urged the Agencies to clarify that a holding company may provide margin required to be collected by a covered swap entity from an affiliate. Section __.3(a) of the final rule requires a covered swap entity to collect initial margin from a counterparty that is a financial end user with material swap exposure or that is a swap entity. This requirement applies to both affiliate and non-affiliate counterparties. The rule does not prohibit the margin that a covered swap entity must collect on swaps with its affiliated counterparty from being supplied by the parent holding company. For example, a covered swap entity may act as custodian for non-cash collateral of its parent holding company. To the extent the non-cash collateral was not encumbered to secure some other obligation of the parent holding company (either to the covered swap entity, another affiliate, or unrelated party), the holding company may arrange with its affiliate to use this excess non-cash collateral to satisfy the covered swap entity's requirement to collect initial margin under this rule.
Sections 731 and 764 of the Dodd-Frank Act require that the margin requirements offset the greater risk to swap entities from the use of swaps that are not cleared and help ensure the safety and soundness of the covered swap entity and are appropriate for the risk associated with the non-cleared swap entity. The Agencies believe that the modifications in the final rule are responsive to the commenters' concerns about the proposal's requirement that covered swap entities collect and post initial margin from and to affiliates and are also consistent with the statute. The requirement for covered swap entities to collect initial margin from, but not to post initial margin to, affiliates should help to protect the safety and soundness of covered swap entities in the event of an affiliated counterparty default. At the same time, the final rule does not permit such inter-affiliate swaps, which may be significant in number and notional amount, to remain unmargined and thus to pose a risk to systemic stability. Further, applying a lower threshold amount to each affiliate should permit smaller, end-user types of affiliates to benefit from a lower, but non-zero, amount of credit that can be extended to them, while ensuring that the covered swap entity collects initial margin from its larger affiliates with higher numbers and notional amounts of swaps. Similarly, permitting inter-affiliate swaps that are not cleared pursuant to an exemption from clearing to use a 5-day margin period of risk recognizes that such swaps are typically standardized and, thus, appropriate for a treatment that recognizes their lesser risk. The Agencies believe that the final rule's provisions for inter-affiliate swaps balance the concerns raised by commenters about the impact of full two-way margin on inter-affiliate swaps while at the same time, consistent with the statute, taking into account the risk of these swaps and protecting the safety and soundness of covered swap entities.
Finally, the Agencies note that banks may be subject to additional regulatory restrictions on inter-affiliate swap transactions, such as those that may be required by sections 23A and 23B of the Federal Reserve Act. Compliance with the margin requirements in this final rule does not ensure compliance with other related regulatory requirements that may also limit or otherwise regulate inter-affiliate swap transactions and banks would be expected to comply with all required regulatory requirements related to inter-affiliate swap transactions.
The Agencies are adopting this section of the rule as proposed. The proposal would have required a covered swap entity to comply with any risk-based and leverage capital requirements already applicable to that covered swap entity as part of its prudential regulatory regime. In the last few years, the banking agencies have strengthened regulatory capital requirements for banking organizations through adoption of the revised capital framework as well as through other rulemakings.
• In the case of covered swap entities that are banking organizations,
• In the case of a foreign bank, any state branch or state agency of a foreign bank, the capital standards that are applicable to such covered entity under the Board's Regulation Y (12 CFR 225.2(r)(3)) or the Board's Regulation YY (12 CFR part 252);
• In the case of an Edge corporation or an Agreement corporation, the capital standards applicable to an Edge corporation engaged in banking pursuant to the Board's Regulation K (12 CFR 211.12(c));
• In the case of any “regulated entity” under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (
• In the case of Farmer Mac, the capital adequacy regulations set forth in 12 CFR part 652; and
• In the case of any FCS institution (other than Farmer Mac), the capital regulations set forth in 12 CFR part 615.
The Agencies did not receive comment on these capital-related provisions. The Agencies believe that compliance with the regulatory capital rules described above is sufficient to offset the greater risk, relative to the risk of centrally cleared swaps, to the swap entity and the financial system arising from the use of non-cleared swaps, and would help ensure the safety and soundness of the covered swap entity. In particular, the regulatory capital rules incorporated by reference into the final rule have already addressed, in a risk-sensitive and comprehensive manner, the safety and soundness risks posed by a covered swap entity's swaps positions.
The final rule will apply the initial margin and variation margin requirements to non-cleared swaps that are entered into by a covered swap entity over a substantial phase-in period that begins in September 2016. The final rule will not require an immediate or retroactive application of initial margin or variation margin for any swap entered into prior to the relevant compliance date of the final rule.
Because the requirements will not be applied retroactively, no new initial margin or variation margin requirements will be imposed on non-cleared swaps entered into prior to the relevant compliance date until those transactions are rolled over or renewed. The only requirements that will apply to a pre-compliance date transaction are the initial margin and variation margin requirements to which the parties to the transaction had previously agreed by contract.
This section addresses the potential cost of initial margin requirements, a topic that received considerable attention from commenters. The agencies also note that the exchange of initial margin is in aggregate not solely a cost, since for every dollar of initial margin provided by a posting entity, the collecting entity receives an additional dollar of protection from potential loss. In addition, the posting and collection of margin should reduce build-ups of large unsecured derivatives positions that can adversely affect financial stability. As articulated throughout this preamble, the Agencies believe the final rule will achieve these financial stability benefits in a way that is responsive to the concerns of commenters and consistent with the statutory mandate.
The new requirements will have an impact on the costs of engaging in new non-cleared swaps after the applicable compliance date. In particular, the final rule sets out requirements for initial and variation margin that represent a significant change from current industry practice in many circumstances. Since the 2011 proposal was released, a number of analyses have been conducted that attempt to estimate the total amount of initial margin that would be required by the new margin rules. Given the complexity of this final rule and its inter-relationship to other rulemakings, these analyses are subject to considerable uncertainty. In
Below is a discussion of a selection of studies that have been conducted in the recent past that relate to a margin framework similar to the final rule. Specifically, each of these studies uses the 2013 international framework in estimating the total amount of initial margin collateral that will be required. While this final rule is largely consistent with the 2013 international framework, the two are not identical. Therefore, the results of these studies are limited by these differences.
The final rule will require an exchange of initial margin by many market participants, which represents a significant change in market practice. The total amount of initial margin that will be required at a point in time is an important input into an estimate of the costs of the new requirements. The table below presents estimates of the total amount of initial margin that will be required by U.S. swap entities and their counterparties once the requirements are fully implemented, that is, at the end of the phase-in period and after existing swaps are rolled into new swaps.
The initial margin estimates provided in the table above are taken from two different studies that have examined the impact of the 2013 international framework on overall initial margin requirements. The studies were conducted by the BCBS and IOSCO
As discussed above, these estimates represent the total amount of initial margin that will be required at a point in time once the requirements have been fully phased in and all existing non-cleared swaps have been rolled over into new non-cleared swaps. Accordingly, the full amount of initial margin amount estimates provided in the table above will not be realized until, at the earliest, 2019.
The amounts reported in the table above reflect estimated amounts of initial margin that will be required under the final rule but do not reflect the cost of providing these amounts by covered swap entities and their counterparties. The cost of providing initial margin collateral depends on the difference between the cost of raising
Because banks are a significant market participant in the non-cleared swap market, the debt cost of banks may serve as a useful representative indicator of the cost of funding collateral, though the debt costs banks face may differ substantially from the debt cost faced by other market participants. In terms of collateral assets, the final rule provides for a wide array of collateral assets to be used to satisfy initial margin collateral. One specific asset that is an eligible form of collateral is U.S. Treasury securities. Since U.S. Treasury securities are relatively low yielding assets when compared to other forms of eligible collateral such as equities and corporate bonds, using the yield on U.S. Treasury securities to gauge the incremental cost of obtaining initial margin collateral will tend to result in a conservative estimate of the overall incremental cost of funding initial margin collateral.
The table below presents the twenty-fifth percentile, median and seventy-fifth percentile of five-year CDS spreads for a collection of large banks from January 2004 through August of 2015.
This incremental funding cost can be combined with the estimates of the total amount of initial margin collateral in the previous table to arrive at an estimate of the annual cost of funding initial margin collateral. Specifically, the estimate amount of initial margin is multiplied by the incremental funding cost depicted in the table above to determine the annual funding cost.
Any estimate constructed in this fashion is subject to a number of limitations that have been described earlier. In particular, the estimates of the total amount of initial margin collateral required by the rule is subject to a number of uncertainties including but not limited to the total amount of non-cleared swap activity that will continue to exist in the future. In addition, the incremental funding costs of financing initial margin collateral depends on the specific characteristics of both the entity sourcing the collateral and the collateral asset being sourced. Importantly, in at least some cases swap market participants will pledge assets as initial margin that they already hold and would not need to raise funds to source any additional collateral. In such cases, the incremental cost of the collateral requirements are expected to be low.
The table below presents a matrix of the annual cost estimates associated with the initial margin requirements. The three rows of the matrix correspond to the BCBS-IOSCO, ISDA-Model Based and ISDA Standardized initial margin amounts that were presented and discussed above. The three columns of the matrix refer to the 25th percentile, median and 75th percentile incremental funding cost estimates that were described earlier. Each cell of the matrix presents an annual cost estimate that is computed by multiplying the initial margin amount identified in each row by the incremental funding cost identified in each column. The amounts presented in the table below are reported in millions.
The estimated annual costs of the initial margin requirements range from $672 million to roughly $46 billion depending on the specific initial margin estimate and incremental funding cost that is used to compute the estimate.
The final rule requires that covered swap entities collect initial margin from their affiliate counterparties but does not require that covered swap entities post initial margin to their affiliate counterparties (other than affiliate counterparties that are also covered swap entities required to collect). The quantitative estimates of the amount of initial margin required by the final rule that were presented above did not account for transactions between affiliates. Accordingly, while the estimates of the cost of the initial margin requirements provided above span a wide range, these estimates do not explicitly account for the cost associated with the requirement that covered swap entities collect initial margin from their affiliates. It is difficult to precisely estimate the additional amount of collateral that would be required as a result of the inter-affiliate margin requirements. One commenter, however, provided an analysis of the inter-affiliate swap transactions for several financial firms which is useful to gauge the additional collateral that may be required as a result of the inter-affiliate margin requirements.
The commenter contended that an analysis conducted by several large financial institutions indicated that both collecting and posting initial margin collateral among all affiliates would effectively double the amount,
Finally, the final rule also allows covered swap entities to calculate the required initial margin amounts assuming a 5-day margin period of risk for any swap transactions that would have to be cleared but are not cleared due to the clearing exemption for inter-affiliate transactions. Under the standardized approach to initial margin in the final rule, the initial margin requirements on such transactions are reduced by 30 percent. Accordingly, the total amount of initial margin required to be collected on inter-affiliate transactions would be reduced even further depending on the fraction of transactions margined on a 5-day rather than 10-day basis.
After adjusting for specific features of the final rule, the analysis provided by the commenter suggests an additional increase in initial margin requirements and the cost of financing initial margin of less than fifty percent relative to the amount that will be collected and posted among non-affiliates. The Agencies recognize that available data and methods do not permit a precise estimate of the total amount of initial margin that will be required as a result of the inter-affiliate margin requirements. The Agencies believe that the estimates discussed above are useful in providing guidance on the general magnitude of the requirements but that the specific amounts required could be substantially greater or lesser than the amounts described above for a variety of reasons. First, the analysis described above depends on a number of assumptions and changes to these assumptions could result in significant changes in the resulting estimates. Second, and importantly, the estimates described above depend on the existing configuration of swap transactions between affiliates. It is likely that the behavior of swap market participants, including affiliate counterparties, will respond to incentives created by these swap margin requirements. Such changes could have a dramatic effect on the pattern of affiliate swap transactions which would itself have a significant impact on the amounts of initial margin that are ultimately collected on inter-affiliate transactions.
The final rule will also require that variation margin be exchanged between covered swap entities and certain of their counterparties. The Agencies believe that the impact of such requirements are low in the aggregate because: (i) Regular exchange of variation margin is already a well-established market practice among a large number of market participants, and (ii) exchange of variation margin simply redistributes resources from one entity to another in a manner that imposes no aggregate liquidity costs. A reduction in liquid assets available to the entity posting variation margin is offset by an increase in the liquid assets available to the entity receiving the variation margin. The Agencies have modified the final rule from the proposal to allow swap counterparties that are not swap entities to post non-cash collateral to satisfy variation margin requirements. Accordingly, swap users such as insurance companies and asset managers that want to stay fully invested will be able to utilize existing assets and collateral to meet the variation margin requirements without having to liquidate assets and raise cash. As a result, these swap users will not suffer a reduction in the rate of return on their investment portfolios that would be experienced if a significant cash buffer had to be raised to satisfy the final rule's variation margin requirements.
Subject to certain exceptions, 12 U.S.C. 4802(b) provides that new regulations and amendments to
Certain provisions of the final rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of the PRA, the Agencies may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OMB control number for the OCC is 1557-0251, the FDIC is 3064-0180, and the Board is 7100-0364. In addition, as permitted by the PRA, the Board proposes to extend for three years, with revision, the Reporting Requirements Associated with Regulation KK (Margin and Capital Requirements for Covered Swaps Entities) (Reg KK; OMB No. 7100-0364). The information collection requirements contained in this joint notice of final rulemaking have been submitted to OMB for review and approval by the OCC and FDIC under section 3507(d) of the PRA and § 1320.11 of OMB's implementing regulations (5 CFR part 1320). The Board reviewed the final rule under the authority delegated to the Board by OMB.
The final rule contains requirements subject to the PRA. The reporting requirements are found in §§ _.8(c), _.8(d), _.8(f)(3), and _.9(e). The recordkeeping requirements are found in §§ _.2 definition of “eligible master netting agreement,” item 4, _.5(c)(2)(i), _.7(c), _.8(e), _.8(f), _.8(g), _.8(h), _.10, and _.11(b)(1). These information collection requirements would implement sections 731 and 764 of the Dodd-Frank Act, as mentioned in the Abstract below. The Agencies received a number of comments on the custody agreement in § _.7(c). No PRA burden was taken in the proposed rule; however, based on the comments received, the Agencies will take recordkeeping burden for this section. Also, the Agencies received a number of comments on the posting of initial margin by an affiliate of a covered swap entity with respect to swaps between the covered swap entity and the affiliate. Based on the comments received, the Agencies created a new § _.11, and the agencies will take recordkeeping burden for § _.11(b)(1).
The Agencies have a continuing interest in the public's opinions of collections of information. At any time, commenters may submit comments regarding the burden estimate, or any other aspect of this collection of information, including suggestions for reducing the burden, to the addresses listed in the
Section _.8 establishes standards for initial margin models. These standards include (1) a requirement that the covered swap entity receive prior approval from the relevant Agency based on demonstration that the initial margin model meets specific
Section _.9(e) allows a covered swap entity to request that the prudential regulators make a substituted compliance determination and must provide the reasons therefore and other required supporting documentation. A request for a substituted compliance determination must include a description of the scope and objectives of the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps; the specific provisions of the foreign regulatory framework for non-cleared swaps and security-based swaps (scope of transactions covered; determination of the amount of initial and variation margin required; timing of margin requirements; documentation requirements; forms of eligible collateral; segregation and rehypothecation requirements; and approval process and standards for models); the supervisory compliance program and enforcement authority exercised by a foreign financial regulatory authority or authorities in such system to support its oversight of the application of the non-cleared swap and security-based swap regulatory framework; and any other descriptions and documentation that the prudential regulators determine are appropriate. A covered swap entity may make a request under this section only if directly supervised by the authorities administering the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps.
Section _.2 defines terms used in the proposed rule, including the definition of “eligible master netting agreement,” which provides that a covered swap entity that relies on the agreement for purpose of calculating the required margin must (1) conduct sufficient legal review of the agreement to conclude with a well-founded basis that the agreement meets specified criteria and (2) establish and maintain written procedures for monitoring relevant changes in law and to ensure that the agreement continues to satisfy the requirements of this section. The term “eligible master netting agreement” is used elsewhere in the proposed rule to specify instances in which a covered swap entity may (1) calculate variation margin on an aggregate basis across multiple non-cleared swaps and security-based swaps and (2) calculate initial margin requirements under an initial margin model for one or more swaps and security-based swaps.
Section _.5(c)(2)(i) specifies that a covered swap entity shall not be deemed to have violated its obligation to collect or post margin from or to a counterparty if the covered swap entity has made the necessary efforts to collect or post the required margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, or has otherwise demonstrated upon request to the satisfaction of the Agency that it has made appropriate efforts to collect or post the required margin.
Section _.7(c) requires the custodian to act pursuant to a custody agreement that (1) prohibits the custodian from rehypothecating, repledging, reusing, or otherwise transferring (through securities lending, securities borrowing, repurchase agreement, reverse repurchase agreement or other means) the collateral held by the custodian, except that cash collateral may be held in a general deposit account with the custodian if the funds in the account are used to purchase an asset, such asset is held in compliance with this § _.7, and such purchase takes place within a time period reasonably necessary to consummate such purchase after the cash collateral is posted as initial margin and (2) is a legal, valid, binding, and enforceable agreement under the laws of all relevant jurisdictions, including in the event of bankruptcy, insolvency, or a similar proceeding. A custody agreement may permit the posting party to substitute or direct any reinvestment of posted collateral held by the custodian, provided that, with respect to collateral collected by a covered swap entity pursuant to § _.3(a) or posted by a covered swap entity pursuant to § __.3(b), the agreement requires the posting party to substitute only funds or other property that would qualify as eligible collateral under § _.6, and for which the amount net of applicable discounts described in appendix B would be sufficient to meet the requirements of § _.3 and direct reinvestment of funds only in assets that would qualify as eligible collateral under § _.6, and for which the amount net of applicable discounts described in appendix B would be sufficient to meet the requirements of § _.3.
Section _.8 establishes standards for initial margin models. These standards include (1) a requirement that a covered swap entity review its initial margin model annually (§ _.8(e)); (2) a requirement that the covered swap entity validate its initial margin model initially and on an ongoing basis, describe to the relevant Agency any remedial actions being taken, and report internal audit findings regarding the effectiveness of the initial margin model to the covered swap entity's board of directors or a committee thereof (§ _.8(f)(2), (3), and (4)); (3) a requirement that the covered swap entity adequately document all material aspects of its initial margin model (§ _.8(g)); and (4) that the covered swap entity must adequately document internal authorization procedures, including escalation procedures, that require review and approval of any change to the initial margin calculation under the initial margin model, demonstrable analysis that any basis for any such change is consistent with the requirements of this section, and independent review of such demonstrable analysis and approval (§ _.8(h)).
Section _.10 requires a covered swap entity to execute trading documentation with each counterparty that is either a swap entity or financial end user regarding credit support arrangements that (1) provides the contractual right to collect and post initial margin and variation margin in such amounts, in such form, and under such circumstances as are required; and (2) specifies the methods, procedures,
Section _.11(b)(1) provides that the requirement for a covered swap entity to post initial margin under § _.3(b) does not apply with respect to any non-cleared swap or non-cleared security-based swap with a counterparty that is an affiliate. A covered swap entity shall calculate the amount of initial margin that would be required to be posted to an affiliate that is a financial end user with material swaps exposure pursuant to § _.3(b) and provide documentation of such amount to each affiliate on a daily basis.
As of December 31, 2014, the OCC supervised 1,101 small entities.
As described in the
The final rule generally exempts swap transactions for all OCC-supervised institutions with assets of $10 billion or less. Thus, the OCC estimates that the final rule will not have a significant impact on a substantial number of OCC-supervised small entities.
1.
2.
3.
Under Small Business Administration (the “SBA”) regulations, the finance and insurance sector includes commercial banking, savings institutions, credit unions, other depository credit intermediation and credit card issuing entities (“financial institutions”), which generally are considered “small” if they have assets of $550 million or less.
The Board notes that the RFA does not require it to consider the impact of the final rule, including its indirect economic effects, on small entities that are not subject to the requirements of the final rule.
Many swaps of non-financial end user counterparties will be exempt from the requirements of this rule pursuant to the companion interim final rule required under TRIPRA.
The rule would require covered swap entities to post margin to and collect margin from non-cleared swap and non-cleared security-based swap counterparties that are swap entities or financial end users. As noted above, no swap entities are expected to be small entities; the number of financial end user counterparties is also unknown. However, the Board believes that modifications to the proposed rule would eliminate burden on financial end user counterparties that are small entities.
The application of initial margin requirements to swaps with financial end user counterparties is limited, depending on the counterparty's level of swap activity. With respect to financial end user counterparties that engage in swaps with swap entities that are subject to the rule's margin requirements, the rule minimizes the burden on small entities by requiring that such counterparties have a material swaps exposure in order to be subject to initial margin requirements. Material swaps exposure for an entity is defined to mean that an entity and its affiliates have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps with all counterparties for June, July and August of the previous calendar year that exceeds $8 billion, where such amount is calculated only for business days. This threshold amount was proposed to be $3 billion and was increased to $8 billion in the final rule. Since the application of the initial margin requirements apply only where a counterparty is a financial end user with material swaps exposure, the increased threshold amount will result in fewer small financial end users being subject to the initial margin requirements provisions of this rule. In addition, the rule provides an initial margin threshold resulting in an aggregate credit exposure of $50 million from all non-cleared swaps and non-cleared security-based swaps between a covered swap entity and its affiliates and a counterparty and its affiliates. A covered swap entity would not need to collect initial margin from a counterparty to the extent the amount is below the initial margin threshold. The Board expects the initial margin threshold should further reduce the impact of the rule on financial counterparties that are small entities. In particular, according to 2015 Call Report data, banks with $550 million or less in
As noted above, all financial end users would be subject to the variation margin requirements and documentation requirements of the rule. However, the Board believes that such treatment is consistent with current market practice and should not represent a significant burden on small financial end users. Consequently, the rule would not appear to have a significant economic impact on a substantial number of swap counterparties that are small entities.
4.
In light of the foregoing, the Board does not believe, for covered swap entities subject to the Board's jurisdiction and their counterparties, that this final rule would have a significant economic impact on a substantial number of small entities.
Using SBA's size standards, as of June 30, 2015, the FDIC supervised 3,357 small entities. The FDIC does not expect any small entity that it supervises is likely to be a covered swap entity because such entities are unlikely to engage in the level of swap activity that would require them to register as a swap entity. Because TRIPRA excludes non-cleared swaps entered into for hedging purposes by a financial institution with total assets of $10 billion or less from the requirement of the final rule, the FDIC expects that when a covered swap entity transactions non-cleared swaps with a small entity supervised by the FDIC, and such swaps are used to hedge the small entity's commercial risk, those swaps with not be subject to the final rule. The FDIC does not expect any small entity that it supervises will engage in non-cleared swaps for purposes other than hedging. Therefore, the FDIC does not believe that the final rule results in a significant economic impact on a substantial number of small entities under its supervisory jurisdiction.
The FDIC certifies that the final rule does not have a significant economic impact on a substantial number of small FDIC-supervised institutions.
The OCC has analyzed the final rule under the factors in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether the final rule includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation).
The OCC has determined this proposed rule is likely to result in the expenditure by the private sector of $100 million or more in any one year (adjusted annually for inflation). The OCC has prepared an impact analysis and identified and considered alternative approaches. When the final rule is published in the
The text of the common rules appears below:
(a) [Reserved]
(b) [Reserved]
(c) [Reserved]
(d) [Reserved]
(e)
(1) September 1, 2016 with respect to the requirements in § __.3 for initial margin and § __.4 for variation margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) Its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-
(iii) In calculating the amounts in paragraphs (e)(1)(i) and (ii) of this section, an entity shall count the average daily aggregate notional amount of a non-cleared swap, a non-cleared security-based swap, a foreign exchange forward or a foreign exchange swap between the entity and an affiliate only one time, and shall not count a swap or security-based swap that is exempt pursuant to paragraph (d) of this section.
(2) March 1, 2017 with respect to the requirements in § __.4 for variation margin for any other covered swap entity with respect to non-cleared swaps and non-cleared security-based swaps entered into with any other counterparty.
(3) September 1, 2017 with respect to the requirements in § __.3 for initial margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) Its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for March, April and May 2017 that exceeds $2.25 trillion, where such amounts are calculated only for business days; and
(iii) In calculating the amounts in paragraphs (e)(3)(i) and (ii) of this section, an entity shall count the average daily aggregate notional amount of a non-cleared swap, a non-cleared security-based swap, a foreign exchange forward or a foreign exchange swap between the entity and an affiliate only one time, and shall not count a swap or security-based swap that is exempt pursuant to paragraph (d) of this section.
(4) September 1, 2018 with respect to the requirements in § __.3 for initial margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) Its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for March, April and May 2018 that exceeds $1.5 trillion, where such amounts are calculated only for business days; and
(iii) In calculating the amounts in paragraphs (e)(4)(i) and (ii) of this section, an entity shall count the average daily aggregate notional amount of a non-cleared swap, a non-cleared security-based swap, a foreign exchange forward or a foreign exchange swap between the entity and an affiliate only one time, and shall not count a swap or security-based swap that is exempt pursuant to paragraph (d) of this section.
(5) September 1, 2019 with respect to the requirements in § __.3 for initial margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) Its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for March, April and May 2019 that exceeds $0.75 trillion, where such amounts are calculated only for business days; and
(iii) In calculating the amounts in paragraphs (e)(5)(i) and (ii) of this section, an entity shall count the average daily aggregate notional amount of a non-cleared swap, a non-cleared security-based swap, a foreign exchange forward or a foreign exchange swap between the entity and an affiliate only one time, and shall not count a swap or security-based swap that is exempt pursuant to paragraph (d) of this section.
(6) September 1, 2020 with respect to the requirements in § __.3 for initial margin for any other covered swap entity with respect to non-cleared swaps and non-cleared security-based swaps entered into with any other counterparty.
(f) Once a covered swap entity must comply with the margin requirements for non-cleared swaps and non-cleared security-based swaps with respect to a particular counterparty based on the compliance dates in paragraph (e) of this section, the covered swap entity shall remain subject to the requirements of this [part] with respect to that counterparty.
(g)(1) If a covered swap entity's counterparty changes its status such that a non-cleared swap or non-cleared security-based swap with that counterparty becomes subject to stricter margin requirements under this [part] (such as if the counterparty's status changes from a financial end user without material swaps exposure to a financial end user with material swaps exposure), then the covered swap entity shall comply with the stricter margin requirements for any non-cleared swap or non-cleared security-based swap entered into with that counterparty after the counterparty changes its status.
(2) If a covered swap entity's counterparty changes its status such that a non-cleared swap or non-cleared security-based swap with that counterparty becomes subject to less strict margin requirements under this [part] (such as if the counterparty's status changes from a financial end user with material swaps exposure to a financial end user without material swaps exposure), then the covered swap entity may comply with the less strict margin requirements for any non-cleared swap or non-cleared security-based swap entered into with that counterparty after the counterparty changes its status as well as for any outstanding non-cleared swap or non-cleared security-based swap entered into after the applicable compliance date in paragraph (e) of this section and before the counterparty changed its status.
(1) Either company consolidates the other on financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles, the International Financial Reporting Standards, or other similar standards;
(2) Both companies are consolidated with a third company on a financial statement prepared in accordance with such principles or standards;
(3) For a company that is not subject to such principles or standards, if consolidation as described in paragraph (1) or (2) of this definition would have occurred if such principles or standards had applied; or
(4) [The Agency] has determined that a company is an affiliate of another company, based on [Agency's] conclusion that either company provides significant support to, or is materially subject to the risks or losses of, the other company.
(1) If each party is in a different calendar day at the time the parties enter into the non-cleared swap or non-cleared security-based swap, the day of execution is deemed the latter of the two dates; and
(2) If a non-cleared swap or non-cleared security-based swap is:
(i) Entered into after 4:00 p.m. in the location of a party; or
(ii) Entered into on a day that is not a business day in the location of a party, then the non-cleared swap or non-cleared security-based swap is deemed to have been entered into on the immediately succeeding day that is a business day for both parties, and both parties shall determine the day of execution with reference to that business day.
(1) The agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default following any stay permitted by paragraph (2) of this definition, including upon an event of receivership, conservatorship, insolvency, liquidation, or similar proceeding, of the counterparty;
(2) The agreement provides the covered swap entity the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default, including upon an event of receivership, conservatorship, insolvency, liquidation, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than:
(i) In receivership, conservatorship, or resolution under the Federal Deposit Insurance Act (12 U.S.C. 1811
(ii) Where the agreement is subject by its terms to, or incorporates, any of the laws referenced in paragraph (2)(i) of this definition;
(3) The agreement does not contain a walkaway clause (that is, a provision that permits a non-defaulting counterparty to make a lower payment than it otherwise would make under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement); and
(4) A covered swap entity that relies on the agreement for purposes of calculating the margin required by this part must:
(i) Conduct sufficient legal review to conclude with a well-founded basis (and maintain sufficient written documentation of that legal review) that:
(A) The agreement meets the requirements of paragraph (2) of this definition; and
(B) In the event of a legal challenge (including one resulting from default or from receivership, conservatorship, insolvency, liquidation, or similar proceeding), the relevant court and administrative authorities would find the agreement to be legal, valid, binding, and enforceable under the law of the relevant jurisdictions; and
(ii) Establish and maintain written procedures to monitor possible changes in relevant law and to ensure that the agreement continues to satisfy the requirements of this definition.
(1) Any counterparty that is not a swap entity and that is:
(i) A bank holding company or an affiliate thereof; a savings and loan holding company; a U.S. intermediate holding company established or designated for purposes of compliance with 12 CFR 252.153; or a nonbank financial institution supervised by the Board of Governors of the Federal Reserve System under Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323);
(ii) A depository institution; a foreign bank; a Federal credit union or State credit union as defined in section 2 of the Federal Credit Union Act (12 U.S.C. 1752(1) & (6)); an institution that functions solely in a trust or fiduciary capacity as described in section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(D)); an industrial loan company, an industrial bank, or other similar institution described in section 2(c)(2)(H) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(H));
(iii) An entity that is state-licensed or registered as:
(A) A credit or lending entity, including a finance company; money lender; installment lender; consumer lender or lending company; mortgage lender, broker, or bank; motor vehicle title pledge lender; payday or deferred deposit lender; premium finance company; commercial finance or lending company; or commercial mortgage company; except entities registered or licensed solely on account of financing the entity's direct sales of goods or services to customers;
(B) A money services business, including a check casher; money transmitter; currency dealer or exchange; or money order or traveler's check issuer;
(iv) A regulated entity as defined in section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (12 U.S.C. 4502(20)) or any entity for which the Federal Housing Finance Agency or
(v) Any institution chartered in accordance with the Farm Credit Act of 1971, as amended, 12 U.S.C. 2001
(vi) A securities holding company; a broker or dealer; an investment adviser as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)); an investment company registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1
(vii) A private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80-b-2(a)); an entity that would be an investment company under section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3) but for section 3(c)(5)(C); or an entity that is deemed not to be an investment company under section 3 of the Investment Company Act of 1940 pursuant to Investment Company Act Rule 3a-7 (17 CFR 270.3a-7) of the U.S. Securities and Exchange Commission;
(viii) A commodity pool, a commodity pool operator, or a commodity trading advisor as defined, respectively, in section 1a(10), 1a(11), and 1a(12) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(10), 1a(11), and 1a(12)); a floor broker, a floor trader, or introducing broker as defined, respectively, in 1a(22), 1a(23) and 1a(31) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(22), 1a(23), and 1a(31)); or a futures commission merchant as defined in 1a(28) of the Commodity Exchange Act of 1936 (7 U.S.C. 1a(28));
(ix) An employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income and Security Act of 1974 (29 U.S.C. 1002);
(x) An entity that is organized as an insurance company, primarily engaged in writing insurance or reinsuring risks underwritten by insurance companies, or is subject to supervision as such by a State insurance regulator or foreign insurance regulator;
(xi) An entity, person or arrangement that is, or holds itself out as being, an entity, person, or arrangement that raises money from investors, accepts money from clients, or uses its own money primarily for the purpose of investing or trading or facilitating the investing or trading in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets; or
(xii) An entity that would be a financial end user described in paragraph (1) of this definition or a swap entity, if it were organized under the laws of the United States or any State thereof.
(2) The term “financial end user” does not include any counterparty that is:
(i) A sovereign entity;
(ii) A multilateral development bank;
(iii) The Bank for International Settlements;
(iv) An entity that is exempt from the definition of financial entity pursuant to section 2(h)(7)(C)(iii) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(7)(C)(iii)) and implementing regulations; or
(v) An affiliate that qualifies for the exemption from clearing pursuant to section 2(h)(7)(D) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(7)(D)) or section 3C(g)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(4)) and implementing regulations.
(1) In the case of a covered swap entity that does not use an initial margin model, the amount of initial margin with respect to a non-cleared swap or non-cleared security-based swap that is required under appendix A of this [part]; and
(2) In the case of a covered swap entity that uses an initial margin model pursuant to § __.8, the amount of initial margin with respect to a non-cleared swap or non-cleared security-based swap that is required under the initial margin model.
(1) Has been developed and designed to identify an appropriate, risk-based amount of initial margin that the covered swap entity must collect with respect to one or more non-cleared swaps or non-cleared security-based swaps to which the covered swap entity is a party; and
(2) Has been approved by [Agency] pursuant to § __.8.
(1) United States Dollar (USD);
(2) Canadian Dollar (CAD);
(3) Euro (EUR);
(4) United Kingdom Pound (GBP);
(5) Japanese Yen (JPY);
(6) Swiss Franc (CHF);
(7) New Zealand Dollar (NZD);
(8) Australian Dollar (AUD);
(9) Swedish Kronor (SEK);
(10) Danish Kroner (DKK);
(11) Norwegian Krone (NOK); or
(12) Any other currency as determined by [Agency].
(1) The company is consolidated by the other company on financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles, the International Financial Reporting Standards, or other similar standards;
(2) For a company that is not subject to such principles or standards, if consolidation as described in paragraph (1) of this definition would have occurred if such principles or standards had applied; or
(3) [The Agency] has determined that the company is a subsidiary of another company, based on [Agency's] conclusion that either company provides significant support to, or is materially subject to the risks of loss of, the other company.
(a)
(1) Zero; or
(2) The initial margin collection amount for such non-cleared swap or non-cleared security-based swap
(b)
(c)
(d)
(a)
(b)
(c)
(a)
(2) To the extent that one or more non-cleared swaps or non-cleared security-based swaps are executed pursuant to an eligible master netting agreement between a covered swap entity and its counterparty that is a swap entity or financial end user, a covered swap entity may calculate and comply with the applicable requirements of this [part] on an aggregate net basis with respect to all non-cleared swaps and non-cleared security-based swaps governed by such agreement, subject to paragraph (a)(3) of this section.
(3)(i) Except as permitted in paragraph (a)(3)(ii) of this section, if an eligible master netting agreement covers non-cleared swaps and non-cleared security-based swaps entered into on or after the applicable compliance date set forth in § __.1(e) or (g), all the non-cleared swaps and non-cleared security-based swaps covered by that agreement are subject to the requirements of this [part] and included in the aggregate netting portfolio for the purposes of calculating and complying with the margin requirements of this [part].
(ii) An eligible master netting agreement may identify one or more separate netting portfolios that independently meet the requirements in paragraph (1) of the definition of “Eligible master netting agreement” in § __.2 and to which collection and posting of margin applies on an aggregate net basis separate from and exclusive of any other non-cleared swaps or non-cleared security-based swaps covered by the eligible master netting agreement. Any such netting portfolio that contains any non-cleared swap or non-cleared security-based swap entered into on or after the applicable compliance date set forth in § __.1(e) or (g) is subject to the requirements of this [part]. Any such netting portfolio that contains only non-cleared swaps or non-cleared security-based swaps entered into before the applicable compliance date is not subject to the requirements of this [part].
(4) If a covered swap entity cannot conclude after sufficient legal review with a well-founded basis that the netting agreement described in this section meets the definition of eligible master netting agreement set forth in § __.2, the covered swap entity must treat the non-cleared swaps and non-cleared security based swaps covered by the agreement on a gross basis for the purposes of calculating and complying with the requirements of this [part] to collect margin, but the covered swap entity may net those non-cleared swaps and non-cleared security-based swaps in accordance with paragraphs (a)(1) through (3) of this section for the purposes of calculating and complying with the requirements of this [part] to post margin.
(b)
(c)
(1) The counterparty has refused or otherwise failed to provide or accept the required margin to or from the covered swap entity; and
(2) The covered swap entity has:
(i) Made the necessary efforts to collect or post the required margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, or has otherwise demonstrated upon request to the satisfaction of [Agency] that it has made appropriate efforts to collect or post the required margin; or
(ii) Commenced termination of the non-cleared swap or non-cleared security-based swap with the counterparty promptly following the applicable cure period and notification requirements.
(a)
(1) Immediately available cash funds that are denominated in:
(i) U.S. dollars or another major currency; or
(ii) The currency of settlement for the non-cleared swap or non-cleared security-based swap;
(2) With respect to initial margin only:
(i) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury;
(ii) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a U.S. government agency (other than the U.S. Department of Treasury) whose obligations are fully guaranteed by the full faith and credit of the United States government;
(iii) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under the capital rules applicable to the covered swap entity as set forth in § __.12;
(iv) A publicly traded debt security issued by, or an asset-backed security fully guaranteed as to the payment of principal and interest by, a U.S. Government-sponsored enterprise that is operating with capital support or another form of direct financial assistance received from the U.S. government that enables the repayments of the U.S. Government-sponsored enterprise's eligible securities;
(v) A publicly traded debt security that meets the terms of [RESERVED] and is issued by a U.S. Government-sponsored enterprise not operating with capital support or another form of direct financial assistance from the U.S. government, and is not an asset-backed security;
(vi) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the Bank for International Settlements, the International Monetary Fund, or a multilateral development bank;
(vii) A security solely in the form of:
(A) Publicly traded debt not otherwise described in paragraph (a)(2) of this section that meets the terms of [RESERVED] and is not an asset-backed security;
(B) Publicly traded common equity that is included in:
(
(
(viii) Securities in the form of redeemable securities in a pooled investment fund representing the security-holder's proportional interest in the fund's net assets and that are issued and redeemed only on the basis of the market value of the fund's net assets prepared each business day after the security-holder makes its investment commitment or redemption request to the fund, if:
(A) The fund's investments are limited to the following:
(
(
(B) Assets of the fund may not be transferred through securities lending, securities borrowing, repurchase agreements, reverse repurchase agreements, or other means that involve the fund having rights to acquire the same or similar assets from the transferee; or
(ix) Gold.
(b)
(1) Immediately available cash funds that are denominated in:
(i) U.S. dollars or another major currency; or
(ii) The currency of settlement for the non-cleared swap or non-cleared security-based swap;
(2) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury;
(3) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a U.S. government agency (other than the U.S. Department of Treasury) whose obligations are fully guaranteed by the full faith and credit of the United States government;
(4) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under the capital rules applicable to the covered swap entity as set forth in § __.12;
(5) A publicly traded debt security issued by, or an asset-backed security fully guaranteed as to the payment of principal and interest by, a U.S. Government-sponsored enterprise that is operating with capital support or another form of direct financial assistance received from the U.S. government that enables the repayments of the U.S. Government-sponsored enterprise's eligible securities;
(6) A publicly traded debt security that meets the terms of [RESERVED] and is issued by a U.S. Government-sponsored enterprise not operating with capital support or another form of direct financial assistance from the U.S. government, and is not an asset-backed security;
(7) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the Bank for International Settlements, the International Monetary Fund, or a multilateral development bank;
(8) A security solely in the form of:
(i) Publicly traded debt not otherwise described in this paragraph (b) that meets the terms of [RESERVED] and is not an asset-backed security;
(ii) Publicly traded common equity that is included in:
(A) The Standard & Poor's Composite 1500 Index or any other similar index of liquid and readily marketable equity securities as determined by [Agency]; or
(B) An index that a covered swap entity's supervisor in a foreign jurisdiction recognizes for purposes of including publicly traded common equity as initial margin under applicable regulatory policy, if held in that foreign jurisdiction;
(9) Securities in the form of redeemable securities in a pooled investment fund representing the security-holder's proportional interest in the fund's net assets and that are issued and redeemed only on the basis of the market value of the fund's net assets prepared each business day after the security-holder makes its investment commitment or redemption request to the fund, if:
(i) The fund's investments are limited to the following:
(A) Securities that are issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury, and immediately-available cash funds denominated in U.S. dollars; or
(B) Securities denominated in a common currency and issued by, or fully guaranteed as to the payment of principal and interest by, the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under the capital rules applicable to the covered swap entity as set forth in § __.12, and immediately-available cash funds denominated in the same currency; and
(ii) Assets of the fund may not be transferred through securities lending, securities borrowing, repurchase agreements, reverse repurchase agreements, or other means that involve
(10) Gold.
(c)(1) The value of any eligible collateral collected or posted to satisfy margin requirements pursuant to this [part] is subject to the sum of the following discounts, as applicable:
(i) An 8 percent discount for variation margin collateral denominated in a currency that is not the currency of settlement for the non-cleared swap or non-cleared security-based swap, except for immediately available cash funds denominated in U.S. dollars or another major currency;
(ii) An 8 percent discount for initial margin collateral denominated in a currency that is not the currency of settlement for the non-cleared swap or non-cleared security-based swap, except for eligible types of collateral denominated in a single termination currency designated as payable to the non-posting counterparty as part of the eligible master netting agreement; and
(iii) For variation and initial margin non-cash collateral, the discounts described in appendix B of this [part].
(2) The value of variation margin or initial margin collateral is computed as the product of the cash or market value of the eligible collateral asset times one minus the applicable discounts pursuant to paragraph (c)(1) of this section expressed in percentage terms. The total value of all variation margin or initial margin collateral is calculated as the sum of those values for each eligible collateral asset.
(d) Notwithstanding paragraphs (a) and (b) of this section, eligible collateral for initial margin and variation margin required by this [part] does not include a security issued by:
(1) The party or an affiliate of the party pledging such collateral;
(2) A bank holding company, a savings and loan holding company, a U.S. intermediate holding company established or designated for purposes of compliance with 12 CFR 252.153, a foreign bank, a depository institution, a market intermediary, a company that would be any of the foregoing if it were organized under the laws of the United States or any State, or an affiliate of any of the foregoing institutions; or
(3) A nonbank financial institution supervised by the Board of Governors of the Federal Reserve System under Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323).
(e) A covered swap entity shall monitor the market value and eligibility of all collateral collected and posted to satisfy the minimum initial margin and minimum variation margin requirements of this [part]. To the extent that the market value of such collateral has declined, the covered swap entity shall promptly collect or post such additional eligible collateral as is necessary to maintain compliance with the margin requirements of this [part]. To the extent that the collateral is no longer eligible, the covered swap entity shall promptly collect or post sufficient eligible replacement collateral to comply with the margin requirements of this [part].
(f) A covered swap entity may collect or post initial margin and variation margin that is required by § __.3(d) or § __.4(c) or that is not required pursuant to this [part] in any form of collateral.
(a) A covered swap entity that posts any collateral other than for variation margin with respect to a non-cleared swap or a non-cleared security-based swap shall require that all funds or other property other than variation margin provided by the covered swap entity be held by one or more custodians that are not the covered swap entity or counterparty and not affiliates of the covered swap entity or the counterparty.
(b) A covered swap entity that collects initial margin required by § __.3(a) with respect to a non-cleared swap or a non-cleared security-based swap shall require that such initial margin be held by one or more custodians that are not the covered swap entity or counterparty and not affiliates of the covered swap entity or the counterparty.
(c) For purposes of paragraphs (a) and (b) of this section, the custodian must act pursuant to a custody agreement that:
(1) Prohibits the custodian from rehypothecating, repledging, reusing, or otherwise transferring (through securities lending, securities borrowing, repurchase agreement, reverse repurchase agreement or other means) the collateral held by the custodian, except that cash collateral may be held in a general deposit account with the custodian if the funds in the account are used to purchase an asset described in § __.6(a)(2) or (b), such asset is held in compliance with this § __.7, and such purchase takes place within a time period reasonably necessary to consummate such purchase after the cash collateral is posted as initial margin; and
(2) Is a legal, valid, binding, and enforceable agreement under the laws of all relevant jurisdictions, including in the event of bankruptcy, insolvency, or a similar proceeding.
(d) Notwithstanding paragraph (c)(1) of this section, a custody agreement may permit the posting party to substitute or direct any reinvestment of posted collateral held by the custodian, provided that, with respect to collateral collected by a covered swap entity pursuant to § __.3(a) or posted by a covered swap entity pursuant to § __.3(b), the agreement requires the posting party to:
(1) Substitute only funds or other property that would qualify as eligible collateral under § __.6, and for which the amount net of applicable discounts described in appendix B of this [part] would be sufficient to meet the requirements of § __.3; and
(2) Direct reinvestment of funds only in assets that would qualify as eligible collateral under § __.6, and for which the amount net of applicable discounts described in appendix B of this [part] would be sufficient to meet the requirements of § __.3.
(a)
(b)
(c)
(2) A covered swap entity must demonstrate that the initial margin model satisfies all of the requirements of this section on an ongoing basis.
(3) A covered swap entity must notify [Agency] in writing 60 days prior to:
(i) Extending the use of an initial margin model that [Agency] has approved under this section to an additional product type;
(ii) Making any change to any initial margin model approved by [Agency]
(iii) Making any material change to modeling assumptions used by the initial margin model.
(4) [The Agency] may rescind its approval of the use of any initial margin model, in whole or in part, or may impose additional conditions or requirements if [Agency] determines, in its sole discretion, that the initial margin model no longer complies with this section.
(d)
(2) All data used to calibrate the initial margin model must be based on an equally weighted historical observation period of at least one year and not more than five years and must incorporate a period of significant financial stress for each broad asset class that is appropriate to the non-cleared swaps and non-cleared security-based swaps to which the initial margin model is applied.
(3) The covered swap entity's initial margin model must use risk factors sufficient to measure all material price risks inherent in the transactions for which initial margin is being calculated. The risk categories must include, but should not be limited to, foreign exchange or interest rate risk, credit risk, equity risk, and commodity risk, as appropriate. For material exposures in significant currencies and markets, modeling techniques must capture spread and basis risk and must incorporate a sufficient number of segments of the yield curve to capture differences in volatility and imperfect correlation of rates along the yield curve.
(4) In the case of a non-cleared cross-currency swap, the covered swap entity's initial margin model need not recognize any risks or risk factors associated with the fixed, physically-settled foreign exchange transaction associated with the exchange of principal embedded in the non-cleared cross-currency swap. The initial margin model must recognize all material risks and risk factors associated with all other payments and cash flows that occur during the life of the non-cleared cross-currency swap.
(5) The initial margin model may calculate initial margin for a non-cleared swap or non-cleared security-based swap or a netting portfolio of non-cleared swaps or non-cleared security-based swaps covered by an eligible master netting agreement. It may reflect offsetting exposures, diversification, and other hedging benefits for non-cleared swaps and non-cleared security-based swaps that are governed by the same eligible master netting agreement by incorporating empirical correlations within the following broad risk categories, provided the covered swap entity validates and demonstrates the reasonableness of its process for modeling and measuring hedging benefits: Commodity, credit, equity, and foreign exchange or interest rate. Empirical correlations under an eligible master netting agreement may be recognized by the initial margin model within each broad risk category, but not across broad risk categories.
(6) If the initial margin model does not explicitly reflect offsetting exposures, diversification, and hedging benefits between subsets of non-cleared swaps or non-cleared security-based swaps within a broad risk category, the covered swap entity must calculate an amount of initial margin separately for each subset within which such relationships are explicitly recognized by the initial margin model. The sum of the initial margin amounts calculated for each subset of non-cleared swaps and non-cleared security-based swaps within a broad risk category will be used to determine the aggregate initial margin due from the counterparty for the portfolio of non-cleared swaps and non-cleared security-based swaps within the broad risk category.
(7) The sum of the initial margin amounts calculated for each broad risk category will be used to determine the aggregate initial margin due from the counterparty.
(8) The initial margin model may not permit the calculation of any initial margin collection amount to be offset by, or otherwise take into account, any initial margin that may be owed or otherwise payable by the covered swap entity to the counterparty.
(9) The initial margin model must include all material risks arising from the nonlinear price characteristics of option positions or positions with embedded optionality and the sensitivity of the market value of the positions to changes in the volatility of the underlying rates, prices, or other material risk factors.
(10) The covered swap entity may not omit any risk factor from the calculation of its initial margin that the covered swap entity uses in its initial margin model unless it has first demonstrated to the satisfaction of [Agency] that such omission is appropriate.
(11) The covered swap entity may not incorporate any proxy or approximation used to capture the risks of the covered swap entity's non-cleared swaps or non-cleared security-based swaps unless it has first demonstrated to the satisfaction of [Agency] that such proxy or approximation is appropriate.
(12) The covered swap entity must have a rigorous and well-defined process for re-estimating, re-evaluating, and updating its internal margin model to ensure continued applicability and relevance.
(13) The covered swap entity must review and, as necessary, revise the data used to calibrate the initial margin model at least annually, and more frequently as market conditions warrant, to ensure that the data incorporate a period of significant financial stress appropriate to the non-cleared swaps and non-cleared security-based swaps to which the initial margin model is applied.
(14) The level of sophistication of the initial margin model must be commensurate with the complexity of the non-cleared swaps and non-cleared security-based swaps to which it is applied. In calculating an initial margin collection amount, the initial margin model may make use of any of the generally accepted approaches for modeling the risk of a single instrument or portfolio of instruments.
(15) [The Agency] may in its sole discretion require a covered swap entity using an initial margin model to collect a greater amount of initial margin than that determined by the covered swap entity's initial margin model if [Agency] determines that the additional collateral is appropriate due to the nature, structure, or characteristics of the covered swap entity's transaction(s), or is commensurate with the risks associated with the transaction(s).
(e)
(f)
(2) The covered swap entity's risk control unit must validate its initial margin model prior to implementation and on an ongoing basis. The covered swap entity's validation process must be independent of the development, implementation, and operation of the initial margin model, or the validation process must be subject to an independent review of its adequacy and effectiveness. The validation process must include:
(i) An evaluation of the conceptual soundness of (including developmental evidence supporting) the initial margin model;
(ii) An ongoing monitoring process that includes verification of processes and benchmarking by comparing the covered swap entity's initial margin model outputs (estimation of initial margin) with relevant alternative internal and external data sources or estimation techniques. The benchmark(s) must address the chosen model's limitations. When applicable, the covered swap entity should consider benchmarks that allow for non-normal distributions such as historical and Monte Carlo simulations. When applicable, validation shall include benchmarking against observable margin standards to ensure that the initial margin required is not less than what a derivatives clearing organization or a clearing agency would require for similar cleared transactions; and
(iii) An outcomes analysis process that includes backtesting the initial margin model. This analysis must recognize and compensate for the challenges inherent in back-testing over periods that do not contain significant financial stress.
(3) If the validation process reveals any material problems with the initial margin model, the covered swap entity must promptly notify [Agency] of the problems, describe to [Agency] any remedial actions being taken, and adjust the initial margin model to ensure an appropriately conservative amount of required initial margin is being calculated.
(4) The covered swap entity must have an internal audit function independent of business-line management and the risk control unit that at least annually assesses the effectiveness of the controls supporting the covered swap entity's initial margin model measurement systems, including the activities of the business trading units and risk control unit, compliance with policies and procedures, and calculation of the covered swap entity's initial margin requirements under this [part]. At least annually, the internal audit function must report its findings to the covered swap entity's board of directors or a committee thereof.
(g)
(h)
(a)
(b) For purposes of this section, a
(1) An entity organized under the laws of the United States or any State (including a U.S. branch, agency, or subsidiary of a foreign bank) or a natural person who is a resident of the United States;
(2) A branch or office of an entity organized under the laws of the United States or any State; or
(3) A swap entity that is a subsidiary of an entity that is organized under the laws of the United States or any State.
(c) For purposes of this section, a
(1) An entity organized under the laws of the United States or any State, including a U.S. branch, agency, or subsidiary of a foreign bank;
(2) A branch or office of an entity organized under the laws of the United States or any State; or
(3) An entity that is a subsidiary of an entity that is organized under the laws of the United States or any State.
(d)
(2)
(3)
(i) The covered swap entity's obligations under the non-cleared swap or non-cleared security-based swap do not have a guarantee from:
(A) An entity organized under the laws of the United States or any State (other than a U.S. branch or agency of a foreign bank) or a natural person who is a resident of the United States; or
(B) A branch or office of an entity organized under the laws of the United States or any State; and
(ii) The covered swap entity is:
(A) A foreign covered swap entity;
(B) A U.S. branch or agency of a foreign bank; or
(C) An entity that is not organized under the laws of the United States or any State and is a subsidiary of a depository institution, Edge corporation, or agreement corporation.
(4)
(i) An entity organized under the laws of the United States or any State (including a U.S. branch, agency, or subsidiary of a foreign bank) or a natural person who is a resident of the United States; or
(ii) A branch or office of an entity organized under the laws of the United States or any State.
(e)
(i) The scope and objectives of the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps;
(ii) The specific provisions of the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps that govern:
(A) The scope of transactions covered;
(B) The determination of the amount of initial margin and variation margin required and how that amount is calculated;
(C) The timing of margin requirements;
(D) Any documentation requirements;
(E) The forms of eligible collateral;
(F) Any segregation and rehypothecation requirements; and
(G) The approval process and standards for models used in calculating initial margin and variation margin;
(iii) The supervisory compliance program and enforcement authority exercised by a foreign financial regulatory authority or authorities in such system to support its oversight of the application of the non-cleared swap or non-cleared security-based swap regulatory framework and how that framework applies to the non-cleared swaps or non-cleared security-based swaps of the covered swap entity; and
(iv) Any other descriptions and documentation that the prudential regulators determine are appropriate.
(2) A covered swap entity described in paragraph (d)(3) of this section may make a request under this section only if the non-cleared swap or non-cleared security-based swap activities of the covered swap entity are directly supervised by the authorities administering the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps.
(f)
(1) A foreign branch of a covered swap entity that is a depository institution; or
(2) A covered swap entity that is not organized under the laws of the United States or any State and is a subsidiary of a depository institution, Edge corporation, or agreement corporation, if:
(i) Inherent limitations in the legal or operational infrastructure in the foreign jurisdiction make it impracticable for the covered swap entity and the counterparty to post any form of eligible initial margin collateral recognized pursuant to § __.6(b) in compliance with the segregation requirements of § __.7;
(ii) The covered swap entity is subject to foreign regulatory restrictions that require the covered swap entity to transact in the non-cleared swap or non-cleared security-based swap with the counterparty through an establishment within the foreign jurisdiction and do not accommodate the posting of collateral for the non-cleared swap or non-cleared security-based swap outside the jurisdiction;
(iii) The counterparty to the non-cleared swap or non-cleared security-based swap is not, and the counterparty's obligations under the non-cleared swap or non-cleared security-based swap do not have a guarantee from:
(A) An entity organized under the laws of the United States or any State (including a U.S. branch, agency, or subsidiary of a foreign bank) or a natural person who is a resident of the United States; or
(B) A branch or office of an entity organized under the laws of the United States or any State;
(iv) The covered swap entity collects initial margin for the non-cleared swap or non-cleared security-based swap in accordance with § __.3(a) in the form of cash pursuant to § __.6(b)(1), and posts and collects variation margin in accordance with § __.4(a) in the form of cash pursuant to § __.6(b)(1); and
(v) [The Agency] provides the covered swap entity with prior written approval for the covered swap entity's reliance on this paragraph (f) for the foreign jurisdiction.
(g)
A covered swap entity shall execute trading documentation with each counterparty that is either a swap entity or financial end user regarding credit support arrangements that:
(a) Provides the covered swap entity and its counterparty with the contractual right to collect and post initial margin and variation margin in such amounts, in such form, and under such circumstances as are required by this [part]; and
(b) Specifies:
(1) The methods, procedures, rules, and inputs for determining the value of each non-cleared swap or non-cleared security-based swap for purposes of calculating variation margin requirements; and
(2) The procedures by which any disputes concerning the valuation of non-cleared swaps or non-cleared security-based swaps, or the valuation of assets collected or posted as initial margin or variation margin, may be resolved; and
(c) Describes the methods, procedures, rules, and inputs used to calculate initial margin for non-cleared swaps and non-cleared security based swaps entered into between the covered swap entity and the counterparty.
(a)
(b)
(2)
(c)
(d)
(e)
(2)
(f)
Administrative practice and procedure, Capital, Margin requirements, National Banks, Federal Savings Associations, Reporting and recordkeeping requirements, Risk.
Administrative practice and procedure, Banks and banking, Capital, Foreign banking, Holding companies, Margin requirements, Reporting and recordkeeping requirements, Risk.
Administrative practice and procedure, Banks, Holding companies, Margin Requirements, Capital, Reporting and recordkeeping requirements, Savings associations, Risk.
Accounting, Agriculture, Banks, Banking, Capital, Cooperatives, Credit, Margin requirements, Reporting and recordkeeping requirements, Risk, Rural areas, Swaps.
Government-sponsored enterprises, Mortgages, Securities.
The adoption of the common rules by the agencies, as modified by agency-specific text, is set forth below:
For the reasons stated in the Common Preamble and under the authority of 12 U.S.C. 93a and 5412(b)(2)(B), the Office of the Comptroller of the Currency amends chapter I of title 12, Code of Federal Regulations, as follows:
7 U.S.C. 6s(e), 12 U.S.C. 1
(a)
(b)
(c)
A covered swap entity shall comply with:
(a) In the case of a covered swap entity that is a national bank or Federal savings association, the minimum capital requirements as generally provided 12 CFR part 3.
(b) In the case of a covered swap entity that is a Federal branch or agency of a foreign bank, the capital adequacy guidelines applicable as generally provided under 12 CFR 28.14.
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 15 U.S.C. 8305, 12 U.S.C. 221
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 221
(a)
(b)
(c)
(1) State member bank (as defined in 12 CFR 208.2(g));
(2) Bank holding company (as defined in 12 U.S.C. 1841);
(3) Savings and loan holding company (as defined in 12 U.S.C. 1467a);
(4) Foreign banking organization (as defined in 12 CFR 211.21(o));
(5) Foreign bank that does not operate an insured branch;
(6) State branch or state agency of a foreign bank (as defined in 12 U.S.C. 3101(b)(11) and (12));
(7) Edge or agreement corporation (as defined in 12 CFR 211.1(c)(2) and (3)); or
(8) Covered swap entity as determined by the Board. Covered swap entity would not include an affiliate of an entity listed in paragraphs (1) through (7) of this definition for which the Office of the Comptroller of the Currency or the Federal Deposit Insurance Corporation is the prudential regulator or that is required to be registered with the U.S. Commodity Futures Trading Commission as a swap dealer or major swap participant or with the U.S. Securities and Exchange Commission as a security-based swap dealer or major security-based swap participant.
A covered swap entity shall comply with:
(a) In the case of a covered swap entity that is a state member bank (as defined in 12 CFR 208.2(g)), the provisions of the Board's Regulation Q (12 CFR part 217) applicable to the state member bank;
(b) In the case of a covered swap entity that is a bank holding company (as defined in 12 U.S.C. 1842) or a savings and loan holding company (as defined in 12 U.S.C. 1467a), the provisions of the Board's Regulation Q (12 CFR part 217) applicable to the covered swap entity;
(c) In the case of a covered swap entity that is a foreign banking organization (as defined in 12 CFR 211.21(o)), a U.S. intermediate holding company subsidiary of a foreign banking organization (as defined in 12 CFR 252.3(y)) or any state branch or state agency of a foreign bank (as defined in 12 U.S.C. 3101(b)(11) and (12)), the capital standards that are applicable to such covered swap entity under § 225.2(r)(3) of the Board's Regulation Y (12 CFR 225.2(r)(3)) or the Board's Regulation YY (12 CFR part 252); and
(d) In the case of a covered swap entity that is an Edge or agreement corporation (as defined in 12 CFR 211.1(c)(2) and (3)), the capital standards applicable to an Edge corporation under § 211.12(c) of the Board's Regulation K (12 CFR 211.12(c)) and to an agreement corporation under §§ 211.5(g) and 211.12(c) of the Board's Regulation K (12 CFR 211.5(g) and 211.12(c)).
For the reasons set forth in the
12 U.S.C. 1813(q), 1818, 1819, and 3108; 7 U.S.C. 2(c)(2)(E), 27
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), and 12 U.S.C. 1818 and 12 U.S.C. 1819(a)(Tenth), 12 U.S.C.1813(q), 1818, 1819, and 3108.
(a)
(b)
(c)
A covered swap entity shall comply with the capital requirements that are applicable to the covered swap entity under part 324 of this chapter.
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 2154, 12 U.S.C. 2243, 12 U.S.C. 2252, and 12 U.S.C. 2279bb-1.
(a)
(b)
(c)
A covered swap entity shall comply with:
(a) In the case of the Federal Agricultural Mortgage Corporation, the capital adequacy regulations set forth in part 652 of this chapter; and
(b) In the case of any Farm Credit System institution other than the Federal Agricultural Mortgage Corporation, the capital regulations set forth in part 615 of this chapter.
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 4513 and 12 U.S.C. 4526(a).
(a)
(b)
(c)
A covered swap entity shall comply with the capital levels or such other amounts applicable to it as required by the Director of FHFA pursuant to 12 U.S.C. 4611.
By order of the Board of Directors.
Office of the Comptroller of the Currency, Treasury (“OCC”); Board of Governors of the Federal Reserve System (“Board”); Federal Deposit Insurance Corporation (“FDIC”); Farm Credit Administration (“FCA”); and the Federal Housing Finance Agency (“FHFA”).
Interim final rule and request for comment.
The OCC, Board, FDIC, FCA, and FHFA (each an “Agency” and, collectively, the “Agencies”) are adopting and invite comment on an interim final rule that will exempt certain non-cleared swaps and non-cleared security-based swaps with certain counterparties that qualify for an exception or exemption from clearing from the initial and variation margin requirements promulgated under sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or the “Act”). This interim final rule implements Title III of the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”), which exempts from the Agencies' swap margin rules non-cleared swaps and non-cleared security-based swaps in which a counterparty qualifies for an exemption or exception from clearing under the Dodd-Frank Act. This interim final rule is a companion rule to the final rules adopted by the Agencies to implement section 731 and 764 of the Dodd-Frank Act.
The interim final rule is effective April 1, 2016. Comments should be received on or before January 31, 2016.
Interested parties are encouraged to submit written comments jointly to all of the Agencies. Commenters are encouraged to use the title “Margin and Capital Requirements for Covered Swap Entities” to facilitate the organization and distribution of comments among the Agencies.
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All comments received by the deadline will be posted for public inspection without change, including any personal information you provide, such as your name, address, email address and telephone number on the FHFA Web site at
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You may review copies of all comments we receive at our office in McLean, Virginia or on our Web site at
The Dodd-Frank Act was enacted on July 21, 2010.
Sections 731 and 764 of the Dodd-Frank Act require the Agencies to adopt joint rules that apply to all swap entities for which any one of the Agencies is the prudential regulator,
The capital and margin requirements under sections 731 and 764 of the Dodd-Frank Act apply to non-cleared swaps and complement other provisions of the Dodd-Frank Act that require the CFTC and SEC to make determinations as to whether certain swaps or security-based swaps, or a group, category, or class of such transactions, should be required to be cleared.
The clearing requirements, however, do not apply to an entity that is not a financial entity, is using a swap or security-based swap to hedge or mitigate commercial risk, and notifies the applicable Commission, in a manner set forth by that Commission, how it generally meets its financial obligations.
Sections 731 and 764 direct the Agencies to impose initial and variation margin requirements on all swaps that are not cleared. Under the proposed rule, the Agencies distinguished among different types of counterparties on the basis of risk,
On January 12, 2015, President Obama signed into law TRIPRA.
The Agencies are therefore promulgating this interim final rule with request for comment. The proposed rule of September 2014 would have allowed covered swap entities to
As noted above, swaps may be non-cleared swaps either because (i) there is an exemption or exception from clearing available; or (ii) the CFTC or SEC, as applicable, has not determined that such swap or security-based swap is required to be cleared. The exclusions and exemptions from the joint final margin rule described below will apply to both categories of non-cleared swaps when they involve a counterparty that meets the requirements for an exception or exemption from clearing (
Clearing requirements pursuant to the Commodity Exchange Act began to take effect with respect to certain interest rate and credit default swap indices swaps on March 11, 2013.
This interim final rule, which adds a new § _.1(d) to the joint final rule, adopts the statutory exemptions and exceptions as required under TRIPRA. TRIPRA provides that the initial and variation margin requirements do not apply to the non-cleared swaps and non-cleared security-based swaps of three categories of counterparties. In particular, section 302 of TRIPRA amends sections 731 and 764 so that initial and variation margin requirements will not apply to a swap or security-based swap in which a counterparty (to a covered swap entity) is:
(1) A non-financial entity (including small financial institution and a captive finance company) that qualifies for the clearing exception under section 2(h)(7)(A) of the Commodity Exchange Act or section 3C(g)(1) of the Securities Exchange Act;
(2) A cooperative entity that qualifies for an exemption from the clearing requirements issued under section 4(c)(1) of the Commodity Exchange Act; or
(3) A treasury affiliate acting as agent that satisfies the criteria for an exception from clearing in section 2(h)(7)(D) of the Commodity Exchange Act or section 3C(g)(4) of the Securities Exchange Act.
TRIPRA provides that the initial and variation margin requirements of the joint final rule shall not apply to a non-cleared swap in which a counterparty qualifies for an exception under section 2(h)(7)(A) of the Commodity Exchange Act or section 3C(g)(1) of the Securities Exchange Act.
Similarly, section 3C(g) provides that the SEC shall consider whether to exempt small banks, savings associations, Farm Credit System institutions, and credit unions with total assets of $10 billion or less.
TRIPRA provides that the initial and variation margin requirements shall not apply to a non-cleared swap in which a counterparty satisfies the criteria in section 2(h)(7)(D) of the Commodity Exchange Act or section 3C(g)(4) of the Securities Exchange Act. These sections provide that, where a person qualifies for an exception from the clearing requirements, an affiliate of that person (including an affiliate predominantly engaged in providing financing for the purchase of the merchandise or manufactured goods of the person) may qualify for the exception as well, but only if the affiliate is acting on behalf of the person and as an agent and uses the swap to hedge or mitigate the commercial risk of the person or other affiliate of the person that is not a financial entity (“treasury affiliate acting as agent”).
TRIPRA provides that the initial and variation margin requirements shall not apply to a non-cleared swap in which a counterparty qualifies for an exemption issued under section 4(c)(1) of the Commodity Exchange Act from the clearing requirements of section 2(h)(1)(A) of the Commodity Exchange Act for cooperative entities as defined in such exemption.
The Agencies request comment on all aspects of the interim final rule.
Pursuant to the Administrative Procedure Act (the “APA”), at 5 U.S.C. 553(b)(B), notice and comment are not required prior to the issuance of a final rule if an agency, for good cause, finds that “notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” As discussed above, this interim final rule implements Title III of TRIPRA. In section 303 of TRIPRA, Congress required that the Agencies implement the provisions of Title III by promulgating an interim final rule and seeking public comment on the interim final rule. Given the statutory requirement for an interim final rule, the Agencies find that prior notice and comment in accordance with 5 U.S.C. 553(b) is impracticable. The Agencies are providing, however, an opportunity for comment before the effective date of the interim final rule (April 1, 2016).
Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec. 722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the OCC, Board and FDIC to use plain language in all proposed and final rules published after January 1, 2000. The OCC, Board and FDIC invite your comments on how to make this proposal easier to understand. For example:
• Have we organized the material to suit your needs? If not, how could this material be better organized?
• Are the requirements in the regulation clearly stated? If not, how could the regulation be more clearly stated?
• Does the regulation contain language or jargon that is not clear? If so, which language requires clarification?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes to the format would make the regulation easier to understand?
• What else could we do to make the regulation easier to understand?
Certain provisions of the interim final rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of the PRA, the Agencies may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OMB control number for the OCC is 1557-0251, the FDIC is 3064-0180, and the Board is 7100-0364. The information collection requirements contained in this joint notice of interim final rulemaking have been submitted to OMB for review and approval by the OCC and FDIC under section 3507(d) of the PRA and § 1320.11 of OMB's implementing regulations (5 CFR part 1320). The Board reviewed the interim final rule under the authority delegated to the Board by OMB.
The interim final rule contains requirements subject to the PRA. The reporting requirements are found in § _.1(d). The interim final rule implements statutory language that requires certain swaps of certain counterparties to qualify for a statutory exemption or exception from clearing in order to not be subject to the initial and variation margin requirements of the joint final rule.
Comments are invited on:
(a) Whether the collections of information are necessary for the proper performance of the Agencies' functions, including whether the information has practical utility;
(b) The accuracy of the estimates of the burden of the information collections, including the validity of the methodology and assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on aspects of this notice that may affect reporting or recordkeeping requirements and burden estimates should be sent to the addresses listed in the
The interim final rule implements statutory language that requires certain swaps of certain counterparties to qualify for a statutory exemption or exception from clearing in order to not be subject to the initial and variation margin requirements of the joint final rule. The reporting requirements are found in § _.1(d) pursuant to cross-references to other statutory provisions that set forth the conditions for an exemption from clearing. For example, TRIPRA provides that the initial and variation margin requirements of the joint final rule shall not apply to a non-cleared swap or non-cleared security-based swap in which a counterparty qualifies for an exception under section 2(h)(7)(A) of the Commodity Exchange Act or section 3C(g)(1) of the Securities Exchange Act, which includes certain reporting requirements established by the applicable Commission.
Estimated Burden per Response: § _.1(d)—1 hour.
As explained in detail above, this interim final rule implements section 302 of TRIPRA, which provides that initial and variation margin requirements will not apply to specified non-cleared swaps or non-cleared security-based swaps of certain counterparties (to a covered swap entity). This interim final rule may have an effect on the following types of small entities: (i) Covered swap entities that are subject to the joint final rule's capital and margin requirements; and (ii) certain counterparties (
Under Small Business Administration (the “SBA”) regulations, the finance and insurance sector includes commercial banking, savings institutions, credit unions, other depository credit intermediation and credit card issuing entities (“financial institutions”), which generally are considered “small” if they have assets of $550 million or less.
As described above, this interim final rule implements statutory language that requires certain swaps of certain counterparties to qualify for a statutory exemption or exception from the applicable clearing requirements in order to not be subject to the initial and variation margin requirements of the joint final rule. The reporting requirements are found in § _.1(d) of this interim final rule pursuant to cross-references to other statutory provisions that set forth the conditions for an exemption or exception from clearing. In certain cases, the statutory exemption from clearing and related regulations may require a counterparty to report information, such as how it meets its swaps obligations, to the CFTC or SEC. These counterparties would be required to meet the same notification requirements that are required for an exception or exemption from the relevant CFTC and SEC regulations. Other than this potential overlap of reporting obligations of this interim final rule and the relevant CFTC and SEC regulations, the Board is aware of any other Federal rules that duplicate, overlap, or conflict with this interim final rule. In light of the exemptions provided for the non-cleared swaps and non-cleared security-based swaps of many small entities, the Board does not believe that the interim final rule would have a significant economic impact on a substantial number of small entity counterparties.
Since this interim final rule is required by section 303 of TRIPRA, the Board does not believe that there are any significant alternatives to the rule which would accomplish the stated objectives of the applicable statute. However, the Agencies welcome comment on any significant alternatives that would minimize the impact of the rule on small entities.
In light of the foregoing, the Board does not believe that this interim final rule would have a significant economic impact on a substantial number of small entities.
Using SBA's size standards, as of June 30, 2015, the FDIC supervised 3,357 small entities. The FDIC does not expect any small entity that it supervises is likely to be a covered swap entity because such entities are unlikely to engage in the level of swap activity that would require them to register as a swap entity. Because TRIPRA excludes non-cleared swaps entered into for hedging purposes by a financial institution with total assets of $10 billion or less from the requirement of the final rule, the FDIC expects that when a covered swap entity transactions non-cleared swaps with a small entity supervised by the FDIC, and such swaps are used to hedge the small entity's commercial risk, those swaps with not be subject to the final rule. The FDIC does not expect any small entity that it supervises will engage in non-cleared swaps for purposes other than hedging. Therefore, the FDIC does not believe that the interim final rule results in a significant economic impact on a substantial number of small entities under its supervisory jurisdiction.
The FDIC certifies that the interim final rule does not have a significant economic impact on a substantial
The common text of the interim final rule appears below:
(d)
(i) Qualifies for an exception from clearing under section 2(h)(7)(A) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(7)(A)) and implementing regulations;
(ii) Qualifies for an exemption from clearing under a rule, regulation, or order that the Commodity Futures Trading Commission issued pursuant to its authority under section 4(c)(1) of the Commodity Exchange Act of 1936 (7 U.S.C. 6(c)(1)) concerning cooperative entities that would otherwise be subject to the requirements of section 2(h)(1)(A) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(1)(A)); or
(iii) Satisfies the criteria in section 2(h)(7)(D) of the Commodity Exchange Act of 1936 (7 U.S.C. 2(h)(7)(D)) and implementing regulations.
(2)
(i) Qualifies for an exception from clearing under section 3C(g)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(1)) and implementing regulations; or
(ii) Satisfies the criteria in section 3C(g)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(4)) and implementing regulations.
Administrative practice and procedure, Capital, Margin requirements, National Banks, Federal Savings Associations, Reporting and recordkeeping requirements, Risk.
Administrative practice and procedure, Banks and banking, Capital, Foreign banking, Holding companies, Margin requirements, Reporting and recordkeeping requirements, Risk.
Administrative practice and procedure, Banks, Holding companies, Capital, Margin Requirements, Reporting and recordkeeping requirements, Savings associations Risk.
Accounting, Agriculture, Banks, Banking, Capital, Cooperatives, Credit, Margin requirements, Reporting and recordkeeping requirements, Risk, Rural areas, Swaps.
Government-sponsored enterprises, Mortgages, Securities.
For the reasons set forth in the common preamble and under the authority of 12 U.S.C. 93a and 5412(b)(2)(B), the Office of the Comptroller of the Currency amends chapter I of title 12, Code of Federal Regulations, as follows:
7 U.S.C. 6s(e), 12 U.S.C. 1
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 221
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), and 12 U.S.C. 1818 and 12 U.S.C. 1819(a)(Tenth), 12 U.S.C.1813(q), 1818, 1819, and 3108.
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), and secs. 4.3, 5.9, 5.17, and 8.32 of the Farm Credit Act (12 U.S.C. 2154, 12 U.S.C. 2243, 12 U.S.C. 2252, and 12 U.S.C. 2279bb-1).
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 4513 and 12 U.S.C. 4526(a).
By order of the Board of Directors.
Board of Governors of the Federal Reserve System (Board).
Notice of proposed rulemaking.
The Board is inviting comment on a proposed rule to promote financial stability by improving the resolvability and resiliency of large, interconnected U.S. bank holding companies and the U.S. operations of large, interconnected foreign banking organizations pursuant to section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and related deduction requirements for all banking organizations subject to the Board's capital rules. Under the proposed rule, a U.S. top-tier bank holding company identified by the Board as a global systemically important banking organization (covered BHC) would be required to maintain outstanding a minimum amount of loss-absorbing instruments, including a minimum amount of unsecured long-term debt, and related buffer. Similarly, the proposed rule would require the top-tier U.S. intermediate holding company of a global systemically important foreign banking organization with $50 billion or more in U.S. non-branch assets (covered IHC) to maintain outstanding a minimum amount of intra-group loss-absorbing instruments, including a minimum amount of unsecured long-term debt, and related buffer. The proposed rule would also impose restrictions on the other liabilities that a covered BHC or covered IHC may have outstanding. Finally, the proposed rule would require state member banks, bank holding companies, and savings and loan holding companies that are subject to the Board's capital rules to apply a regulatory capital deduction treatment to their investments in unsecured debt issued by covered BHCs.
Comments should be received by February 1, 2016.
You may submit comments, identified by Docket No. R-1523 and RIN 7100 AE-37, by any of the following methods:
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All public comments will be made available on the Board's Web site at
Constance M. Horsley, Assistant Director, (202) 452-5239, Thomas Boemio, Senior Project Manager, (202) 452-2982, Juan C. Climent, Manager, (202) 872-7526, Felton Booker, Senior Supervisory Financial Analyst, (202) 912-4651, Sean Healey, Senior Financial Analyst, (202) 912-4611, or Mark Savignac, Senior Financial Analyst, (202) 475-7606, Division of Banking Supervision and Regulation; or Laurie Schaffer, Associate General Counsel, (202) 452-2272, Benjamin McDonough, Special Counsel, (202) 452-2036, Jay Schwarz, Senior Counsel, (202) 452-2970, Will Giles, Counsel, (202) 452-3351, Mark Buresh, Senior Attorney, (202) 452-5270, or Greg Frischmann, Senior Attorney, (202) 452-2803, Legal Division, Board of Governors of the Federal Reserve System, 20th and C Streets NW., Washington, DC 20551. For the hearing impaired only, Telecommunications Device for the Deaf (TDD) users may contact (202) 263-4869.
An important objective of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
The Dodd-Frank Act establishes a framework to address the financial stability risks associated with major financial companies. The Act seeks to enhance financial stability through two approaches. First, the Act seeks to reduce major financial companies' probability of failure by requiring the Board to subject them to enhanced capital, liquidity, and other prudential requirements and to heightened supervision.
The Board has made considerable progress in implementing the first approach by reducing the probability that a major financial company will fail. Along with the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), the Board has implemented stronger capital standards
To further enhance firm-specific resiliency during periods of severe stress, the Board has also issued guidance on recovery planning to the most systemically important U.S. banking organizations.
U.S. regulators have also made substantial progress with respect to the second approach by implementing the Dodd-Frank Act's framework for resolution-planning for major financial companies. The Dodd-Frank Act provides significant new authorities to the FDIC and the Board to address the failure of large, interconnected financial companies.
Second, Title II of the Dodd-Frank Act (Title II) establishes an alternative resolution framework for the largest financial companies, the Orderly Liquidation Authority. In general, if a major U.S. bank holding company or non-bank financial company were to fail, it would be resolved under the U.S. Bankruptcy Code.
Since 2012, the largest bank holding companies and foreign banking organizations with U.S. operations have submitted annual resolution plans to the
Resolution of large financial firms will involve either a single-point-of-entry (SPOE) resolution strategy or a multiple-point-of-entry (MPOE) resolution strategy.
In an SPOE resolution of a banking organization, only the top-tier bank holding company would enter a resolution proceeding. The losses that caused the banking organization to fail would be passed up from the subsidiaries that incurred the losses and would then be imposed on the equity holders and unsecured creditors of the holding company, which would have the effect of recapitalizing the subsidiaries of the banking organization. An SPOE resolution could avoid losses to the third-party creditors of the subsidiaries and could thereby allow the subsidiaries to continue normal operations, without entering resolution or taking actions (such as asset firesales) that could pose a risk to the financial stability of the United States. The expectation that the holding company's equity holders and unsecured creditors would absorb the banking organization's losses in the event of its failure would also help to maintain the confidence of the operating subsidiaries' creditors and counterparties, reducing their incentive to engage in potentially destabilizing funding runs. An SPOE resolution would avoid the need for separate proceedings for separate legal entities run by separate authorities across multiple jurisdictions and the associated destabilizing complexity.
Certain structural features of the U.S. GSIBs facilitate SPOE resolution. In the United States, the top-tier parent company of a large banking organization generally does not itself engage in material operations. Rather, it generally acts primarily as a holding company, by, for example, measuring and managing the consolidated risks of the organization, undertaking capital and liquidity planning, coordinating the operations of its subsidiaries, and raising equity capital and long-term debt to fund those operations. Its assets therefore consist largely of cash, liquid securities, and equity and debt investments in its subsidiaries. As a result of this organizational structure, in the context of SPOE resolution the liabilities of the parent holding company are generally “structurally subordinated” to the liabilities of the operating subsidiaries.
The alternative to an SPOE resolution is a multiple-point-of-entry (MPOE) resolution. An MPOE resolution would entail separate resolutions of different legal entities within the financial firm and could potentially be executed by multiple resolution authorities across multiple jurisdictions. The SPOE approach to resolution appears to offer substantial advantages, because it facilitates the continued operations of subsidiaries of a GSIB, reducing the material risk that the failure of the organization could have on U.S. financial stability. U.S. regulators nevertheless are cognizant of the need to prepare for other plausible contingencies, including the MPOE resolution of a GSIB. While this proposal is primarily focused on implementing the SPOE resolution strategy, it would also substantially improve the prospects for a successful MPOE resolution of a GSIB by requiring U.S. GSIBs and the IHCs of foreign GSIBs to maintain substantially more loss-absorbing capacity.
The Board is inviting comment on this notice of proposed rulemaking to improve the resolvability and resiliency of U.S. banking organizations. The proposal would require the parent holding companies of U.S. GSIBs to maintain outstanding minimum levels of total loss-absorbing capacity and long-term unsecured debt, and a related buffer. The proposal would also require the top-tier U.S. intermediate holding companies of foreign GSIBs to maintain outstanding minimum levels of total loss-absorbing capacity and long-term unsecured debt instruments issued to their foreign parent company, and related buffer. The proposal would subject the operations of the parent holding companies of U.S. GSIBs and the top-tier U.S. intermediate holding companies of foreign GSIBs to “clean holding company” limitations to further improve their resolvability and the resiliency of their operating subsidiaries. Finally, the proposal would require banking organizations subject to the Board's capital requirements to make certain deductions from capital.
This proposal would further the goals of improving the resiliency and resolvability of GSIBs. Separately, the Board and the FDIC are continuing to work to mitigate the resolvability risks related to potential disorderly unwinds of financial contracts. Other actions for consideration include ensuring the adequacy of “internal bail-in” mechanisms through which operating subsidiaries can pass losses up to their parent holding company and the holding company can recapitalize the subsidiaries.
Under this proposal, a “covered BHC” would be required to maintain outstanding minimum levels of eligible external total loss-absorbing capacity (external TLAC requirement) and eligible external long-term debt (external LTD requirement). The term “external” refers to the fact that the requirement would apply to loss-absorbing instruments issued by the covered BHC to third-party investors, and the instrument would be used to pass losses from the banking organization to those investors in case of failure. This is in contrast to “internal” loss-absorbing capacity, which could be used to transfer losses among legal entities within a banking organization (for instance, from the operating subsidiaries to the parent holding company).
The term “covered BHC” would be defined to include any U.S. top-tier bank holding company identified as a GSIB under the Board's rule establishing risk-based capital surcharges for GSIBs (“GSIB surcharge rule”).
Under the external LTD requirement, a covered BHC would be required to maintain outstanding eligible external long-term debt instruments (“eligible external LTD”) in an amount not less than the greater of 6 percent plus the surcharge applicable under the GSIB surcharge rule (expressed as a percentage) of total risk-weighted assets and 4.5 percent of total leverage exposure.
A covered BHC's eligible external TLAC would be defined to be the sum of (a) the tier 1 regulatory capital of the covered BHC issued directly by the covered BHC and (b) the covered BHC's eligible external LTD, as defined below.
A covered BHC's eligible external LTD would generally be defined to be debt that is issued directly by the covered BHC, is unsecured, is “plain vanilla,”
Under this proposal, a “covered IHC” would be required to maintain outstanding minimum levels of eligible internal total loss-absorbing capacity (“internal TLAC requirement”) and eligible internal long-term debt (“internal LTD requirement”). The term “internal” refers to the fact that these instruments would be required to be issued internally within the foreign banking organization, from the covered IHC to a foreign parent entity. The term “covered IHC” would be defined to include any U.S. intermediate holding company that (a) is required to be formed under the Board's enhanced prudential standards rule
Under the internal TLAC requirement, the amount of eligible internal total loss-absorbing capacity (“eligible internal TLAC”) that a covered IHC would be required to maintain outstanding would depend on whether the covered IHC (or any of its subsidiaries) is expected to go into resolution in a failure scenario, rather than being maintained as a going concern while a foreign parent entity is instead resolved. In general, this means that the stringency of the internal TLAC and LTD requirements for a given covered IHC would be a function of whether the foreign GSIB parent of the covered IHC has an SPOE or an MPOE resolution strategy.
Covered IHCs that are not expected to enter resolution themselves would be required to maintain eligible internal TLAC in an amount not less than the greater of: (a) 16 percent of the covered IHC's total risk-weighted assets;
Covered IHCs that are expected to enter resolution themselves would be required to maintain outstanding eligible internal TLAC in an amount not less than the greater of: (a) 18 percent of the covered IHC's total risk-weighted assets;
For all covered IHCs, an internal TLAC buffer that is similar to the capital conservation buffer in the Board's Regulation Q would apply in addition to the risk-weighted assets component of the internal TLAC requirement.
Under the internal LTD requirement, a covered IHC would be required to maintain outstanding eligible internal long-term debt instruments (“eligible internal LTD”) in an amount not less than the greater of: (a) 7 percent of total risk-weighted assets; (b) 3 percent of the total leverage exposure (if applicable); and (c) 4 percent of average total consolidated assets, as computed for purposes of the U.S. tier 1 leverage ratio.
A covered IHC's eligible internal TLAC would generally be defined to be the sum of (a) the tier 1 regulatory capital issued from the covered IHC to a foreign parent entity that controls the covered IHC and (b) the covered IHC's eligible internal LTD, as defined below.
A covered IHC's eligible internal LTD would generally be subject to the same requirements as would apply to eligible external LTD: It would be required to be debt that is issued directly from the covered IHC, is unsecured, is plain vanilla, and is governed by U.S. law. Eligible internal LTD with a remaining maturity of between one and two years would be subject to a 50 percent haircut for purposes of the internal LTD requirement, and eligible internal LTD with a remaining maturity of less than one year would not count toward the internal LTD requirement.
However, several features distinguish eligible internal LTD from eligible external LTD: It would be required to be issued to a parent foreign entity that controls the covered IHC, to be contractually subordinated to all third-party liabilities of the covered IHC, and to include a contractual trigger pursuant
The Board is proposing to prohibit or limit covered BHCs from directly entering into certain financial arrangements that could impede an entity's orderly resolution. In an SPOE resolution of a U.S. GSIB, the covered BHC will go into a resolution proceeding while its subsidiaries continue their normal operations. These prohibitions and limitations would support the orderly resolution of a covered BHC, whether in an SPOE resolution or in an MPOE resolution involving the resolution of the covered BHC. The proposed requirements would also enhance the resiliency of the U.S. GSIB by reducing the covered BHC's complexity and reliance on short-term funding.
Under the Board's clean holding company proposal, a covered BHC would be prohibited from issuing short-term debt instruments to third parties (including deposits); entering into “qualified financial contracts” (QFCs) with third parties; having liabilities that are subject to “upstream guarantees” from the covered BHC's subsidiaries or that are subject to contractual offset rights for its subsidiaries' creditors; or issuing guarantees of its subsidiaries' liabilities, if the issuance of the guarantee would result in the covered BHC's insolvency or entry into resolution operating as a default event on the part of the subsidiary. Additionally, the proposal would cap the value of a covered BHC's liabilities (other than those related to eligible external TLAC and eligible external LTD) that can be pari passu with or junior to its eligible external LTD at 5 percent of the value of its eligible external TLAC. Finally, the proposal would require covered BHCs to make certain public disclosures of the fact that their unsecured debt would be expected to absorb losses ahead of other liabilities, including the liabilities of the covered BHC's subsidiaries, in a failure scenario.
An SPOE resolution of a foreign GSIB in its home jurisdiction would allow the GSIB's covered IHC to continue operating without itself entering into a resolution proceeding. However, to prepare for a scenario in which a covered IHC would enter U.S. resolution proceedings, the Board is proposing to prohibit covered IHCs from entering into certain financial arrangements that can impede such a resolution.
The SPOE resolution strategy assumes (a) that losses will be passed up from the subsidiaries that initially incur them to the covered BHC or covered IHC and (b) that they then will be passed on to either the external TLAC holders (in the case of a covered BHC) or a foreign parent entity (in the case of a covered IHC). This proposal would work to satisfy the second of these assumptions, but it does not address the first. As discussed further below, however, the Board is seeking comment on whether, and if so how, the Board should regulate the mechanisms used by a covered BHC or covered IHC to transfer losses up from the operating subsidiaries that incur them to the covered BHC or covered IHC.
To limit the potential for financial sector contagion in the event of the failure of a covered BHC, state member banks, certain bank holding companies and savings and loan holding companies with total consolidated assets of at least $1 billion, and intermediate holding companies formed pursuant to the Board's enhanced prudential standards for foreign banking organizations would be required to apply a regulatory capital deduction treatment to any investments in unsecured debt instruments issued by covered BHCs (including unsecured debt instruments that do not qualify as eligible external LTD).
In developing this proposal, the Board consulted with the FDIC, the Financial Stability Oversight Council (Council), and other U.S. financial regulatory agencies. The proposal reflects input that the Board received during this consultation process. The Board also intends to consult with the FDIC, the Council, and other financial regulatory agencies after it reviews comments on the proposal. Furthermore, the Board has consulted with, and expects to continue to consult with, foreign financial regulatory authorities regarding this proposal and the establishment of other standards that would maximize the prospects for the cooperative and orderly cross-border resolution of failed GSIBs.
In 2013, the G20 Leaders called on the FSB to develop proposals on the adequacy of the loss-absorbing capacity of global systemically important financial institutions (“SIFIs”).
This proposal is generally consistent with the FSB's proposed standard, although it includes a required LTD component that is more stringent than the expectation in the FSB's proposed standard.
The Board considered whether to structure this proposal solely as a TLAC requirement—that is, as a single minimum requirement that could be satisfied by any mixture of capital and eligible LTD—without a specific LTD requirement. In the absence of an LTD requirement, a TLAC requirement would permit each covered firm to reduce its expected systemic impact
This proposal includes a separate LTD requirement in order to address the too-big-to-fail problem. Unlike existing equity, LTD can be used as a fresh source of capital subsequent to failure. Imposing an LTD requirement would help to ensure that a covered firm would have a known and observable quantity of loss-absorbing capacity at the point of failure. Unlike common equity, that loss-absorbing capacity would not be at substantial risk of volatility or depletion before the covered BHC is placed into a resolution proceeding. Thus, the proposed LTD requirements would more assuredly enhance the prospects for the successful resolution of a failed GSIB and thereby better address the too-big-to-fail problem than would TLAC requirements alone.
The Board is issuing this proposal under the authority provided by section 165 of the Dodd-Frank Act.
The enhanced prudential standards in this proposal are appropriate because they are intended to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress, failure, or ongoing activities of a GSIB. In particular, the proposed requirements would improve the resolvability of U.S. GSIBs under either the U.S. Bankruptcy Code or Title II and improve their resiliency. The proposed requirements would also improve the resiliency of covered IHCs and their subsidiaries, and thereby increase the likelihood that a failed foreign GSIB with significant U.S. operations would be successfully resolved under an SPOE approach without the failure of the U.S. subsidiaries or, failing that, that the foreign GSIB's U.S. operations could be separately resolved in an orderly manner.
In addition to the authority identified above, section 165 of the Dodd-Frank Act also authorizes the Board to establish “enhanced public disclosures” and “short-term debt limits.”
Finally, the Board has tailored this proposal to apply only to those companies whose disorderly resolution would likely pose the greatest risk to the financial stability of the United States: The U.S. GSIBs and the U.S. intermediate holding companies of foreign GSIBs.
The proposed rule would apply to all “covered BHCs.” The term “covered BHC” would be defined to include any U.S. top-tier bank holding company identified as a GSIB under the Board's GSIB surcharge rule.
Accordingly, the methodology provides a tool for identifying as GSIBs those banking organizations that pose elevated risks. The proposal's focus on GSIBs is in keeping with the Dodd-Frank Act's mandate that more stringent prudential standards be applied to the most systemically important bank holding companies.
Under the GSIB surcharge rule's methodology, eight U.S. bank holding companies would currently be identified as GSIBs. Those eight top-tier bank holding companies would therefore be covered BHCs under this proposal.
Under the proposal's external TLAC requirement, a covered BHC would be required to maintain outstanding eligible external TLAC in an amount not less than the greater of 18 percent of the covered BHC's total risk-weighted assets
The risk-weighted assets component of the external TLAC requirement would be phased in as follows: It would be equal to 16 percent of the covered BHC's risk-weighted assets beginning on January 1, 2019, and would be equal to 18 percent of the covered BHC's risk-weighted assets beginning on January 1, 2022.
Under the proposal's external LTD requirement, a covered BHC would be required to maintain outstanding eligible external LTD in an amount not less than the greater of 6 percent plus the surcharge applicable under the GSIB
The calibration of the proposed external TLAC requirement is based in part on an analysis of the historical loss experience of major financial institutions during financial crises. First, a targeted analysis of losses of U.S. financial firms during the 2007-2009 financial crisis was performed. The analysis considered the loss experiences of the 19 bank holding companies that participated in the Supervisory Capital Assessment Program (SCAP).
The analysis found that the bank holding company with the most severe loss experience incurred estimated losses and recapitalization needs of roughly 19 percent of risk-weighted assets. The risk-weighted assets component of the proposed external TLAC requirement is consistent with this high-water mark from the global financial crisis. This historical analysis provides further confirmation of the appropriateness of the proposed calibration.
Additionally, a quantitative study of the experiences of 13 U.S. and foreign GSIBs and other major financial firms that incurred substantial losses during the 2007-2009 financial crisis and the Japanese financial crisis of the 1990s was conducted. With respect to each firm, the study considered both the peak losses incurred by the firm (measured in terms of total comprehensive income) over the loss period and public-sector capital support, incorporating both direct capital injections and asset relief transactions.
The study examined losses and recapitalization in terms of both risk-weighted assets and total assets, which is relevant to the total leverage exposure component of the external TLAC requirement. The proposed calibration of the external TLAC requirement is consistent with the findings of this historical survey. The risk-weighted assets component of the proposed requirement exceeds a substantial majority of the loss-and-recapitalization experiences surveyed, while the total leverage exposure component of the proposed requirement is slightly higher than the most severe experience surveyed. These are appropriate results in light of the Dodd-Frank Act's focus on the mitigation of risks that could arise from the material financial distress or failure of the largest, most systemic financial institutions.
The proposed external LTD requirement was calibrated primarily on the basis of a “capital refill” framework. According to the capital refill framework, the objective of the external LTD requirement is to ensure that each covered BHC has a minimum amount of eligible external LTD such that, if the covered BHC's going-concern capital is depleted and the covered BHC fails and enters resolution, the eligible external LTD will be sufficient to absorb losses and fully recapitalize the covered BHC by replenishing its going-concern capital. Fulfilling this objective is vital to the use of eligible external LTD to facilitate the orderly resolution of a covered BHC, because it is a prerequisite to an orderly SPOE resolution that the resolved firm have sufficient going-concern capital post-resolution to maintain market confidence in its solvency so that other market participants continue to do business with it.
The proposed external LTD requirement was calibrated in accordance with this framework. In terms of risk-weighted assets, a covered BHC's common equity tier 1 capital level is an amount equal to a minimum requirement of 4.5 percent of risk-weighted assets plus a capital conservation buffer, which is itself equal to 2.5 percent plus a firm-specific surcharge determined under the GSIB surcharge rule (expressed as a percentage) of risk-weighted assets.
Under the proposal, a covered BHC would be subject to an external LTD requirement equal to 7 percent of risk-weighted assets plus the applicable GSIB surcharge minus a 1 percentage point allowance for balance-sheet depletion. This results in a requirement of 6 percent plus the applicable GSIB surcharge (expressed as a percentage) of risk-weighted assets. Without the 1 percentage point allowance for balance-sheet depletion, the risk-weighted assets component of a covered BHC's external LTD requirement would require it to maintain outstanding an amount of eligible external LTD equal to its common equity tier 1 capital minimum requirement plus buffers. The 1 percentage point allowance for balance-sheet depletion is appropriate under the capital refill theory because the losses that the covered BHC incurs leading to its failure will deplete its risk-weighted assets as well as its capital. Accordingly, the pre-failure losses would result in a smaller balance sheet for the covered BHC at the point of failure, meaning that a smaller dollar amount of capital would be required to restore the covered BHC's pre-stress capital level. Although the specific amount of eligible external LTD necessary to restore a covered BHC's pre-stress capital level in light of the diminished size of its post-failure balance sheet will vary slightly in light of the varying GSIB surcharges applicable to the covered BHCs, the Board is proposing to apply a uniform 1 percentage point allowance for balance-sheet depletion so as to avoid undue regulatory complexity.
The application of the capital refill framework to the leverage ratio component of the external LTD requirement is analogous. Under the enhanced supplementary leverage ratio applicable to U.S. GSIBs, a covered BHC's tier 1 leverage ratio minimum plus buffer is 5 percent of its total
The proposed calibration of the external LTD requirement was also informed by an analysis of the extreme loss tail of the distribution of income for large U.S. bank holding companies over the past several decades. This analysis closely resembled the analysis that informed the calibration of the minimum risk-based capital requirements in the revised capital framework, but it involved looking farther into the tail of the income distribution.
Question 3: The Board invites comment on all aspects of the calibration of the proposed external TLAC and LTD requirements. In particular, the Board invites comment on the probable impact of the proposed requirements on covered BHCs and on markets for senior unsecured debt instruments.
Under the proposal, a covered BHC's eligible external TLAC would be defined to be the sum of (a) the tier 1 regulatory capital (common equity tier 1 capital and additional tier 1 capital, excluding any tier 1 minority interests) issued directly by the covered BHC and (b) the covered BHC's eligible external LTD, as defined below.
The requirement that regulatory capital be issued out of the covered BHC itself (rather than by a subsidiary) is intended to ensure that the total required amount of loss-absorbing capacity would be available to absorb losses incurred anywhere in the banking organization (through downstreaming of resources from the BHC to the subsidiary that has incurred the losses, if necessary). Regulatory capital that is issued by a subsidiary lacks this key feature of being available to flexibly absorb losses incurred by other subsidiaries.
An external TLAC buffer would apply in addition to the risk-weighted assets component of the external TLAC requirement. A covered BHC's external TLAC buffer would be equal to the sum of 2.5 percent plus the GSIB surcharge applicable to the covered BHC under method 1 of the GSIB surcharge rule
In order to determine whether it has met the external TLAC requirement and the external TLAC buffer, a covered BHC would calculate an outstanding TLAC amount and an external TLAC buffer level. In keeping with the definition of eligible external TLAC, a covered BHC's outstanding TLAC amount would be equal to the sum of its common equity tier 1 capital, its additional tier 1 capital, and its eligible external LTD. The covered BHC's external TLAC buffer level would be equal to the sum of its common equity tier 1 capital ratio minus that portion (if any) of its common equity tier 1 capital ratio (expressed as a percentage) that is used to meet the risk-weighted assets
In order to comply with the external TLAC requirement, the covered BHC would need to have an outstanding TLAC amount sufficient to meet both the risk-weighted assets component and the total leverage exposure component. In order to avoid limitations on capital distributions and discretionary bonus payments pursuant to Table 1, the covered BHC would also have to have an external TLAC buffer level in excess of its external TLAC buffer.
For example, suppose that a covered BHC called “BHC A” has a common equity tier 1 capital ratio of 10 percent, an additional tier 1 capital ratio of 2 percent, and an eligible external LTD amount equal to 8 percent of its risk-weighted assets. Suppose further that BHC A is subject to an external TLAC requirement of 18 percent and an external TLAC buffer of 5 percent of risk-weighted assets. BHC A would meet its external TLAC requirement because the sum of its common equity tier 1 capital ratio, its additional tier 1 capital ratio, and the ratio of its eligible external TLAC to risk-weighted assets would be equal to 20, which is greater than 18. Moreover, BHC A would have an external TLAC buffer level equal to 10 − (18 − 2 − 8) = 2. Because 2 is less than 50 percent and more than 25 percent of the applicable 5 percent external TLAC buffer, BHC A would be subject to a maximum external TLAC payout ratio of 20 percent of eligible retained income.
Although the proposed external TLAC buffer must be met only with common equity tier 1 capital, under the proposal, any covered BHC that meets existing capital requirements and the existing capital conservation buffer would not need to increase its common equity tier 1 capital to meet its external TLAC requirement and its external TLAC buffer. This is because (a) a covered BHC could meet its external TLAC requirement solely through the issuance of eligible external LTD, (b) a covered BHC could use the same common equity tier 1 capital that it uses to meet existing minimum capital requirements and the existing capital conservation buffer to meet the proposed external TLAC requirement and external TLAC buffer, and (c) a covered BHC's external TLAC buffer would always be less than or equal to its existing capital conservation buffer.
The rationale for the external TLAC buffer is similar to the rationale for the capital conservation buffer established by the Board's Regulation Q. During the 2007-2009 financial crisis, some banking organizations continued to pay dividends and substantial discretionary bonuses even as their financial condition weakened. These capital distributions weakened the financial system and exacerbated the crisis. The external TLAC buffer would be intended to encourage covered BHCs to practice sound capital conservation and thus to enhance the resilience of covered BHCs and of the financial system as a whole. The external TLAC buffer would pursue this goal by providing covered BHCs with incentives to hold sufficient capital to reduce the risk that their eligible external TLAC would fall below the minimum external TLAC requirement during a period of financial stress.
Under the proposal, a covered BHC's eligible external LTD would be defined to be debt that is paid in and issued directly by the covered BHC, is unsecured, has a maturity of greater than one year from the date of issuance, is “plain vanilla,” and is governed by U.S. law. Eligible external LTD with a remaining maturity of between one and two years would be subject to a 50 percent haircut for purposes of the external LTD requirement, and eligible external LTD with a remaining maturity of less than one year would not count toward the external LTD requirement.
As discussed below, the general purpose of these requirements is to ensure the adequacy of eligible external LTD instruments to absorb losses in a resolution of the covered BHC.
Eligible external LTD would be required to be paid in and issued directly by the covered BHC itself—that is, by the banking organization's top-tier holding company. Thus, debt instruments issued by a subsidiary would not qualify as eligible external LTD, even if they do qualify as regulatory capital.
This restriction would serve two purposes. First, as with the requirement that regulatory capital be issued directly by the covered BHC in order to count as eligible external TLAC, this restriction helps to ensure that eligible external LTD can be used to absorb losses incurred anywhere in the banking organization. By contrast, loss-absorbing debt issued by a subsidiary would lack this flexibility and would generally be available only to absorb losses incurred by that particular subsidiary.
Second, issuance directly from the covered BHC would enable the use of the eligible external LTD in an SPOE resolution of the covered BHC. Under the SPOE approach, only the covered BHC itself would enter resolution. The covered BHC's eligible external LTD would be used to absorb losses incurred throughout the banking organization, enabling the recapitalization of operating subsidiaries that had incurred losses and enabling those subsidiaries to continue operating on a going-concern basis. For this approach to be implemented successfully, the eligible external LTD must be issued directly by the covered BHC. Debt issued by a subsidiary generally cannot be used to absorb losses even at the issuing subsidiary itself unless that subsidiary enters a resolution proceeding, which would be contrary to the SPOE approach and, in the case of a material operating subsidiary of a covered BHC, would likely present risks to financial stability.
Eligible external LTD would be required to be unsecured, not guaranteed by the covered BHC or a subsidiary of the covered BHC, and not subject to any other arrangement that legally or economically enhances the seniority of the instrument (such as a credit enhancement provided by an affiliate). The primary rationale for this restriction is to ensure that eligible external LTD can serve its intended purpose of absorbing losses incurred by the banking organization in resolution. To the extent that a creditor is secured, it can avoid suffering losses by seizing the collateral that secures the debt. This would thwart the purpose of eligible external LTD by leaving losses with the covered BHC (which would lose the collateral) rather than imposing them on the eligible external LTD creditor (which could take the collateral).
A secondary purpose of the restriction is to prevent eligible external LTD from contributing to the asset firesales that can occur when a financial institution fails and its secured creditors seize and liquidate collateral. Asset firesales can drive down the value of the assets being sold, which can undermine financial stability by transmitting contagion from the failed firm to other entities that hold similar assets.
Finally, the requirement that eligible external LTD be unsecured ensures that losses can be imposed on that debt in resolution in accordance with the standard creditor hierarchy in bankruptcy, under which secured creditors are paid ahead of unsecured creditors.
Eligible external LTD instruments would be required to be “plain-vanilla” instruments. The purpose of this requirement is to ensure that eligible external LTD can be effectively used to absorb losses in resolution by prohibiting exotic features that could create complexity and thereby diminish the prospects for an orderly resolution.
These prohibitions would help to ensure that a covered BHC's eligible external LTD represents loss-absorbing capacity with a definite value that can be quickly determined in resolution. In a resolution proceeding, claims represented by such plain-vanilla debt instruments are more easily ascertainable and relatively certain compared to more complex and volatile instruments. Permitting these features could engender uncertainty as to the level of the covered BHC's loss-absorbing capacity and could increase the complexity of the resolution proceeding, both of which could undermine market participants' confidence in an SPOE resolution and potentially result in a disorderly resolution. This could occur, for instance, if creditors and counterparties of the covered BHC's subsidiaries decided to reduce their exposures to the subsidiaries of the failed covered BHC by engaging in a funding run.
Eligible external LTD instruments also would be prohibited from: (a) Being structured notes; (b) having a credit-sensitive feature; (c) including a contractual provision for conversion into or exchange for equity in the covered BHC; or (d) including a provision that gives the holder a contractual right to accelerate payment (including automatic acceleration), other than a right that is exercisable on a one or more dates specified in the instrument, in the event of the insolvency of the covered BHC, or the covered BHC's failure to make a payment on the instrument when due.
For purposes of this proposal, a “structured note” is a debt instrument that (a) has a principal amount, redemption amount, or stated maturity that is subject to reduction based on the performance of any asset,
Structured notes would not count as eligible external LTD because they contain features that could make their valuation uncertain, volatile, or unduly complex, and because they are typically customer liabilities (as opposed to investor liabilities). To promote resiliency and market discipline, it is important that covered BHCs have a minimum amount of loss-absorbing capacity whose value is easily ascertainable at any given time. Moreover, in an orderly resolution of a covered BHC, debt instruments that will be subjected to losses must be able to be valued accurately and with minimal risk of dispute. The requirement that eligible external LTD not contain the features associated with structured notes advances these goals.
Eligible external LTD would be prohibited from including contractual provisions for conversion into or exchange for equity prior to the covered BHC's resolution because the fundamental objective of the external LTD requirement is to ensure that covered BHCs will have at least a fixed minimum amount of loss-absorbing capacity available to absorb losses upon the covered BHC's entry into resolution. Debt instruments that could convert into equity prior to resolution may not serve this goal, since by doing so they would reduce the amount of debt that will be available to absorb losses in resolution.
Finally, eligible external LTD would be prohibited from having a credit-sensitive feature or giving the holder of the instrument a contractual right to the acceleration of payment of principal or interest at any time prior to the instrument's stated maturity (an “acceleration clause”), other than upon the occurrence of either an insolvency event or a payment default event, except that eligible external LTD instruments would be permitted to give the holder a put right as of a future date certain, subject to the remaining maturity provisions discussed below. This proposed prohibition is similar to but moderately less stringent than the analogous restriction on tier 2 regulatory capital. The main difference between eligible external LTD and tier 2 capital in this regard is that tier 2 capital is also prohibited from containing payment default event acceleration clauses.
This proposed restriction serves the same purpose as several of the other proposed restrictions discussed above: to ensure that the required amount of loss-absorbing capacity will indeed be available to absorb losses in resolution if the covered BHC fails. Early acceleration clauses, including cross-acceleration clauses, may undermine this prerequisite to orderly resolution by triggering and forcing the covered BHC to make payments prior to its entry into resolution, potentially depleting the covered BHC's eligible external LTD immediately prior to resolution. This concern does not apply to acceleration clauses that are triggered by an insolvency event, however, because the insolvency that triggers the clause would generally occur concurrently with the covered BHC's entry into a resolution proceeding, in which case the payment obligations would generally be stayed and the debt would remain available to absorb losses.
Senior debt instruments issued by covered BHCs commonly also include payment default event clauses. These clauses provide the holder with a contractual right to accelerate payment upon the occurrence of a “payment default event”—that is, a failure by the covered BHC to make a required payment when due. Payment default event clauses, which are prohibited from tier 2 regulatory capital, raise more concerns than insolvency event clauses because a payment default event may occur (triggering acceleration) before the institution has entered a resolution proceeding and a stay has been imposed. Such a pre-resolution payment default event could cause a decline in the covered BHC's loss-absorbing capacity.
Nonetheless, the proposal would permit eligible external LTD to be subject to payment default event acceleration rights for two reasons. First, default or acceleration rights upon a borrower's default on its direct payment obligations are a standard feature of senior debt instruments, such that a prohibition on such rights could be unduly disruptive to the potential market for eligible external LTD. Second, the payment default of a covered BHC on an eligible external LTD instrument would likely be a credit event of such significance that whatever diminished capacity led to the payment default event would also be a sufficient trigger for an insolvency event acceleration clause, in which case a prohibition on payment default event acceleration clauses would have little or no practical effect.
Eligible external LTD with a remaining maturity of between one and two years would be subject to a 50 percent haircut for purposes of the external LTD requirement, and eligible external LTD with a remaining maturity of less than one year would not count toward the external LTD requirement.
The purpose of this restriction is to limit the debt that would fill the external LTD requirement to debt that will be reliably available to absorb losses in the event that the covered BHC fails and enters resolution. Debt with a remaining maturity of less than one year does not adequately serve this purpose because of the relatively high likelihood that the debt will mature during the period between the time when the covered BHC begins to experience extreme stress and the time when it enters a resolution proceeding. If the debt matures during that period, then the creditor will likely be unwilling to maintain its exposure to the covered BHC and will therefore refuse to roll over the debt or extend new credit and the distressed covered BHC will likely be unable to replace the debt with new long-term debt that would be available to absorb losses in resolution. This run-off dynamic could result in the covered BHC's entering resolution with materially less loss-absorbing capacity than would be required to recapitalize its subsidiaries, potentially resulting in a disorderly resolution. To protect against this outcome, eligible external LTD would cease to count toward the external LTD requirement upon falling below one year of remaining maturity so that the full required amount of loss-absorbing capacity would be available in resolution even if the resolution period were preceded by a year-long stress period.
For analogous reasons, eligible external LTD with a remaining maturity of less than two years would be subject to a 50 percent haircut for purposes of the external LTD requirement, meaning
The proposal also provides similar treatment for eligible external LTD that could become subject to a “put” right—that is, a right of the holder to require the issuer to redeem the debt on demand—prior to reaching its stated maturity. Such an instrument would be treated as if it were going to mature on the day on which it first became subject to the put right, since on that day the creditor would be capable of demanding payment and thereby subtracting the value of the instrument from the covered BHC's loss-absorbing capacity.
Eligible long-term debt instruments should consist only of liabilities that can be effectively used to absorb losses during the resolution of a covered BHC under the U.S. Bankruptcy Code or Title II without giving rise to material risk of successful legal challenge. To this end, eligible external LTD must be governed by U.S. law, including the U.S. Bankruptcy Code and Title II.
The Board considered whether to require eligible external LTD instruments to be contractually subordinated to the claims of general creditors of a covered BHC. A contractual subordination requirement could improve the market discipline imposed on a covered BHC by increasing the clarity of treatment for eligible external LTD holders relative to other creditors.
The proposal does not include a contractual subordination requirement for several reasons. First, as discussed above, the structural subordination of a covered BHC's creditors to the creditors and counterparties of the covered BHC's subsidiaries already generally ensures that the covered BHC's creditors would absorb losses ahead of the creditors of the covered BHC's subsidiaries in an SPOE resolution of the covered BHC.
By limiting the criteria for eligible external LTD to those necessary to achieve the objectives of the proposal, the proposal seeks to retain the broadest possible market for eligible external LTD instruments. Allowing covered BHCs to retain the flexibility to satisfy the external LTD requirement with either senior or subordinated debt instruments should allow covered BHCs to comply with the requirement efficiently, to adapt to debt investors' risk preferences, and to avoid re-issuances of outstanding long-term senior debt instruments that would otherwise meet the criteria for eligible external LTD.
An analysis of the potential costs and benefits of the external TLAC and LTD requirements was conducted. To evaluate the costs attributable to the proposed requirements, this analysis estimated (a) the extent by which the covered BHCs' required capital and currently outstanding long-term debt fall short of the proposed requirements, (b) the increase in each U.S. GSIB's ongoing cost of funding that would result from meeting the proposed requirements, (c) the expected increase in the interest rates that the U.S. GSIBs would charge to borrowers to make up for their higher funding costs, and (d) any decline in the gross domestic product (GDP) of the United States that would result from these increased lending rates.
The following components relevant to the benefits of the proposed requirements were evaluated: (a) The probability of a financial crisis occurring in a given year, (b) the cumulative economic cost that a financial crisis would impose if it were to occur, and (c) the extent to which the proposed requirements would decrease the likelihood and cost of a financial crisis.
The analysis concluded that the estimated benefits would outweigh the estimated costs and that the proposed external TLAC and LTD requirements would yield a substantial net benefit for the U.S. economy.
To evaluate the U.S. GSIBs' shortfalls relative to the proposed external TLAC and LTD requirements, information was collected on the long-term debt that covered BHCs had outstanding as of year-end 2014.
Several assumptions were made for purposes of the shortfall analysis. First, to provide an accurate estimate of shortfalls relative to the proposed requirements using 2014 data, it was assumed that the covered BHCs were already compliant with the other capital requirements (including capital conservation buffers) that will be in effect as of 2019, when the proposed external TLAC and LTD requirements would begin to take effect. This assumption was necessary to ensure that the analysis would attribute to the proposed external TLAC and LTD requirements only those costs that would result from those requirements, as distinct from other requirements that the Board has imposed but that were not fully phased in as of year-end 2014. As a result of this assumption, a certain amount of “capital catch-up” was allocated to five of the U.S. GSIBs to bring their capital levels into alignment with the rules that will be in effect as of 2019.
Second, for purposes of this analysis, all of the U.S. GSIB debt that met the primary attributes of eligible external LTD was treated as eligible LTD, including issuance directly from the covered BHC, remaining maturity of at least one year, and the absence of derivative-linked features. Although these instruments may not meet every one of the other proposed elements of eligible external LTD, it appears that the cost of meeting any remaining elements would be relatively minor.
Under the proposal, covered BHCs would have an aggregate external LTD requirement of approximately $680 billion. This amounts to approximately 9.6 percent of aggregate risk-weighted assets and 4.9 percent of aggregate total leverage exposure for the covered BHCs. The covered BHCs' aggregate shortfall relative to the proposed external TLAC requirement was approximately $100 billion. The covered BHCs' aggregate shortfall relative to the proposed external LTD requirement was approximately $90 billion. For four of the covered BHCs, the risk-weighted assets component of the external LTD requirement was binding; for the other four covered BHCs, the supplementary leverage exposure component was binding.
The covered BHCs' overall aggregate shortfall from the two proposed requirements was approximately $120 billion, or 1.7 percent of aggregate risk-weighted assets.
The analysis also considered the effect that filling the $120 billion shortfall through the issuance of additional eligible external LTD would have on the covered BHCs' cost of funding. This analysis relied on additional information about the amounts and costs of funding of the debt that the covered BHCs and their subsidiaries currently have outstanding.
Several additional assumptions were made at this stage of the analysis. First, it was assumed that covered BHCs would fill their shortfalls by replacing existing, ineligible debt with eligible external LTD during the period prior to the effective date of the proposed requirements, rather than by expanding their balance sheets by issuing the new debt while maintaining existing liabilities outstanding. Second, it was assumed that covered BHCs would minimize the cost associated with meeting the proposed external TLAC and LTD requirements by first replacing with eligible external LTD their “near-eligible debt”—that is, their outstanding debt that comes closest to meeting all requirements for eligible external LTD (and that therefore entails a cost of funding almost as high as that associated with eligible external LTD)—and by proceeding in this cost-minimizing fashion until the proposed requirements were met. Thus, the marginal cost of each additional dollar of eligible external LTD was assumed to be the surplus of the funding cost associated with eligible external LTD over the funding cost of the covered BHC's highest-cost remaining ineligible debt. Finally, if total near-eligible liabilities were insufficient to fill the shortfall, it was assumed that the covered BHC proceeded to replace more senior, short-term liabilities, such as deposits, with eligible external LTD.
Roughly $65 billion of the aggregate $120 billion shortfall could be filled through the issuance of eligible external LTD in the place of existing near-eligible debt, most of which takes the form of long-term bonds issued by the covered BHCs' bank subsidiaries.
The figures at the low ends of these ranges—20 basis points for replacing near-eligible debt and 100 basis points for replacing lower-cost liabilities such as deposits—result in an aggregate increased cost of funding for the covered BHCs of $680 million per year.
A more conservative estimate was produced using figures at the high ends of these ranges and then further adjusted them upward to reflect a potential supply effect of 30 basis points (that is, an increase in the interest rate on eligible external LTD caused by the increase in the supply of eligible external LT as a result of the proposed external LTD requirement). The aggregate shortfall in eligible LTD amounts to approximately 20 percent of the covered BHCs' current eligible LTD, implying that the covered BHCs in the aggregate would need to increase their outstanding eligible external LTD by 3 to 4 percent each year through 2022, when the proposed requirements would be fully phased in. On the basis of both internal analysis and an international survey of market participants in which Board staff participated, it is estimated that this increase in supply would increase spreads of covered BHCs'
Using the resulting, higher figures—60 basis points for replacing near-eligible debt and 200 basis points for replacing lower-cost liabilities—resulted in an estimated aggregate increased cost of funding for the covered BHCs of approximately $1.5 billion per year.
Thus, the aggregate increased cost of funding attributable to the proposed external TLAC and LTD requirement are estimated to be in the range of $680 million to $1.5 billion annually.
To arrive at a conservative estimate of the effect of the proposed external TLAC and LTD requirements on lending rates, it was next assumed that the U.S. GSIBs would maintain their current return-on-equity levels by passing all of their increased funding costs on to borrowers, holding constant their level of lending activity. The increased lending rates that the U.S. GSIBs would charge to borrowers were calculated by dividing both the low-end and the high-end estimated cost-of-funding increases by the U.S. GSIBs' aggregate outstanding loans of roughly $3.2 trillion. Under this analysis, covered BHCs would employ an increased lending rate of 1.3 to 3.1 basis points as a result of the proposed external TLAC and LTD requirements.
In prior assessments of the economic impact of regulations on banking organizations, increases in lending rates have been assumed to produce a drag on GDP growth. However, the very modest lending rate increases estimated above—from 1.3 to 3.1 basis points—do not rise to the level of increase that could be expected to meaningfully affect GDP. Thus, from the standpoint of the economy as a whole, it appears that the costs associated with the proposed external TLAC and LTD requirements would be minimal.
To estimate the benefits of the proposed requirements, the analysis built on the framework considered in a recent study titled “An assessment of the long-term economic impact of stronger capital and liquidity requirements” (“LEI report”).
This proposal would materially reduce the risk that the failure of a covered BHC would pose to the financial stability of the United States by enhancing the prospects for the orderly resolution of such a firm. Moreover, by ensuring that the losses caused by the failure of such a firm are borne by private-sector investors and creditors (the holders of the covered BHC's eligible external TLAC), this proposal would materially reduce the probability that a covered BHC would fail in the first place by giving the firm's shareholders and creditors stronger incentives to discipline its excessive risk-taking. Both of these reductions would promote financial stability and concomitantly materially reduce the probability that a financial crisis would occur in any given year. The proposed rule would therefore advance a key objective of the Dodd-Frank Act and help protect the American economy from the substantial potential losses associated with a higher probability of financial crises.
The proposed rule would apply to all “covered IHCs.” The term “covered IHC” would be defined to include any U.S. intermediate holding company that (a) is required to be formed under the Board's enhanced prudential standards rule (IHC rule) and (b) is controlled by a foreign banking organization that would be designated as a GSIB under either the Board's capital rules if it were subject to the Board's GSIB surcharge on a consolidated basis or the BCBS assessment methodology (foreign GSIB).
The purpose of these criteria is to identify those foreign banking organizations that are global systemically important banking organizations and that have substantial operations in the United States. The Board's IHC rule identifies foreign banking organizations with a substantial U.S. presence and requires them to form a single U.S. intermediate holding company over their U.S. subsidiaries.
The Board's GSIB surcharge rule identifies the most systemically important banking organizations. As discussed above with respect to covered BHCs, its methodology evaluates a banking organization's systemic importance on the basis of its size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity. The firms that score the highest on these attributes are classified as GSIBs. While the GSIB surcharge rule itself applies only to U.S. BHCs, its methodology is equally well-suited to evaluating the systemic importance of foreign banking organizations. The Board's methodology for identifying GSIBs is aligned with that of the assessment methodology for the GSIB surcharge framework developed by the BCBS. Moreover, foreign jurisdictions collect information from banking organizations in connection with that framework that parallels the information collected by the Board for purposes of the Board's GSIB surcharge rule.
Under the proposal, a foreign banking organization that controls a U.S. intermediate holding company would be required to determine whether it is a GSIB under that BCBS assessment methodology if the foreign banking organization already prepares or reports, for any purpose, the information necessary to determine whether it is a GSIB under the BCBS assessment methodology. A foreign banking organization that determines under this requirement that it is a GSIB would be a foreign GSIB under the proposal.
A foreign banking organization that controls a U.S. intermediate holding company also would be a foreign GSIB under the proposal if the Board determines that the foreign banking organization has the characteristics of a GSIB under the BCBS assessment methodology or the Board's methodology for determining whether U.S. bank holding companies are GSIBs for purposes of the Board's capital rules,
As with covered BHCs, the proposal's focus on GSIBs is in keeping with the Dodd-Frank Act's mandate that more stringent prudential standards be applied to the most systemically important bank holding companies.
Under the internal TLAC requirement, the amount of eligible internal total loss-absorbing capacity (“eligible internal TLAC”) that a covered IHC would be required to maintain outstanding would depend on whether the covered IHC (or any of its subsidiaries) is expected to enter resolution if a foreign parent entity fails, rather than being maintained as a going concern while a foreign parent entity is resolved. If the home country resolution authority for the parent foreign banking organization of the covered IHC provides a certification to the Board indicating that the authority's planned resolution strategy for the foreign banking organization does not involve the covered IHC or any subsidiary of the covered IHC entering a resolution proceeding in the United States, then the covered IHC would be considered a “non-resolution entity.”
Covered IHCs that are non-resolution entities would be required to maintain outstanding eligible internal TLAC in an amount not less than the greater of: (a) 16 percent of the covered IHC's total risk-weighted assets;
As described below, an internal TLAC buffer would apply to all covered IHCs in addition to the applicable risk-weighted assets component of the internal TLAC requirement.
Under the internal LTD requirement, a covered IHC would be required to maintain outstanding eligible internal long-term debt instruments (“eligible internal LTD”) in an amount not less than the greater of: (a) 7 percent of total risk-weighted assets; (b) 3 percent of the total leverage exposure (if applicable); and (c) 4 percent of average total consolidated assets, as computed for purposes of the U.S. tier 1 leverage ratio. Covered IHCs would be prohibited from redeeming eligible internal LTD prior to its stated maturity date without obtaining prior approval from the Board where such redemption would cause the covered IHC's eligible internal LTD to fall below its internal LTD requirement.
The rationale for the proposed internal TLAC and LTD requirements is generally parallel to the rationale for the proposed external TLAC and LTD requirements, which is discussed above. Covered IHCs, other than those that are non-resolution entities, would be subject to an internal TLAC requirement with a risk-weighted assets component identical to the risk-weighted assets component of the proposed external TLAC requirement. They would be subject to a supplementary leverage ratio component (if applicable) that is lower than the supplementary leverage ratio component of the proposed
Covered IHCs that are non-resolution entities would be subject to a slightly lower internal TLAC requirement. Most foreign GSIBs are expected to be resolved by their home jurisdiction resolution authorities through an SPOE resolution and are therefore expected to be non-resolution entities under the proposal. Were such an SPOE resolution to succeed, the covered IHC would avoid entering resolution and would continue as a going concern, with its eligible internal TLAC and eligible internal LTD used to pass up the covered IHC's going-concern losses to the parent foreign GSIB, to the extent necessary. However, the Board also recognizes the need to plan for the contingency in which the covered IHC enters a U.S. resolution proceeding. The proposed calibration for such a covered IHC is based on the desirability of providing support for the preferred SPOE resolution of the foreign GSIB, which requires that the foreign GSIB be allowed to have some internal loss-absorbing capacity at the parent level that can be freely allocated to whichever subsidiaries have incurred the greatest losses (including non-U.S. subsidiaries), balanced with the need to ensure that sufficient loss-absorbing capacity is prepositioned with the covered IHC to ensure that it can be kept operating as a going concern or subjected to an orderly resolution in the United States if the foreign GSIB is not subjected to an SPOE resolution.
By contrast, covered IHCs that are not designated as non-resolution entities are more analogous to covered BHCs, which are themselves resolution entities. For these covered IHCs, there is no need to apply a diminished eligible internal TLAC requirement in order to support an SPOE resolution of the parent foreign GSIB. These covered IHCs would therefore be subject to eligible internal TLAC requirements in line with the eligible external TLAC requirements that would apply to covered BHCs, as discussed above.
The proposed internal LTD requirements are based on the capital refill framework discussed above with respect to the proposed external LTD requirements. Because covered IHCs are not U.S. GSIBs and are therefore not subject to a GSIB surcharge or to the enhanced supplementary leverage ratio, a covered IHC is subject to a common equity tier 1 capital level of 7 percent of risk-weighted assets (4.5 percent plus a 2.5 percent capital conservation buffer) and, if the supplementary leverage ratio applies to the covered IHC, to a tier 1 capital supplementary leverage ratio requirement of 3 percent of total leverage exposure. Because some covered IHCs may not be subject to the supplementary leverage ratio, a third component based on the U.S. tier 1 leverage ratio was added to the internal LTD requirement. The applicable requirement under that leverage ratio is 4 percent of on-balance sheet assets. The calibration of the proposed internal LTD requirements derives from the application of the capital refill framework described above to these requirements.
The definition of eligible internal TLAC is similar to the definition of eligible external TLAC. A covered IHC's eligible internal TLAC would be defined to be the sum of (a) the tier 1 regulatory capital (common equity tier 1 capital and additional tier 1 capital) issued from the covered IHC to a foreign entity that directly or indirectly controls the covered IHC (“foreign parent entity”) and (b) the covered IHC's eligible internal LTD, as defined below.
The rationale for the requirement that regulatory capital be issued directly by the covered IHC, rather than by a subsidiary of the IHC, in order to count as eligible internal TLAC is identical to the rationale for the analogous requirement for eligible external TLAC: To ensure that the required quantity of loss-absorbing capacity will be available to absorb losses incurred anywhere by any subsidiary of the IHC. Regulatory capital that is issued by one subsidiary of the covered IHC would not necessarily be available to absorb losses incurred by another subsidiary.
Regulatory capital must meet one additional requirements in order to count as eligible internal TLAC: It must be issued to a foreign parent entity of the covered IHC. The requirement of issuance to a foreign parent, rather than to a U.S. affiliate or to third parties, would ensure that losses incurred by the U.S. intermediate holding company of a foreign GSIB would be upstreamed to a foreign parent rather than being transferred to other U.S. entities. This requirement would minimize the risk that such losses pose to the financial stability of the United States, regardless of whether the covered IHC enters a resolution proceeding.
The requirement of issuance to a foreign parent that controls the covered IHC, rather than to another foreign entity within the foreign GSIB or to a third party, would prevent the conversion of eligible internal TLAC into equity from effecting a change in
An internal TLAC buffer would apply in addition to the risk-weighted assets component of the internal TLAC requirement. The internal TLAC buffer would be generally analogous to the proposed external TLAC buffer described above, although the internal TLAC buffer would not include a GSIB surcharge component because covered IHCs are not subject to the GSIB surcharge rule. A covered IHC's internal TLAC buffer would thus be equal to the sum of 2.5 percent plus any applicable countercyclical capital buffer.
The internal TLAC buffer would be required to be filled solely with common equity tier 1 capital, and a covered IHC's breach of its internal TLAC buffer would subject it to limits on capital distributions and discretionary bonus payments in accordance with Table 2. Thus, the internal TLAC buffer would be analogous to the capital conservation buffer applicable under the Board's Regulation Q, except that it would apply in addition to the internal TLAC requirement rather than in addition to minimum risk-based capital requirements under Regulation Q.
As discussed above with respect to the external TLAC buffer, a covered IHC that already meets the applicable capital requirements and the existing capital conservation buffer would not need to increase its common equity tier 1 capital to meet its internal TLAC requirement and its internal TLAC buffer.
A covered IHC's eligible internal LTD would generally be subject to the same requirements as would apply to eligible external LTD: It would be required to be debt that is paid in and issued directly from the covered IHC, is unsecured, has a maturity of greater than one year from the date of issuance, is “plain vanilla,” and is governed by U.S. law. Eligible internal LTD with a remaining maturity of between one and two years would be subject to a 50 percent haircut for purposes of the internal LTD requirement, and eligible internal LTD with a remaining maturity of less than one year would not count toward the internal LTD requirement. The proposal would treat an instrument that could become subject to a put right in the future as if the first day on which the put right could be exercised were the instrument's stated maturity date. The rationales for these proposed provisions are generally the same as the rationales for the identical provisions in the context of eligible external LTD, which are discussed above.
However, several additional requirements would apply to eligible internal LTD. Eligible internal LTD would be required to be issued to a foreign parent entity of the covered IHC, to be contractually subordinated to all third-party liabilities of the covered IHC, and to include a contractual trigger pursuant to which the Board could require the covered IHC to cancel the eligible internal LTD or convert or exchange it into tier 1 common equity on a going-concern basis under certain specified conditions.
Eligible internal LTD would be required to be paid in and issued to a foreign parent entity that controls the covered IHC. The rationale for this requirement is the same as the rationale for the identical requirement with respect to regulatory capital that counts as eligible internal TLAC, which is discussed above.
Eligible internal LTD would be required to be contractually
The proposed contractual subordination requirement would ensure that the foreign parent generally would absorb the covered IHC's losses ahead of the third-party creditors and counterparties of the covered IHC and its subsidiaries. Such a requirement should reduce the risk of third-party challenges to the recapitalization of the covered IHC and reduce the risk that a change in control could result from the recapitalization of the covered IHC. Both legal challenges to the recapitalization and a change in control over the covered IHC could create obstacles to an orderly resolution.
This requirement is more stringent than the requirements for eligible external LTD, which is allowed to be senior unsecured debt and to be senior to a limited amount of a capped amount of liabilities of the covered BHC that do not count as eligible external LTD. The Board is proposing to apply this more stringent requirement to eligible internal LTD because the costs of doing so are likely to be less than the costs of imposing an identical requirement on eligible external LTD and are likely to be outweighed by the benefits described above. In particular, the cost of imposing this contractual subordination requirement on covered IHCs should be substantially lower than the cost of imposing the same requirement on covered BHCs because a covered BHC must issue its long-term debt to third-party market participants, some of which do not invest in contractually subordinated debt instruments, whereas a covered IHC would issue its long-term debt to a parent entity in an internal transaction.
Eligible internal LTD would be required to include a contractual trigger pursuant to which the Board could require the covered IHC to cancel the eligible internal LTD or convert or exchange it into tier 1 common equity on a going-concern basis (that is, without the covered IHC's entry into a resolution proceeding) if: (a) the Board determines that the covered IHC is “in default or in danger of default”;
The principal purpose of this requirement is to ensure that losses incurred by the covered IHC are shifted to a foreign parent without the covered IHC's having to enter a resolution proceeding. If the covered IHC's eligible internal LTD is sufficient to recapitalize the covered IHC in light of the losses that the covered IHC has incurred, this goal could be achieved through conversion of the eligible internal LTD into equity upon the occurrence of the trigger conditions. The covered IHC's entry into a resolution proceeding could pose a risk to the financial stability of the United States, and so avoiding the need for such a resolution proceeding would advance the Dodd-Frank Act's goal of “mitigat[ing] risks to the financial stability of the United States that could arise from the material financial distress” of the covered IHC.
The proposed trigger conditions represent a compromise between the interests of home and host regulators. From the perspective of a host regulator, it is desirable to have the power to impose losses on eligible internal LTD quickly and easily upon a determination that the hosted subsidiary is in danger of default, in order to remove those losses from the host jurisdiction's financial system and thereby promote financial stability in the host jurisdiction. The proposed trigger conditions advance this interest by giving the Board the power to do so upon a determination that the covered IHC is in danger of default where the home jurisdiction supervisory authority either consents or fails to object within 48 hours or where the home jurisdiction resolution authority has placed the parent foreign banking organization into resolution proceedings. At the same time, from the perspective of a home regulator, it is desirable that host regulators not impose losses on the top-tier parent entity except where doing so is appropriate to prevent the failure of the hosted subsidiary, since doing so drains loss-absorbing capacity from the top-tier parent entity that may be needed to support other subsidiaries in the home jurisdiction or in another host jurisdiction. The proposed trigger conditions advance this interest by giving the home jurisdiction supervisory authority the right to object to the triggering decision within 48 hours, except where the home jurisdiction resolution authority has placed the parent foreign banking entity into resolution proceedings. The United States is home to numerous U.S. GSIBs and also hosts substantial operations of numerous foreign GSIBs, making both considerations relevant to U.S. interests. U.S. financial regulatory agencies are discussing the application of similar standards by foreign regulatory authorities in jurisdictions that host the operations of U.S. GSIBs.
To further facilitate the resolution of a covered BHC, a covered IHC, or a foreign parent entity of a covered IHC, the Board proposes to prohibit both covered BHCs and covered IHCs (together, “covered holding companies”) from engaging in certain classes of transactions that could pose an obstacle to the orderly SPOE resolution of a covered holding company or increase the risk that financial market contagion would result from the resolution of a covered holding company.
In particular, the Board proposes to prohibit covered holding companies from having outstanding liabilities in the following categories: Third-party debt instruments with an original maturity of less than one year, including deposits (“short-term debt”); qualified financial contracts with a third party (“third-party QFCs”); guarantees of a subsidiary's liabilities if the covered holding company's insolvency or entry into a resolution proceeding would create default rights for a counterparty of the subsidiary; and liabilities that are guaranteed by a subsidiary of the covered holding company (“upstream guarantees”) or are subject to rights that would allow a third party to offset its debt to a subsidiary upon the covered holding company's default on an obligation owed to the third party.
Additionally, the Board proposes to cap the total value of each covered BHC's non-TLAC-related third-party liabilities that are either pari passu with or subordinated to any eligible external TLAC to 5 percent of the value of the covered BHC's eligible external TLAC. (As discussed above, the Board proposes to prohibit covered IHCs from having any non-TLAC-related third-party liabilities that are pari passu with or subordinated to eligible internal LTD by requiring that eligible internal LTD be contractually subordinated to all third-party debt claims. Therefore, the proposed cap is not relevant to covered IHCs.)
The proposed prohibitions and cap would apply only to the corporate practices and liabilities of the covered holding company itself. They would not directly restrict the corporate practices and liabilities of the subsidiaries of the covered holding company.
These proposed clean holding company provisions would advance three related goals of SPOE resolution. First, a successful SPOE resolution proceeding requires the ability to impose losses on the creditors of the covered holding company without causing material disruption to the financial system. The proposed clean holding company restrictions would advance this goal by minimizing the risk of short-term funding runs, asset firesales, and severe losses to other large financial firms that might otherwise be associated with an SPOE resolution of a covered holding company.
Second, the clean holding company provisions would limit the extent to which the subsidiaries of a covered holding company would experience losses as a result of the failure of the covered holding company. In particular, the prohibition on holding company liabilities that are subject to upstream guarantees or offset rights would prevent a failed covered holding company's creditors from passing their losses on to the covered holding company's subsidiaries. This would serve SPOE resolution's goal of ensuring that the failed holding company's operating subsidiaries are able to continue their normal operations throughout the resolution of the failed holding company by protecting those subsidiaries from losses that might threaten their viability.
Third, SPOE resolution seeks to achieve the rapid recapitalization of the material subsidiaries of a covered holding company with minimal interruption to the ordinary operations of those subsidiaries. An entity's complexity can pose a major obstacle to rapid and orderly resolution. Limitations on the types of transactions that a covered holding company may enter into serve to limit its legal and operational complexity and thereby facilitate a prompt resolution and recapitalization with minimal uncertainty and delay.
The proposed clean holding company provisions would also enhance the overall resiliency of covered holding companies by removing complexity from their balance sheets and limiting their reliance on short-term funding.
The Board proposes to prohibit covered holding companies from issuing debt instruments with an original maturity of less than one year to a third party (as opposed to an affiliate of the covered holding company). Such a liability would be considered to have an original maturity of less than one year if it would provide the creditor with the option to receive repayment within one year of the creation of the liability, or if it would create such an option or an automatic obligation to pay upon the occurrence of an event that could occur within one year of the creation of the liability (other than an event related to the covered holding company's insolvency). The proposed prohibition would also cover short-term and demand deposits at the covered holding company.
One objective of SPOE resolution is to mitigate the risk of destabilizing funding runs. A funding run occurs when the short-term creditors of a financial company observe stress at that institution and seek to minimize their exposures to it by refusing to roll over its debts. The resulting liquidity stress can hasten the company's failure, including by forcing it to engage in asset firesales to come up with the liquidity to pay the short-term creditors. Because they reduce the value of similar assets held by other firms, asset firesales are a key channel for the propagation of stress throughout the financial system. The short-term creditors of a failing GSIB may also run on other counterparties that are similar to the failing firm in certain respects, weakening those firms and forcing further firesales. And depositors, who generally have the ability to demand their funds on short notice, present analogous issues.
The Board's proposal seeks to mitigate these risks in two complementary ways. First, although the operating subsidiaries of covered holding companies rely on short-term funding, in an SPOE resolution, their short-term creditors would not bear losses incurred by the subsidiaries because those losses would instead be borne by the external TLAC holders of the covered holding company. To the extent that market participants view SPOE resolution as workable, the subsidiaries' short-term creditors should have reduced incentives to run because their direct counterparty will not default in such a resolution. Second, the covered holding
The proposed prohibition applies to both secured and unsecured short-term borrowings. Although secured creditors are less likely to take losses in resolution than unsecured creditors, secured creditors may nonetheless be unwilling to maintain their exposures to a covered holding company that comes under stress. In particular, if the covered holding company were to enter into a resolution proceeding, the collateral used to secure the debt would be subject to a stay, preventing the creditor from liquidating it immediately. (Qualified financial contracts, which are not subject to a stay under the U.S. Bankruptcy Code but which present other potential difficulties for SPOE resolution, are discussed below.) The creditor would therefore face two risks: The risk that the value of the collateral would decline before it could be liquidated and the liquidity risk attributable to the fact that the creditor would be stayed from liquidating the collateral for some time. Knowing this, secured short-term creditors may well decide to withdraw funding from a covered holding company that comes under stress.
Additionally, many short-term lenders to GSIBs are themselves maturity-transforming financial firms that are vulnerable to runs (for instance, money market mutual funds). If such firms incur losses, then they may be unable to meet their obligations to their own investors and counterparties, which would cause further losses throughout the financial system. Because SPOE resolution relies on imposing losses on the covered holding company's creditors while protecting the creditors and counterparties of its material operating subsidiaries, it is desirable that the holding company's creditors be limited to those entities that can be exposed to losses without materially affecting financial stability. This proposal seeks to further enhance the credibility of the SPOE approach by removing undue complexity from the resolution of a covered holding company.
Finally, the proposed prohibition on short-term debt instruments would promote the resiliency of covered holding companies as well as their resolvability. As discussed above, reliance on short-term funding creates the risk of a short-term funding run that could destabilize the covered holding company by draining its liquidity and forcing it to engage in capital-depleting asset firesales. The increase in covered holding company resiliency yielded by the proposed prohibition provides a secondary justification for the proposal.
Under the proposal, covered BHCs could only enter into qualified financial contracts (QFCs) with their subsidiaries and covered IHCs could only enter into QFCs with their affiliates. The proposal defines QFCs by reference to Title II of the Dodd-Frank Act, which defines QFCs to include securities contracts, commodities contracts, forward contracts, repurchase agreements, and swap agreements.
The failure of a large financial organization that is a party to a material amount of third-party QFCs could pose a substantial risk to the stability of the financial system. Specifically, it is likely that many of that institution's QFC counterparties would respond to the institution's default by immediately liquidating their collateral and seeking replacement trades with other dealers, which could cause firesale effects and propagate financial stress to other firms that hold similar assets by depressing asset prices.
The proposed restriction on third-party QFCs would mitigate this threat to financial stability by two means. First, covered holding companies' operating subsidiaries, which are parties to large quantities of QFCs, should remain solvent and not fail to meet any ordinary course payment or delivery obligations during a successful SPOE resolution. Therefore, assuming that the cross-default provisions of the QFCs engaged in by the operating subsidiaries of covered holding companies are appropriately structured, their QFC counterparties generally would have no contractual right to terminate or liquidate collateral on the basis of the covered holding company's entry into resolution proceedings.
The proposal would prohibit a covered holding company from guaranteeing (including by providing credit support) with respect to any liability between a direct or indirect subsidiary of the covered holding company and an external counterparty if the covered holding company's insolvency or entry into resolution (other than resolution under Title II of the Dodd-Frank Act) would directly or indirectly provide the subsidiary's counterparty with a default right.
The proposed prohibition would advance the key SPOE resolution goal of ensuring that a covered holding company's subsidiaries would continue to operate normally upon the covered holding company's entry into resolution. This goal would be jeopardized if the covered holding company's entry into resolution or insolvency operated as a default by the subsidiary and empowered the subsidiary's counterparties to take default-related actions, such as ceasing to perform under the contract or liquidating collateral. Were the counterparty to take such actions, the subsidiary could face liquidity, reputational, or other stress that could undermine its ability to continue operating normally, for instance by prompting a short-term funding run on the subsidiary. The proposed prohibition would be a complement to other work that has been done or is underway to facilitate SPOE resolution through the stay of cross-defaults, including the ISDA 2014 Resolution Stay Protocol.
The Board proposes to prohibit covered holding companies from having outstanding liabilities that are subject to a guarantee from any direct or indirect subsidiary of the holding company. SPOE resolution relies on imposing all losses incurred by the group on the covered holding company's eligible external TLAC holders while ensuring that its operating subsidiaries continue to operate normally. This arrangement could be undermined if a liability of the covered holding company is subject to an upstream guarantee, because the effect of such a guarantee is to subject the guaranteeing subsidiary (and, ultimately, its creditors) to the losses that would otherwise be imposed on the holding company's creditors. A prohibition on upstream guarantees would facilitate the SPOE resolution strategy by increasing the certainty that the covered holding company's eligible external TLAC holders will be exposed to loss ahead of the creditors of its subsidiaries.
Upstream guarantees do not appear to be common among covered holding companies. Section 23A of the Federal Reserve Act already limits the ability of a U.S. insured depository institution to issue guarantees on behalf of its parent holding company.
For analogous reasons, the Board also proposes to prohibit covered holding companies from issuing an instrument if the holder of the instrument has a contractual right to offset its or its affiliates' liabilities to the covered holding company's subsidiaries against the covered holding company's liability under the instrument.
Finally, the Board proposes to limit the total value of certain other liabilities of covered BHCs that could create obstacles to orderly resolution to 5 percent of the value of the covered BHC's eligible external TLAC. The cap would apply to non-contingent liabilities to third parties (
Because the Board proposes to require that a covered IHC's eligible internal LTD be contractually subordinated to all of the covered IHC's third-party liabilities, this proposed cap would have no relevance to those firms. The Board accordingly does not propose to apply the cap to covered IHCs.
Liabilities that would be expected to be subject to the cap include debt instruments with derivative-linked features (
The liabilities subject to the cap fall into two groups: Those that could be subjected to losses alongside eligible external TLAC without potentially undermining SPOE resolution or financial stability, and those that potentially could not.
The first group includes structured notes. The proposal defines structured notes so as to avoid capturing debt instruments that pay interest based on the performance of a single index but to otherwise capture all debt instruments that have a principal amount, redemption amount, or stated maturity, that is subject to reduction based on the performance of any asset, entity, index, or embedded derivative or similar embedded feature.
The second group includes, for example, vendor liabilities and obligations to employees. Successful resolution may require that the covered BHC continue to perform on certain of its unsecured liabilities in order to ensure that it is not cut off from vital services and resources. If these vital liabilities were pari passu with eligible external LTD, protecting these vital liabilities from loss would entail treating these liabilities differently from eligible external LTD of the same priority, which could present both operational and legal risk. The operational risk flows from the need to identify such liabilities quickly in the context of a complex resolution proceeding, reducing the covered holding company's complexity by capping the amount of these liabilities that it can have outstanding mitigates this risk. The legal risk flows from the no-creditor-worse-off principle, according to which each creditor of a firm that enters resolution is entitled to recover at least as much as it would have if the firm had simply been liquidated under chapter 7 of the U.S. Bankruptcy Code.
The rationale for calibrating the proposed cap to 5 percent of a covered BHC's eligible TLAC is as follows. The Board collected data from the U.S. GSIBs and determined that covered BHCs have outstanding certain third-party operational liabilities that may rank pari passu with eligible LTD and that could not be eliminated without substantial cost and complexity. These liabilities include (among other things) tax payables, compensation payables, and accrued benefit plan obligations. For the eight current U.S. GSIBs, the value of these operating liabilities ranges from 1 percent to 4 percent of the sum of the covered BHC's equity and long-term debt, which provides a reasonable proxy for the amount of eligible external TLAC it would have under this proposal. The cap was calibrated to allow these existing operational liabilities while limiting the excessive growth of these and other liabilities at the covered BHC so that the problems discussed in the preceding paragraphs may be avoided. In particular, several covered BHCs may need to limit the value of structured notes that they have outstanding. This result would be consistent with the rationale for the clean holding company requirements because, as noted above, such structured notes are customer liabilities rather than vital operating liabilities and because their presence at the holding company could create undue complexity during resolution.
By subjecting the total value of a covered BHC's liabilities of both types to a single cap, the Board's proposal gives covered BHCs greater discretion to manage their own affairs than would a proposal that applied separate, smaller caps to the two types of liability.
The Board proposes to require each covered BHC to publicly disclose a description of the financial consequences to unsecured debtholders of the covered BHC's entry into a resolution proceeding in which the covered BHC is the only entity that would enter resolution.
Consistent with the disclosure requirements imposed by the Board's capital regulations, the covered BHC would be permitted to make this disclosure on its Web site or in more than one public financial report or other public regulatory report, provided that the covered BHC publicly provides a summary table specifically indicating the location(s) of this disclosure.
The Board has long supported meaningful public disclosure by banking organizations, with the objective of improving market discipline and encouraging sound risk-management practices.
The Board intends to propose for a comment a requirement that covered BHCs and covered IHCs report publicly their amounts of eligible external TLAC and LTD and eligible internal TLAC and LTD, respectively, on a regular basis. By rendering each covered holding company's loss-absorbing capacity transparent to regulators and market participants, public reporting requirements would promote both supervision and market discipline, which could be expected to disincentivize excessive risk-taking by covered BHCs and covered IHCs and thereby mitigate risks to the financial stability of the United States.
Under the SPOE resolution strategy, severe losses must be passed up from the operating subsidiaries that initially incur them to the covered holding company, and then on to the eligible external TLAC holders (in the case of a covered BHC) or the foreign parent (in the case of a covered IHC). Both steps are necessary to achieve the key goal of the SPOE resolution strategy: Allowing material operating subsidiaries to continue to operate normally by ensuring that losses that would otherwise fall on their creditors (potentially sparking contagious runs and other generators of financial instability) will instead be borne by the holders of the TLAC issued by the covered holding company. The proposed rule is intended to ensure that covered holding companies issue a sufficient amount of loss-absorbing resources to absorb such losses, but the proposed rule does not ensure that firms have in place adequate mechanisms for transferring severe losses up from their operating subsidiaries to the covered holding company—that is, domestic internal total loss-absorbing capacity (“domestic internal TLAC”).
The Board is therefore considering the costs and benefits of imposing domestic internal TLAC requirements between covered holding companies and their subsidiaries. Such requirements could complement this proposed rule and could enhance the prospects for a successful SPOE resolution of a covered BHC or of the parent foreign GSIB of a covered IHC.
The domestic internal TLAC framework that the Board is considering would require identification of covered holding companies' material operating subsidiaries (“covered subsidiaries”). The framework would then subject each covered holding company to a domestic internal TLAC requirement with respect to each of its covered subsidiaries. The size of the requirement with respect to a given covered subsidiary would depend on the subsidiary's total risk-weighted assets, its total leverage exposure, or both.
Under the framework that the Board is considering, domestic internal TLAC would be divided into two categories: “contributable resources” and “prepositioned resources.” Contributable resources would be assets that are held by the covered holding company and would enable the covered holding company to make contributions to covered subsidiaries that incur severe losses, which would have the effect of recapitalizing those subsidiaries. The principal benefit of contributable resources is that they avoid the “misallocation risk” associated with prepositioned resources: Whereas an investment that has been prepositioned with a particular subsidiary cannot easily be used to recapitalize a different subsidiary that incurs unexpectedly high losses, contributable resources can be flexibly allocated among subsidiaries in light of the losses they suffer. The rationale for requiring that contributable resources be held by the covered holding company (rather than allowing them to be held at its subsidiaries) would be that it could help to avoid operational risks and other potential limitations on the firm's ability to move the assets to the parts of the organization that need them most.
To ensure that the contributable resources would retain sufficient value to recapitalize a subsidiary, including under conditions of severe market stress, a domestic internal TLAC framework could require that the contributable resources requirement be met entirely or substantially with assets that would qualify as high-quality liquid assets (HQLA) under the U.S. liquidity coverage ratio rule.
Prepositioned resources would be a covered holding company's debt and equity investments in a covered subsidiary (including investments made indirectly through lower-tier parent entities of the covered subsidiary). A covered holding company's equity investment in a subsidiary would transfer losses from the subsidiary to the holding company automatically, while a holding company's debt investment could be used to absorb losses incurred by the subsidiary through forgiveness of the debt, conversion of the debt into equity, or another economically similar procedure. To qualify as prepositioned resources, debt could be required to be unsecured, be plain vanilla, have a remaining maturity of at least one year, and be of lower priority than all third-party claims on the subsidiary. The rationale for these restrictions would be to ensure that the loss-absorbing capacity will indeed be available if and when it is needed, to reduce operational risk by eliminating unnecessary complexity, and to mitigate possible legal risk associated with insolvency law.
The Board's regulatory capital rules (Regulation Q) impose minimum capital requirements on all state member banks, as well as on certain bank holding companies, and certain savings and loan holding companies (“Board-regulated institutions”).
At this time, the proposed capital deduction will not apply to nonbank SIFIs. Following the finalization of the regulatory capital framework applicable to one or more nonbank SIFIs, the Board would determine whether, and how, the proposed capital deduction would apply to such companies.
In calculating its capital ratios under these rules, a Board-regulated institution is required to deduct fully from regulatory capital certain assets, such as goodwill and other intangible assets.
The regulatory capital rules include two broad categories of deductions related to investments in capital instruments. First, Regulation Q requires that a Board-regulated institution fully deduct any investment in its own regulatory capital instruments and investments in regulatory capital instruments held reciprocally with another financial institution.
To address the potential contagion stemming from the failure of a GSIB, the proposal would amend Regulation Q to require a Board-regulated institution to deduct from its regulatory capital the amount of any investment in, or exposure to, unsecured debt issued by a covered BHC. In particular, for purposes of the deductions, a Board-regulated institution would be required to treat unsecured debt issued by a covered BHC in a similar manner to an investment in a tier 2 capital instrument.
Analysis conducted by Board staff has not indicated that Board-regulated institutions currently own a substantial amount of unsecured debt issued by covered BHCs. The proposed deduction requirement would substantially reduce the incentive of a Board-regulated institution to invest in unsecured debt issued by a covered BHC, thereby increasing the prospects for an orderly resolution of a covered BHC by reducing the risk of contagion spreading to other Board-regulated institutions.
To implement the proposed deduction requirements for investments in covered debt instruments, the proposal would add or amend certain definitions in Regulation Q. The proposal would add new definitions of “covered debt instrument” and “investment in a covered debt instrument” to § 217.2 of Regulation Q. A “covered debt instrument” would be defined as any unsecured debt security issued by a global systemically important BHC, excluding any instrument that qualifies as tier 2 capital. An “investment in a covered debt instrument” would be defined as a net long position in a covered debt instrument, including direct, indirect, and synthetic exposures to a covered debt instrument. This definition would exclude underwriting positions held for five or fewer business days for purposes of certain deductions. In addition, the proposal would amend the definitions of “indirect exposure” and “synthetic exposure” in Regulation Q to add exposures to covered debt instruments. Further, the definition of “investment in the capital of an unconsolidated financial institution” would be amended to correct a typographical error.
In addition, as discussed more fully in the following section, the proposal would revise § 217.22(c), (f), and (h) of Regulation Q to incorporate the proposed deductions for investments in covered debt instruments. The proposed revisions to Regulation Q would take effect on January 1, 2019, consistent with the other aspects of the proposal; provided that the proposed correction to the definition of “investment in the capital of an unconsolidated financial institution” would take effect on April 1, 2016.
To be most effective, the proposed deduction approach for investments in unsecured debt instruments of a covered BHC would apply to all depository institution holding companies and insured depository institutions covered by the capital rules issued by the Board, OCC, and FDIC. The Board intends to consult with the OCC and FDIC on the proposed deductions for covered debt instruments in Regulation Q regarding consistent treatment among all banking organizations subject to the regulatory capital rules.
Under the Board's current regulatory capital rules, a Board-regulated institution must deduct any investment in its own capital instruments and any investment in the capital of other financial institutions that it holds reciprocally under § 217.22(c)(1) and (3) of Regulation Q.
Under § 217.22(c)(4) and (5) of Regulation Q, a Board-regulated institution must deduct certain investments in the capital of unconsolidated financial institutions.
If the Board-regulated institution has a “non-significant investment” in an unconsolidated financial institution, the Board-regulated institution must deduct its investments in the capital of the unconsolidated financial institution to the extent that the Board-regulated institution's investment exceeds 10 percent of the Board-regulated institution's common equity tier 1 capital.
If a Board-regulated institution has a significant investment in an unconsolidated financial institution, the Board-regulated institution must fully deduct under § 217.22(c)(5) of Regulation Q any investment in the capital instruments of the unconsolidated financial institution that are not in the form of common stock.
For each of the proposed deductions, the same rules and standards that apply to investments in capital instruments issued by financial institutions would also apply to an investment in a covered debt instrument. For example, the proposal would amend the “corresponding deduction approach” in § 217.22(c)(2) of Regulation Q to specify that unsecured debt issued by a covered BHC would be treated as tier 2 capital for purposes of deductions from capital. Under the corresponding deduction approach, a Board-regulated institution must make deductions from the component of capital for which the underlying instrument would qualify if it were issued by the Board-regulated institution making the deduction.
Under Regulation Q, if a Board-regulated institution has an investment in the tier 2 capital of an unconsolidated financial institution that the Board-regulated institution is required to deduct from capital, the Board-regulated institution must make the deduction from its tier 2 capital. Under the proposal, if a Board-regulated institution has a significant investment in a covered BHC and also owns unsecured debt of the covered BHC, the Board-regulated institution would be required to deduct the unsecured debt amount from its tier 2 capital. If the Board-regulated institution does not have sufficient tier 2 capital to complete this deduction, then the Board-regulated institution would be required to deduct any shortfall amount from its additional tier 1 capital. If the Board-regulated institution does not have sufficient additional tier 1 capital to complete this deduction, the institution would deduct any remaining amount of the investment from its common equity tier 1 capital.
The proposal would follow the same general approach as under the current requirements in Regulation Q regarding the calculation of the amount of any deduction and the treatment of guarantees and indirect investments for purposes of the deductions. Under Regulation Q, the amount of a Board-regulated institution's investment in its own capital instrument or in the capital instrument of an unconsolidated financial institution is the Board-regulated institution's net long position in the capital instrument as calculated under § 217.22(h) of Regulation Q.
With regard to an indirect exposure to a capital instrument in the form of, for example, a direct exposure to an investment fund, a Board-regulated institution has three options under Regulation Q to measure its gross long position in the capital instrument.
The first option would be to deduct the entire carrying value of the investment. The second option would be, with the prior approval of the Board, for the Board-regulated institution to use a conservative estimate of the amount of the investment in the unsecured debt instrument held through a fund. The third option would be to multiply the carrying value of the Board-regulated institution's investment in a fund by either the exact percentage of the unsecured debt issued by a covered BHC held by the investment fund or by the highest stated prospectus limit for such investments held by the investment fund. In each case, the amount of the gross long position may be reduced by the Board-regulated institution's qualified short positions to reach the net long position.
An investment in the unsecured debt of a covered BHC would be defined in § 217.2 of Regulation Q to include synthetic exposures to covered debt instruments, including, for example, the issuance a guarantee of such debt or selling a credit default swap referencing such debt.
The Board proposes to generally require firms that are covered BHCs as of the date on which the final rule is issued to achieve compliance with the rule as of January 1, 2019. However, the Board proposes to phase in the risk-weighted assets component of the external TLAC requirement in two stages. A 16 percent requirement would apply as of January 1, 2019. The requirement would then increase to 18 percent as of January 1, 2022. The purpose of the proposed transition period is to minimize the effect of the implementation of the proposal on credit availability and credit costs in the U.S. economy.
Firms that become covered BHCs after the date on which the final rule is issued would be required to comply by the later of three years after becoming covered BHCs and the effective date applicable to firms that are covered BHCs as of the date on which the final rule is issued.
Foreign GSIBs that are required to form U.S. intermediate holding companies as of the date on which the final rule is issued would similarly be required to achieve compliance as of January 1, 2019. However, the Board proposes to phase in the risk-weighted assets component of the internal TLAC requirement applicable to covered IHCs that are expected to enter resolution in a failure scenario in two stages. A 16 percent requirement would apply as of January 1, 2019. The requirement would then increase to 18 percent as of January 1, 2022.
Where a foreign banking organization becomes subject to a requirement to form a covered IHC after the date on which the final rule is issued,
Board-regulated institutions would be required to comply with the proposed regulatory capital deduction for investments in the unsecured debt of a covered BHC as of January 1, 2019.
Certain provisions of the proposed rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501 through 3521). The Board reviewed the proposed rule under the authority delegated to the Board by OMB. The disclosure requirements are found in § 252.65 and the reporting requirements are found in § 252.153(b)(5). These information collection requirements would implement section 165 of the Dodd Frank Act, as described in the Abstract below. In accordance with the requirements of the PRA, the Board may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.
The proposed rule would revise the Reporting, Recordkeeping, and Disclosure Requirements Associated with Enhanced Prudential Standards (Regulation YY) (Reg YY; OMB No. 7100-0350). In addition, as permitted by the PRA, the Board proposes to extend for three years, with revision, the Reporting, Recordkeeping, and Disclosure Requirements Associated with Enhanced Prudential Standards (Regulation YY) (Reg YY; OMB No. 7100-0350).
Comments are invited on:
(a) Whether the collections of information are necessary for the proper performance of the Board's functions, including whether the information has practical utility;
(b) The accuracy of the Board's estimates of the burden of the information collections, including the validity of the methodology and assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on aspects of this notice that may affect reporting, recordkeeping, or disclosure requirements and burden estimates should be sent to the addresses listed in the
Section 252.65 of the proposed rule would require a global systemically important BHC to publicly disclose a description of the financial consequences to unsecured debtholders of the global systemically important BHC entering into a resolution proceeding in which the global systemically important BHC is the only entity that would be subject to the resolution proceeding. A global systemically important BHC must provide the disclosure required of this section: (1) In the offering documents for all of its eligible debt securities; and (2) either on the global systemically important BHC's Web site, or in more than one public financial report or other regulatory reports, provided that the global systemically important BHC publicly provides a summary table specifically indicating the location(s) of this disclosure.
Section 252.153(b)(5) of the proposed rule would require each top-tier foreign banking organization that controls a U.S. intermediate holding company to submit to the Board by January 1 of each calendar year through the U.S. intermediate holding company: (1) Notice of whether the home country supervisor (or other appropriate home country regulatory authority) of the top-tier foreign banking organization of the U.S. intermediate holding company has adopted standards consistent with the BCBS assessment methodology for identifying global systemically important banking organizations; and (2) notice of whether the top-tier foreign banking organization prepares or reports the indicators used by the BCBS assessment methodology to identify a banking organization as a global systemically important banking organization and, if it does, whether the top-tier foreign banking organization has determined that it has the characteristics of a global systemically important banking organization under the BCBS assessment methodology.
Section 252.65—8 respondents.
Section 252.153(b)(5)—15 respondents.
Section 252.65—1 hour (annual), 5 hours (one-time burden).
Section 252.153(b)(5)—1 hour (annual).
The Board is providing an initial regulatory flexibility analysis with respect to this proposed rule. The Regulatory Flexibility Act, 5 U.S.C. 601
This proposed rule is designed to improve the resolvability of covered BHCs and covered IHCs by requiring such institutions maintain outstanding a minimum amount of loss-absorbing instruments, including a minimum amount of unsecured long-term debt, and imposing restrictions on the corporate practices and liabilities of such organizations. The proposed rule is also designed to help reduce the potential contagion stemming from the failure of a GSIB by requiring state member banks, bank holding companies, savings and loan holding companies, and intermediate holding companies subject to the Board's capital rules to deduct from their regulatory capital investments in unsecured debt issued by covered BHCs.
The majority of the provisions of the proposed rule would apply to a top-tier bank holding company domiciled in the United States with $50 billion or more in total consolidated assets and has been identified as a GSIB, and to a U.S. intermediate holding company of a foreign GSIB. Bank holding companies and U.S. intermediate holding companies of foreign GSIBs that are subject to the proposed rule therefore substantially exceed the $550 million asset threshold at which a banking entity would qualify as a small banking organization. However, small state member banks would be subject to the provisions of the proposed rule that impose regulatory capital deductions for investments in eligible external long-term debt of covered BHCs. The provisions of the proposed rule related
The proposed regulatory capital deductions for investments in the unsecured debt of covered BHCs would require small state member banks to deduct holdings of unsecured debt issued by a covered BHC from regulatory capital, in a similar manner as small state member banks must deduct investments in tier 2 capital instruments from their regulatory capital, as described in Part VII. State member banks would be required to make internal reporting changes to comply with the proposed capital rules and corresponding reporting requirements. As described in Part VII, these requirements would reduce the incentives of a small state member bank to invest in the unsecured debt of a covered BHC, and thereby increase the prospect for an orderly resolution not a covered BHC.
Depository institutions do not presently report their holdings in the unsecured debt of U.S. GSIBs. However, regulatory reports filed by depository institutions provide a listing of the holdings by such institutions of “other domestic debt,” which would include holdings of unsecured debt issued by U.S. GSIBs. Therefore, the reported holdings of “other domestic debt” held by small depository institutions provides a conservative estimate of the amount of unsecured debt of GSIBs held by such institutions.
As of June 30, 2015, such institutions held “other domestic debt” equal to approximately 0.5 percent of their total assets. Excluding depository institutions that report no holdings of “other domestic debt,” such depository institutions held “other domestic debt” equal to only 2.2 percent of their total assets. The low level of reported holdings of “other domestic debt” by such institutions supports the view that the proposed regulatory capital deductions would not have a material impact on small state member banks. In addition, in light of the reported holdings of “other domestic debt” by small depository institutions, such institutions should be able to replace their holdings of unsecured debt by GSIBs without a material economic impact.
The proposed rule does not appear to duplicate, overlap, or conflict with any other Federal rules. In light of the foregoing, the Board does not believe that the proposed rule, if adopted in final form, would have a significant economic impact on a substantial number of small entities. Nonetheless, the Board invites comment on whether the proposed rule would impose undue burdens on, or have unintended consequences for, small organizations, and whether there are ways such potential burdens or consequences could be minimized in a manner consistent with the purpose of the proposed rule. A final regulatory flexibility analysis will be conducted after consideration of comments received during the public comment period.
In determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on state member banks, the Board is required to consider, consistent with the principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, and the benefits of such regulations.
The proposed regulatory capital deductions applicable to state member banks would take effect on the first day of a calendar quarter. The proposed rule would provide state member banks a reasonable period of time to make the incremental internal reporting changes necessary to comply with the proposed revisions to the regulatory capital rules. The proposed revisions to the regulatory capital rules would also be reflected in amendments to the Board's regulatory reporting forms, and the instructions to such forms. The internal reporting changes are expected to be minimal because the banking organizations subject to the proposed rule are already required to track similar information to comply with current capital rules and reporting requirements.
As described above in Part IX.B, depository institutions do not presently report their holdings in the unsecured debt of U.S. GSIBs, but do report holdings of “other domestic debt,” which would include holdings of unsecured debt issued by U.S. GSIBs. Therefore, the reported holdings of “other domestic debt” held by depository institutions provides a conservative estimate of the amount of unsecured debt of GSIBs held by such institutions.
As of June 30, 2015, state member banks held “other domestic debt” equal to approximately 0.57 percent of their total assets. Excluding state member banks that report no holdings of “other domestic debt,” such depository institutions held “other domestic debt” equal to only 0.77 percent of their total assets. The reported holdings of “other domestic debt” by such institutions supports the view that the incremental administrative reporting burden imposed by the proposed revisions to the Board's regulatory capital rules on such institutions is expected to be minimal. These administrative burdens are offset by the safety and soundness and financial stability benefits that will accrue to the financial system as a result of the proposed rule, as described herein.
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113 Stat. 1338, 1471, 12 U.S.C. 4809) requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The Board has sought to present the proposed rule in a simple and straightforward manner, and invites comment on the use of plain language. For example:
• Have the agencies organized the material to suit your needs? If not, how could they present the proposed rule more clearly?
• Are the requirements in the proposed rule clearly stated? If not, how could the proposed rule be more clearly stated?
• Do the regulations contain technical language or jargon that is not clear? If so, which language requires clarification?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes would achieve that?
• Is the section format adequate? If not, which of the sections should be changed and how?
• What other changes can the Board incorporate to make the regulation easier to understand?
Administrative practice and procedure, Banks, banking, Federal
For the reasons stated in the preamble, the Board of Governors of the Federal Reserve System proposes to amend 12 CFR parts 217 and 252 as follows:
12 U.S.C. 248(a), 321-338a, 481-486, 1462a, 1467a, 1818, 1828, 1831n, 1831o, 1831p-l, 1831w, 1835, 1844(b), 1851, 3904, 3906-3909, 4808, 5365, 5368, 5371.
The additions and revisions read as follows:
(c)
(i) A Board-regulated institution must deduct an investment in the Board-regulated institution's own common stock instruments from its common equity tier 1 capital elements to the extent such instruments are not excluded from regulatory capital under § 217.20(b)(1);
(ii) A Board-regulated institution must deduct an investment in the Board-regulated institution's own additional tier 1 capital instruments from its additional tier 1 capital elements;
(iii) A Board-regulated institution must deduct an investment in the Board-regulated institution's own tier 2 capital instruments from its tier 2 capital elements; and
(iv) A Board-regulated institution that is a global systemically important BHC must deduct an investment in the Board-regulated institution's own covered debt instruments from its tier 2 capital elements. If the Board-regulated institution does not have a sufficient amount of tier 2 capital to effect this deduction, the Board-regulated institution must deduct the shortfall amount from the next higher (that is, more subordinated) component of regulatory capital.
(2)
(i) If an investment is in the form of an instrument issued by a financial institution that is not a regulated financial institution, the Board-regulated institution must treat the instrument as:
(A) A common equity tier 1 capital instrument if it is common stock or represents the most subordinated claim in liquidation of the financial institution; and
(B) An additional tier 1 capital instrument if it is subordinated to all creditors of the financial institution and is senior in liquidation only to common shareholders.
(ii) If an investment is in the form of an instrument issued by a regulated financial institution and the instrument does not meet the criteria for common
(A) A common equity tier 1 capital instrument if it is common stock included in GAAP equity or represents the most subordinated claim in liquidation of the financial institution;
(B) An additional tier 1 capital instrument if it is included in GAAP equity, subordinated to all creditors of the financial institution, and senior in a receivership, insolvency, liquidation, or similar proceeding only to common shareholders; and
(C) A tier 2 capital instrument if it is a covered debt instrument or if it is not included in GAAP equity but considered regulatory capital by the primary supervisor of the financial institution.
(iii) If an investment is in the form of a non-qualifying capital instrument (as defined in §217.300(c)), the Board-regulated institution must treat the instrument as:
(A) An additional tier 1 capital instrument if such instrument was included in the issuer's tier 1 capital prior to May 19, 2010; or
(B) A tier 2 capital instrument if such instrument was included in the issuer's tier 2 capital (but not includable in tier 1 capital) prior to May 19, 2010.
(3)
(4)
(ii) The amount to be deducted under this section from a specific capital component is equal to:
(A) The Board-regulated institution's aggregate non-significant investments in the capital of an unconsolidated financial institution and, if applicable, any investments in a covered debt instrument subject to deduction under this paragraph (c)(4), exceeding the 10 percent threshold for non-significant investments, multiplied by
(B) The ratio of the Board-regulated institution's aggregate non-significant investments in the capital of an unconsolidated financial institution (in the form of such capital component) to the Board-regulated institution's total non-significant investments in unconsolidated financial institutions, with an investment in a covered debt instrument being treated as tier 2 capital for this purpose.
(5)
(f)
(h)
(2)
(i) For an equity exposure that is held directly by the Board-regulated institution, the adjusted carrying value of the exposure as that term is defined in §217.51(b);
(ii) For an exposure that is held directly and that is not an equity exposure or a securitization exposure, the exposure amount as that term is defined in §217.2; and
(iii) For each indirect exposure, the Board-regulated institution's carrying value of its investment in an investment fund or, alternatively:
(A) A Board-regulated institution may, with the prior approval of the Board, use a conservative estimate of the amount of its indirect investment in the Board-regulated institution's own capital instruments, its indirect investment in the capital of an unconsolidated financial institution, or its indirect investment in a covered debt instrument held through a position in an index, as applicable; or
(B) A Board-regulated institution may calculate the gross long position for an indirect exposure by multiplying the Board-regulated institution's carrying value of its investment in the investment fund by either:
(
(
(iv) For a synthetic exposure, the amount of the Board-regulated institution's loss on the exposure if the reference capital instrument were to have a value of zero.
(3)
(i) The maturity of the short position must match the maturity of the long position, or the short position must have a residual maturity of at least one year (maturity requirement); or
(ii) For a position that is a trading asset or trading liability (whether on- or off-balance sheet) as reported on the Board-regulated institution's Call Report, for a state member bank, or FR Y-9C, for a bank holding company or savings and loan holding company, as applicable, if the Board-regulated institution has a contractual right or obligation to sell the long position at a specific point in time and the counterparty to the contract has an obligation to purchase the long position if the Board-regulated institution exercises its right to sell, this point in time may be treated as the maturity of the long position such that the maturity of the long position and short position are deemed to match for purposes of the maturity requirement, even if the maturity of the short position is less than one year; and
(iii) For an investment in a Board-regulated institution's own capital instrument under paragraph (c)(1) of this section, an investment in a capital of an unconsolidated financial institution under paragraphs (c)(4), (c)(5), and (d)(1)(iii) of this section, and an investment in a covered debt instrument under paragraphs (c)(1), (c)(4), and (c)(5) of this section:
(A) The Board-regulated institution may only net a short position against a long position in an investment in the Board-regulated institution's own capital instrument or own covered debt instrument under paragraph (c)(1) of this section if the short position involves no counterparty credit risk;
(B) A gross long position in an investment in the Board-regulated institution's own capital instrument, an investment in the capital instrument of an unconsolidated financial institution, or an investment in a covered debt instrument due to a position in an index may be netted against a short position in the same index;
(C) Long and short positions in the same index without maturity dates are considered to have matching maturities; and
(D) A short position in an index that is hedging a long cash or synthetic position in an investment in the Board-regulated institution's own capital instrument, an investment in the capital instrument of an unconsolidated financial institution, or an investment in a covered debt instrument can be decomposed to provide recognition of the hedge. More specifically, the portion of the index that is composed of the same underlying instrument that is being hedged may be used to offset the long position if both the long position being hedged and the short position in the index are reported as a trading asset or trading liability (whether on- or off-balance sheet) on the Board-regulated institution's Call Report, for a state member bank, or FR Y-9C, for a bank holding company or savings and loan holding company, as applicable, and the hedge is deemed effective by the Board-regulated institution's internal control processes, which have not been found to be inadequate by the Board.
12 U.S.C. 321-338a, 481-486, 1467a(g), 1818, 1828, 1831n, 1831o, 1831p-l, 1831w, 1835, 1844(b), 1844(c), 3904, 3906-3909, 4808, 5361, 5365, 5366, 5367, 5368, 5371.
The additions read as follows:
(n)
(o)
(p)
(q)
(r)
(s)
(z)
(a)
(b)
(1) January 1, 2019; or
(2) 1095 days (three years) after the date on which the company becomes a global systemically important BHC.
For purposes of this subpart:
(i) Right of a party, whether contractual or otherwise (including rights incorporated by reference to any other contract, agreement or document, and rights afforded by statute, civil code, regulation and common law), to liquidate, terminate, cancel, rescind, or accelerate the agreement or transactions thereunder, set off or net amounts owing in respect thereto (except rights related to same-day payment netting), exercise remedies in respect of collateral or other credit support or property related thereto (including the purchase and sale of property), demand payment or delivery thereunder or in respect thereof (other than a right or operation of a contractual provision arising solely from a change in the value of collateral or margin or a change in the amount of an economic exposure), suspend, delay or defer payment or performance thereunder, modify the obligations of a party thereunder or any similar rights; and
(ii) Right or contractual provision that alters the amount of collateral or margin that must be provided with respect to an exposure thereunder, including by altering any initial amount, threshold amount, variation margin, minimum transfer amount, the margin value of collateral or any similar amount, that entitles a party to demand the return of any collateral or margin transferred by it to the other party or a custodian or that modifies a transferee's right to reuse collateral or margin (if such right previously existed), or any similar rights, in each case, other than a right or operation of a contractual provision arising solely from a change in the value of collateral or margin or a change in the amount of an economic exposure; and
(2) Does not include any right under a contract that allows a party to terminate the contract on demand or at its option at a specified time, or from time to time, without the need to show cause.
(1) Is paid in, and issued by the global systemically important BHC;
(2) Is not secured, not guaranteed by the global systemically important BHC or a subsidiary of the global systemically important BHC, and is not subject to any other arrangement that legally or economically enhances the seniority of the instrument;
(3) Has a maturity of greater than 365 days (one year) from the date of issuance;
(4) Is governed by the laws of the United States or any State thereof;
(5) Does not provide the holder of the instrument a contractual right to accelerate payment of principal or interest on the instrument, except a right that is exercisable on one or more dates that are specified in the instrument or in the event of (i) a receivership, insolvency, liquidation, or similar proceeding of the global systemically important BHC or (ii) a failure of the global systemically important BHC to pay principal or interest on the instrument when due;
(6) Does not have a credit-sensitive feature, such as an interest rate that is reset periodically based in whole or in part on the global systemically important BHC's credit quality, but may have an interest rate that is adjusted periodically independent of the global systemically important BHC's credit quality, in relation to general market interest rates or similar adjustments;
(7) Is not a structured note; and
(8) Does not provide that the instrument may be converted into or exchanged for equity of the global systemically important BHC.
(1) Has a principal amount, redemption amount, or stated maturity that is subject to reduction based on the performance of any asset, entity, index, or embedded derivative or similar embedded feature;
(2) Has an embedded derivative or similar embedded feature that is linked to one or more equity securities, commodities, assets, or entities;
(3) Does not specify a minimum principal amount due upon acceleration or early termination; or
(4) Is not classified as debt under GAAP.
(a)
(1) The global systemically important BHC's total risk-weighted assets multiplied by the sum of 6 percent plus the global systemically important BHC's GSIB surcharge (expressed as a percentage); and
(2) 4.5 percent of the global systemically important BHC's total leverage exposure.
(b)
(i) One hundred (100) percent of the unpaid principal amount of the outstanding eligible debt securities issued by the global systemically important BHC that have a remaining maturity greater than or equal to 730 days (two years);
(ii) Fifty (50) percent of the unpaid principal amount of the outstanding eligible debt securities issued by the global systemically important BHC that have a remaining maturity of greater than or equal to 365 days (one year) and less than 730 days (two years); and
(iii) Zero (0) percent of the unpaid principal amount of the outstanding eligible debt securities issued by the global systemically important BHC that have a remaining maturity of less than 365 days (one year).
(2) For purposes of paragraph (b)(1) of this section, the remaining maturity of an outstanding eligible debt security is calculated from the earlier of:
(i) The final payment date of the principal, without respect to any right of the holder to accelerate payment of principal; and
(ii) The date the holder of the instrument first has the contractual right to request or require payment of principal, provided that, with respect to a right that is exercisable on one or more dates that are specified in the instrument only on the occurrence of an event (other than an event of a receivership, insolvency, liquidation, or similar proceeding of the global systemically important BHC, or a failure of the global systemically important BHC to pay principal or interest on the instrument when due), the date for the outstanding eligible debt security under this paragraph (b)(2)(ii) will be calculated as if the event has occurred.
(c)
(a)
(1)(i) From January 1, 2019 through December 31, 2021, 16 percent of the global systemically important BHC's total risk-weighted assets; and
(ii) Beginning January 1, 2022, 18 percent of the global systemically important BHC's total risk-weighted assets; and
(2) 9.5 percent of the global systemically important BHC's total leverage exposure.
(b)
(1) The global systemically important BHC's common equity tier 1 capital (excluding any common equity tier 1 minority interest);
(2) The global systemically important BHC's additional tier 1 capital (excluding any tier 1 minority interest); and
(3) The global systemically important BHC's outstanding eligible external long-term debt amount plus 50 percent of the unpaid principal amount of outstanding eligible debt securities issued by the global systemically important BHC that have a remaining maturity, as calculated in § 252.62(b)(2), of greater than or equal to 365 days (one year) but less than 730 days (two years).
(c)
(2)
(i)
(ii)
(iii)
(3)
(A) (
(
(B) The ratio (expressed as a percentage) of the global systemically important BHC's additional tier 1 capital (excluding any tier 1 minority interest) to its total risk-weighted assets; and minus
(C) The ratio (expressed as a percentage) of the global systemically important BHC's eligible external long-term debt amount to total risk-weighted assets.
(ii) Notwithstanding paragraph (c)(3)(i) of this section, if the ratio (expressed as a percentage) of a global systemically important BHC's external total loss-absorbing capacity amount as calculated under paragraph (b) of this section to its risk-weighted assets is less than or equal to, from January 1, 2019, through December 31, 2021, 16 percent and beginning January 1, 2022, 18 percent, the global systemically important BHC's external TLAC buffer level is zero.
(4)
(ii) A global systemically important BHC with an external TLAC buffer level that is greater than the external TLAC buffer is not subject to a maximum external TLAC payout amount.
(iii) Except as provided in paragraph (c)(4)(iv) of this section, a global systemically important BHC may not make distributions or discretionary bonus payments during the current calendar quarter if the global systemically important BHC's:
(A) Eligible retained income is negative; and
(B) External TLAC buffer level was less than the external TLAC buffer as of the end of the previous calendar quarter.
(iv) Notwithstanding the limitations in paragraphs (c)(4)(i) through (iii) of this section, the Board may permit a global systemically important BHC to make a distribution or discretionary bonus payment upon a request of the global systemically important BHC, if the Board determines that the distribution or discretionary bonus payment would not be contrary to the purposes of this section, or to the safety and soundness of the global systemically important BHC. In making such a determination, the Board will consider the nature and extent of the request and the particular circumstances giving rise to the request.
(v)(A) A global systemically important BHC is subject to the lowest of the maximum payout amounts as determined under 12 CFR 217.11(a)(2)(iii) and (iv) and the maximum external TLAC payout amount as determined under this paragraph.
(B) Additional limitations on distributions may apply to a global systemically important BHC under 12 CFR 225.4, 225.8, and 263.202.
(a)
(1) Issue any debt instrument with an original maturity of less than 365 days (one year), including short term deposits and demand deposits, to any person, unless the person is a subsidiary of the global systemically important BHC;
(2) Issue any instrument, or enter into any related contract, with respect to which the holder of the instrument has a contractual right to offset debt owed by the holder or its affiliates to a subsidiary of the global systemically important BHC against the amount, or a portion of the amount, owed by the global systemically important BHC under the instrument;
(3) Enter into a qualified financial contract with a person that is not a subsidiary of the global systemically important BHC;
(4) Guarantee a liability of a subsidiary of the global systemically important BHC if such liability permits the exercise of a default right that is related, directly or indirectly, to the global systemically important BHC becoming subject to a receivership, insolvency, liquidation, resolution, or similar proceeding other than a receivership proceeding under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5381 through 5394); or
(5) Enter into, or otherwise benefit from, any agreement that provides for its liabilities to be guaranteed by any of its subsidiaries.
(b)
(2) For purposes of paragraph (b)(1) of this section, an unrelated liability is any non-contingent liability of the global systemically important BHC owed to a person that is not an affiliate of the global systemically important BHC other than:
(i) The instruments that satisfy the global systemically important BHC's external total loss-absorbing capacity amount, as calculated under § 252.63(b);
(ii) Any dividend or other liability arising from the instruments that satisfy the global systemically important BHC's external total loss-absorbing capacity amount, as calculated under § 252.63(b)(2);
(iii) An eligible debt security that does not provide the holder of the instrument with a currently exercisable right to require immediate payment of the total or remaining principal amount; and
(iv) A secured liability, to the extent that it is secured, or a liability that otherwise represents a claim that would be senior to eligible debt securities in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5390(b)) and the Bankruptcy Code (11 U.S.C. 507).
(a) A global systemically important BHC must publicly disclose a description of the financial consequences to unsecured debtholders of the global systemically important BHC entering into a resolution proceeding in which the global systemically important BHC is the only entity that would be subject to the resolution proceeding.
(b) A global systemically important BHC must provide the disclosure required by paragraph (a) of this section:
(1) In the offering documents for all of its eligible debt securities; and
(2) Either:
(i) On the global systemically important BHC's Web site; or
(ii) In more than one public financial report or other public regulatory reports, provided that the global systemically important BHC publicly provides a summary table specifically indicating the location(s) of this disclosure.
(b) * * *
(4) For purposes of this part, a top-tier foreign banking organization that controls a U.S. intermediate holding company is a global systemically important foreign banking organization if any of the following conditions are met:
(i) The top-tier foreign banking organization determines, pursuant to paragraph (b)(6) of this section, that the top-tier foreign banking organization has the characteristics of a global systemically important banking organization under the global methodology; or
(ii) The Board, using information reported by the top-tier foreign banking organization or its U.S. subsidiaries, information that is publicly available, and confidential supervisory information, determines:
(A) That the top-tier foreign banking organization would be a global systemically important banking organization under the global methodology;
(B) That the top-tier foreign banking organization, if it were subject to the Board's Regulation Q, would be identified as a global systemically important BHC under § 217.402 of the Board's Regulation Q; or
(C) That the U.S. intermediate holding company, if it were subject to § 217.402 of the Board's Regulation Q, would be identified as a global systemically important BHC.
(5) Each top-tier foreign banking organization that controls a U.S. intermediate holding company shall submit to the Board by January 1 of each calendar year through the U.S. intermediate holding company:
(i) Notice of whether the home country supervisor (or other appropriate home country regulatory authority) of the top-tier foreign banking organization of the U.S. intermediate holding company has adopted standards consistent with the global methodology; and
(ii) Notice of whether the top-tier foreign banking organization prepares or reports the indicators used by the global methodology to identify a banking organization as a global systemically important banking organization and, if it does, whether the top-tier foreign banking organization has determined that it has the characteristics of a global systemically important banking organization under the global methodology pursuant to paragraph (b)(6) of this section.
(6) A top-tier foreign banking organization that controls a U.S. intermediate holding company and prepares or reports for any purpose the indicator amounts necessary to determine whether the top-tier foreign banking organization is a global systemically important banking organization under the global methodology must use the data to determine whether the top-tier foreign banking organization has the characteristics of a global systemically important banking organization under the global methodology.
(a)
(b)
(1) January 1, 2019; and
(2) 1095 days (three years) after the earlier of date on which a:
(i) Global systemically important foreign banking organization is required to establish a U.S. intermediate holding company pursuant to § 252.153; and
(ii) Foreign banking organization that is required to establish a U.S. intermediate holding company pursuant to § 252.153 becomes a global systemically important foreign banking organization.
For purposes of this subpart:
(i) Right of a party, whether contractual or otherwise (including rights incorporated by reference to any other contract, agreement or document, and rights afforded by statute, civil code, regulation and common law), to
(ii) Right or contractual provision that alters the amount of collateral or margin that must be provided with respect to an exposure thereunder, including by altering any initial amount, threshold amount, variation margin, minimum transfer amount, the margin value of collateral or any similar amount, that entitles a party to demand the return of any collateral or margin transferred by it to the other party or a custodian or that modifies a transferee's right to reuse collateral or margin (if such right previously existed), or any similar rights, in each case, other than a right or operation of a contractual provision arising solely from a change in the value of collateral or margin or a change in the amount of an economic exposure; and
(2) Does not include any right under a contract that allows a party to terminate the contract on demand or at its option at a specified time, or from time to time, without the need to show cause.
(1) Is paid in, and issued by a Covered IHC to and remains held by a company that is incorporated or organized outside of the United States that directly or indirectly controls the Covered IHC;
(2) Is unsecured and would represent the most subordinated debt claim in a receivership, insolvency, liquidation, or similar proceeding of the Covered IHC;
(3) Has a maturity at issuance of greater than 365 days (one year) from the date of issuance;
(4) Does not provide the holder of the instrument a contractual right to accelerate payment of principal or interest on the instrument;
(5) Has a contractual provision that is approved by the Board that provides for the immediate conversion or exchange of the instrument into common equity tier 1 of the Covered IHC, or the cancellation of the instrument, in either case upon issuance by the Board of an internal debt conversion order;
(6) Is governed by the laws of the United States or any State thereof; and
(7) Is not a structured note.
(1) Has a principal amount, redemption amount, or stated maturity that is subject to reduction based on the performance of any asset, entity, index, or embedded derivative or similar embedded feature;
(2) Has an embedded derivative or other similar embedded feature that is linked to one or more equity securities, commodities, assets, or entities;
(3) Does not specify a minimum principal amount due upon acceleration or early termination; or
(4) Is not classified as debt under GAAP.
(a)
(1) 7 percent of the Covered IHC's total risk-weighted assets;
(2) If the Covered IHC is required to maintain a minimum supplementary leverage ratio, 3 percent of the Covered IHC's total leverage exposure; and
(3) 4 percent of the Covered IHC's average total consolidated assets.
(b)
(1) One hundred (100) percent of the unpaid principal amount of the outstanding eligible internal debt securities issued by the Covered IHC that have a remaining maturity greater than or equal to 730 days (two years); and
(2) Fifty (50) percent of the unpaid principal amount of the outstanding eligible internal debt securities issued by the Covered IHC that have a remaining maturity of greater than or equal to 365 days (one year) and less than 730 days (two years); and
(3) Zero (0) percent of the unpaid principal amount of the outstanding eligible internal debt securities issued by the Covered IHC that have a remaining maturity of less than 365 days (one year).
(c)
(a) The Board may issue an internal debt conversion order if:
(1) The Board has determined that the Covered IHC is in default or danger of default; and
(2) Any of the following circumstances apply:
(i) A foreign banking organization that directly or indirectly controls the Covered IHC or any subsidiary of the top-tier foreign banking organization has been placed into resolution proceedings (including the application of statutory resolution powers) in its home country;
(ii) The home country supervisor of the top-tier foreign banking organization has consented or not promptly objected after notification by the Board to the conversion, exchange, or cancellation of the eligible internal debt securities of the Covered IHC; or
(iii) The Board has made a written recommendation to the Secretary of the Treasury pursuant to 12 U.S.C. 5383(a) regarding the Covered IHC.
(b) For purposes of paragraph (a) of this section, the Board will consider:
(1) A Covered IHC in default or danger of default if
(i) A case has been, or likely will promptly be, commenced with respect to the Covered IHC under the Bankruptcy Code (11 U.S.C. 101
(ii) The Covered IHC has incurred, or is likely to incur, losses that will deplete all or substantially all of its capital, and there is no reasonable prospect for the Covered IHC to avoid such depletion;
(iii) The assets of the Covered IHC are, or are likely to be, less than its obligations to creditors and others; or
(iv) The Covered IHC is, or is likely to be, unable to pay its obligations (other than those subject to a bona fide dispute) in the normal course of business; and
(2) An objection by the home country supervisor to the conversion, exchange or cancellation of the eligible internal debt securities to be prompt if the Board receives the objection no later than 48 hours after the Board requests such consent or non-objection from the home country supervisor.
(a)
(1) (i) From January 1, 2019 through December 31, 2021, 16 percent of the Covered IHC's total risk-weighted assets; and
(ii) Beginning January 1, 2022, 18 percent of the Covered IHC's total risk-weighted assets;
(2) If the Board requires the Covered IHC to maintain a minimum supplementary leverage ratio, 6.75 percent of the Covered IHC's total leverage exposure; and
(3) Nine (9) percent of the Covered IHC's average total consolidated assets.
(b)
(1) (i) From January 1, 2019 through December 31, 2021, 14 percent of the Covered IHC's total risk-weighted assets; and
(ii) Beginning January 1, 2022, 16 percent of the Covered IHC's total risk-weighted assets;
(2) If the Board requires the Covered IHC to maintain a minimum supplementary leverage ratio, 6 percent of the Covered IHC's total leverage exposure; and
(3) Eight (8) percent of the Covered IHC's average total consolidated assets.
(c)
(1) The Covered IHC's common equity tier 1 capital (excluding any common equity tier 1 minority interest) held by a company that is incorporated or organized outside of the United States and that directly or indirectly controls the Covered IHC;
(2) The Covered IHC's additional tier 1 capital (excluding any tier 1 minority interest) held by a company that is incorporated or organized outside of the United States and that directly or indirectly controls the Covered IHC; and
(3) The Covered IHC's outstanding eligible internal long-term debt amount plus 50 percent of the unpaid principal amount of outstanding eligible internal debt securities issued by the Covered IHC that have a remaining maturity of greater than or equal to 365 days (one year) but less than 730 days (two years).
(d)
(2) A Covered IHC will cease to be a non-resolution entity 365 days (one year) from the date the Board first provided notice to the Covered IHC that the home country resolution authority for the top-tier foreign banking organization that controls the Covered IHC has indicated that the authority's planned resolution strategy for the foreign banking organization involves the Covered IHC or one or more of the subsidiaries of the Covered IHC entering resolution, receivership, insolvency or similar proceedings in the United States.
(e)
(2)
(i)
(ii)
(iii)
(3)
(A) (
(
(B) The ratio (expressed as a percentage) of the Covered IHC's additional tier 1 capital (excluding any tier 1 minority interest) held by a company that is incorporated or organized outside of the United States and that directly or indirectly controls the Covered IHC to its total risk-weighted assets; and minus
(C) The ratio (expressed as a percentage) of the Covered IHC's eligible internal long-term debt to total risk-weighted assets.
(ii) (A) Except as provided in paragraph (e)(3)(ii)(B) of this section and notwithstanding paragraph (e)(3)(i) of this section, if the ratio (expressed as a percentage) of the Covered IHC's internal total loss-absorbing capacity amount, as calculated under § 252.164(a), to the Covered IHC's risk-weighted assets is less than or equal to, from January 1, 2019, through December 31, 2021, 16 percent and beginning January 1, 2022, 18 percent, the Covered IHC's internal TLAC buffer level is zero.
(B) With respect to a Covered IHC that is a non-resolution entity, notwithstanding paragraph (e)(3)(i) of this section, if the ratio (expressed as a percentage) of the Covered IHC's internal total loss-absorbing capacity amount, as calculated under § 252.164(b), to the Covered IHC's risk-weighted assets is less than or equal to, from January 1, 2019, through December 31, 2021, 14 percent and beginning January 1, 2022, 16 percent, the Covered IHC's internal TLAC buffer level is zero.
(4)
(ii) A Covered IHC with an internal TLAC buffer level that is greater than the internal TLAC buffer is not subject to a maximum internal TLAC payout amount.
(iii) Except as provided in paragraph (e)(4)(iv) of this section, a Covered IHC may not make distributions or discretionary bonus payments during the current calendar quarter if the Covered IHC's:
(A) Eligible retained income is negative; and
(B) Internal TLAC buffer level was less than the internal TLAC buffer as of the end of the previous calendar quarter.
(iv) Notwithstanding the limitations in paragraphs (e)(4)(i) through (iii) of this section, the Board may permit a Covered IHC to make a distribution or discretionary bonus payment upon a request of the Covered IHC, if the Board determines that the distribution or discretionary bonus payment would not be contrary to the purposes of this section, or to the safety and soundness of the Covered IHC. In making such a determination, the Board will consider the nature and extent of the request and the particular circumstances giving rise to the request.
(v) (A) A Covered IHC is subject to the lowest of the maximum payout amounts as determined under 12 CFR 217.11(a)(2)(iii) and (iv) and the maximum internal TLAC payout amount as determined under this paragraph.
(B) Additional limitations on distributions may apply to a Covered IHC under 12 CFR 225.4, 225.8, and 263.202.
A Covered IHC may not directly:
(a) Issue any debt instrument with an original maturity of less than 365 days (one year), including short term deposits and demand deposits, to any person, unless the person is an affiliate of the covered IHC;
(b) Issue any instrument, or enter into any related contract, with respect to which the holder of the instrument has a contractual right to offset debt owed by the holder or its affiliates to the Covered IHC or a subsidiary of the Covered IHC against the amount, or a portion of the amount, owed by the Covered IHC under the instrument;
(c) Enter into a qualified financial contract with a person that is not an affiliate of the Covered IHC;
(d) Guarantee a liability of an affiliate of the Covered IHC if such liability permits the exercise of a default right that is related, directly or indirectly, to the Covered IHC becoming subject to a receivership, insolvency, liquidation, resolution, or similar proceeding other than a receivership proceeding under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5381 through 5394); or
(e) Enter into, or otherwise benefit from, any agreement that provides for its liabilities to be guaranteed by any of its subsidiaries.
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration |